Do Nonprofits Make No Profits?

Nonprofits — like Harvard, the Smithsonian, or the Metropolitan Museum of Art — all have employees, bring in money, pay their bills, and provide things that people value (for example: exhibitions).

So yes, a nonprofit is a business.

If a business always brings in less money than it spends, it loses money, can’t pay its bills, and dies. Right?

And when the reverse happens, and at least some money is left over, a business can survive. Right?

So what is the word for that leftover money, that difference between life and death for a business?

You guessed it. Profit.

From the National Council on Nonprofits:
The term "nonprofit" is a bit of a misnomer. Nonprofits can make a profit (and should try to have some level of positive revenue to build a reserve fund to ensure sustainability.)

So a nonprofit is a business, and it should make a profit. Then why do we call it a nonprofit?

Let's start there next. We'll wrap up this series after just a couple more.

Warmly,
Jonathan

P.S. Send me your guesses to the last question. No judgments, no names. Promise.