One of my buddies is doing a non-profit coaching thing in our sport. I was just curious how it works for being able to sustain yourself and live if your not supposed to profit?
Edit: thanks for the replies! I got it now!
In: Economics
I believe the basics come down to:
The companies goal is not for profit, but, companies still need to make money to pay employees. So they make enough money, either through servies, products, grants, or donations, to pay their bills and work towards the goal of the non-profit.
Better Buisness Bureua offers a service, so their goal is to keep companies in check vs the ‘normal’ company goal of almost exclusively making money like a department store or restaraunt.
you get donations, and normal pay, all the things get paid, but it’s cost effective and not profut oriented.
still a lot of money flows. You just don’t make 20k a month or get to own a mansion.
a non-profit can pay a salary to workers, and that is an expense that is removed from revenue when calculating ‘profit’.
non-profit does not mean they don’t have revenue. it just means they spend it all as expenses.
They operate in much the same way as a standard for-profit corporation, the only difference being that they either don’t make a profit, or donate all profits made to charity or something else. Money used to pay employees, pay bills doesn’t come from profit; profit is simply what is left over after everything else has been paid for.
The company is non-profit, meaning that all their income need to be spent, and none of it can go back to the owner at the end. That doesn’t mean that they can’t charge or can’t pay their employe. They can work kind of like any other company, they just can’t have profit at the end, all the money that remain need to be used.
Is your friend volunteering his time, or getting paid?
Non-profits are still allowed to employ staff and to pay them a salary just like a business.
They can also make a “profit” in an individual year – i.e. have revenue that exceeds their expenses. The difference being that while a business has owners and can pay that profit out to the owners, non-profits have to retain that profit and use it in the pursuit of the organisation’s goals.
For example a non-profit zoo might make a profit for a few years and save up the money then spend it on a new enclosure or other improvements.
Non profit doesn’t mean that the organization doesn’t make money. It just means that it uses its surplus revenue to further its goals rather than distributing it to the organization’s shareholders or members.
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