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A profit for not-for-profit public organizations
The survival of profit-seeking entities depends on their being able to identify the needs and to offer them an adequate financial return. Adequate return means a situation in which value of outputs exceeds the value of inputs of all kinds. All parties such as investors, employees, customers, suppliers, and many others should get a good return for their price or efforts.
That’s about profit-seeking entities like privately owned companies. But what about the not-for-profit entities?
When we think about not-for-profit entities, you might think of:
- Government organizations like public schools, hospitals and other public sector organizations
- Trade associations, trade unions, employers’ federations
- Professional organizations
- Housing associations, clubs, societies, cooperatives
- Charity organizations
- Religious organizations
do not expect profits. They are established not for profits but to
achieve different objectives of the society. But, can these
operate without identifying and satisfying the needs? Can they operate
adequate investments in resources and therefore can they refrain from
attracting funds? Can they continue if the value of their outputs is
the value of their inputs? No. Certainly not. So, is the expression
not-for-profit somewhat misleading? Profit is the legitimate reward for
commitment of funds. Then, why should all these organizations not seek a
may be in a different name?
So, activities of not-for-profit sector should not be isolated from the application of financial disciplines. Therefore for an example, it would not seem right for a public sector hospital to use a different criterion from a private hospital. The value of outputs should exceed the value of input in both types of entities. The criterion used in resource allocation should be the same for all sectors.
organizations use funds supplied by their members to develop their
the benefit of employers and the public. Charities and religious
use the cash received from donors for charitable work or to promote a
The government takes money from those in employment to give it to those
work or from healthy to give to the sick. But these redistribution of
lack the direct link between consumption and price.
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profit for the not-for-profit organizations
Not-for-profit entities do not expect profits. They are established not for profits but to achieve different objectives of the society. But, can these organizations operate without identifying and satisfying the needs?