Quote:
Originally posted by 33girl
I was told that a nonprofit must use any money it makes for operations or philanthropic purposes, and a not-for-profit doesn't set out to make a profit but can keep it if it does (i.e. a hospital is a not-for-profit entity). I didn't say that was definitely the difference between a GLO and the GLO's foundation, just maybe.
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A fiscally strong nonprofit (of any kind) is one that is able to have a fund balance at the end of the year, i.e. revenues exceed expenses. It is strongly encouraged. Usually it is put into a reserve or if the nonprofit owns property it may be used to fund depreciation. A strong nonprofit maintains at least a six-month operating reserve.
Above that, net funds are usually used toward the next year's operating budget.
Many hospitals and medical clinics are incorporated as nonprofits. However, lately there has been much scrutiny of this because of the abuse of their nonprofit status.
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