Non-Profit Governance: Your Non-Profit Can Make A Profit

Posted by Matthew Thomas

... as long as the profits do not inure to the benefit of any private shareholder or individual.

This is a great confusion among non-profits and churches. Charities are so accustomed to being cash-strapped and short on funds that it has become normative for them to operate at deficits or at break-even levels.

Actually, your non-profit or church can collect more in revenues than it expends in any given accounting period. (That, by the way, is the definition of "profit.")

The trick is that it cannot use that profit to benefit private individuals.

In reality, healthy, growing organizations regularly bring in more money than they expend. They build a base of assets (real property, moveable property, cash and other investments), with which they can further leverage activities that fulfill their mission and promote their cause.

Moreover, fiscally healthy organizations that have a view toward the long term will work hard to maintain a surplus in their budgets so that they have funds available for more than just this fiscal year or budget cycle. They then have the capacity to meet challenges, obstacles and opportunities with more grace than the more paycheck-to-paycheck type of management.

Steward leaders make every effort to make sure their organization can fulfill its mission over the period of time required to bring that mission to completion. For many organizations, this means building revenues and accrued assets over time so as to leverage those assets and revenues for long-term impact.

Design Group International offers objective financial health assessments to organizations looking to establish sound fiscal footing and steward their resources faithfully. Click the link below to start yours today!

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Topics: Matthew Thomas, Design Group International, Non-Profit Governance, Profit, Fiscal Health, Financial Planning, Financial Reporting