Similarities to Business Enterprises

In an earlier article of our Not-For-Profit News, I discussed

the potential pitfalls of running a non-profit organization like a for-profit business.  But as I mentioned then, there are definite similarities that a non-profit organization has with a for-profit business enterprise. 

For example, both non-profit organizations and for-profit business enterprises may:
 

• Engage in similar activities, such as with non-profit and for-profit schools and hospitals;
• Use resources and charge a fee or price for the goods or services provided;
• Have similar operating problems; such as, obtaining and managing the labor, materials, and facilities, required to perform their activities;
• Have issues related to safeguarding assets;
• Incur obligations to vendors, creditors, and employees;
• Be subject to taxation, since non-profit organizations are subject to federal and state taxes on unrelated business income;
• Be subject to state sales and excise taxes;
• Be subject to federal, state, and local regulations; such as day care licensing requirements or state charities reporting requirements;
• Require sufficient financial resources to continue providing satisfactory levels of goods or services; and,
• Require surplus financial resources to finance growth.

Therefore, while the unique aspects of a non-profit organization cannot be ignored, many of the practices of a successful for-profit business enterprise can be utilized in a non-profit setting and should not be ignored as well.