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For Profit vs. Non Profit

In: Business and Management

Submitted By night0wl
Words 1728
Pages 7
Financial Management in Non-profit Organizations and How It Compares to For-Profits Organizations are usually classified as either non-profit or for-profit. Business corporations are organized for-profit. While non-profits usually include associations, charities, and other voluntary organizations formed to further cultural, educational, religious, or public service objectives. Non-profits and for-profits do have some things in common. Both types of organizations attract individuals focused on maximizing income, minimizing expenses, and reaching their goals. While there are many similarities, non-profits and for-profits have many differences. The most fundamental difference between nonprofit and for-profit organizations is the reason they exist. A non-profit organization exists to provide a particular service to a community, while a for-profit organization exists primarily to generate a profit for the company’s owners and shareholders. A non-profit organization channels all of their income into services and programs aimed at their mission compared to for-profit organizations that distribute profits between owners, employees, shareholders and the business itself (Bottiglieri, Conway, & Kroleski, 2011). Financial management for non-profit organizations is similar to for-profit organizations in many ways however key differences shift the focus of a nonprofit manager. These differences include organizational structure, ownership, distribution of profits, generating revenue and capital, taxes, and recording and reporting financial statements. Non-profit organizations generally lack the financial flexibility of a for-profit organization because it depends on resource providers that are not engaging in an exchange transaction. The resources provided are directed towards providing goods or services to a client other than the actual resource provider. Thus

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