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In: Operations Management

Sometimes organizations that can make a lot of money are nonprofits (e.g. private universities and hospitals)....

Sometimes organizations that can make a lot of money are nonprofits (e.g. private universities and hospitals). Why do they choose to classify themselves as nonprofit organizations?

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Expert Solution

Yes, it is true that non-profit organisation make a lot of money but they are still known as non-profit organisation. The reason behind this is that the profit which the organisation earn are nor kept in surplus and neither can be used by the owner. Organisation uses this surplus in charitable activities. The profit earned is not used for any individual. Non-profit organisation are transparent in their operations and they work only for the welfare of the society and the country. Non-profit organisation perform many activities. But the activities which are related activities which are related to the vision and mission of the organisation. The profit earned from the related activities is tax-free. Which they can use in the development of the country.

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