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Old 02-18-2005, 10:13 AM   #12
Sean McNamara
Location: Chicago, IL
Join Date: Jan 2005
Posts: 5
Re: Where does the money go?

Just to clarify one point about non-profit status (at least here in the States):

A non-profit corporation is allowed to make money, and is allowed to pay employees a reasonable wage. The way a non-profit is different from a traditional for-profit business is in the goal of the company.

In a for-profit corporation, the goal is to produce a maximum amount of income/wealth-growth for the shareholders of the corporation. This is in addition to, and above any other stated goal that the company may have. A company that neglects shareholder value would very quickly find itself in business and possibly legal trouble. To increase value, companies work to increase stock value, pay dividends based on earnings to shareholders, or do a mixture of the two.

A non-profit corporation exists to accomplish it's stated "charitable or educational goal for the the benefit of the community." As a result of this, no disbursements of profit may be made to shareholders. Profits must be rolled back into the company for it's future growth and activities, or can be disbursed to another non-profit organization.

This has very little to do with where the money goes inside an company, which (as many have said) will vary greatly between different organizations, but as a former business owner, I can say that it's quite surprising at how many expenses there are just to do business. Insurance, employers tax-burden, property cost, facilities maintenance, advertising, payroll...

Hope that was at least a little helpful.
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