What profit margin is allowed for a nonprofit organization before it loses its status?
Technically, nonprofits do not generate a profit, rather a"surplus," i.e., any revenues brought in beyond what is required tomeet costs. This surplus, by law governing the nonprofit status,must be "re-invested" into the nonprofit for purposes of furtheringthe nonprofit's mission and goals. This contrasts with for profitenterprises whose profits may be re-invested but can alsobe distributed to investors or shareholders (for publically tradedcompanies). There is no limit to the surplus a nonprofit maygenerate and reinvest into its mission.
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