Nonprofits cant make a profit

Definition: Nonprofits can and should generate surpluses (excess of revenue over expenses). The distinction is that surpluses are reinvested in the organizatio…

Reality

Nonprofits can and should generate surpluses (excess of revenue over expenses). The distinction is that surpluses are reinvested in the organization's mission rather than distributed to owners/shareholders. The term used is 'change in net assets.'

Why It MattersUnderstanding why "nonprofits cant make a profit" is a misconception helps avoid analytical errors and improper financial decision-making.
CategoryNonprofit

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