In your responses to your peers, explain why you believe the similarities and differences they identified are necessary when distinguishing the sectors from each other.
Eugenia Veney Good morning everyone,
My name is Eugenia Veney and this will be my last term here at SNHU (hopefully lol). I am originally from Memphis, TN, but my family and I are currently stationed on the lovely island of Oahu. I am a Army veteran and my husband is currently active duty and we a 4 (going on 14) year old daughter and one on the way.
After reading the assigned material and from personal experience, it is evident that not-for-profit and for-profit business sectors have some similarities and differences. Most for-profit business sector has one purpose to increase the value of business and thus the wealth of its owner (Worth, 2019). Its focus is on maximizing profits and share profits with the company’s owners and shareholders, However, not-for-profit business sector exists to serve a social purpose (Worth, 2019). Not-for-profit business sector reinvest it’s profit back in the company. Second difference is the way bot business sectors are funded. “For-profit organizations tend to fund their initial efforts through bank loans, local investors and revenue generated from sales” (Norwich University Online, 2016). Not-for-profit organizations usually rely on private donations of time and money, government grants, corporate sponsorship (Norwich University Online, 2016).
There are also some similarities between both business sectors. For instance, they both have goals and mission which are well defined, and their product and services are known by everyone. (NPO central, n.d.). Both business sectors have limited funding and resources and the goal must be met with the limited funds (NPO Central, n.d.).
References: Noewitch University Online (2016). 7 Key Differences Between Nonprofit and For-profit Organizations. Retrieved from https://online.norwich.edu/academic-programs/resources/7-key-differences-between-nonprofit-and-profit-organizations
NPO Central (n.d.). Similarities & Differences between Non-Profits & For-Profits. Retrieved on March 14, 2019 from https://www.startnonprofitorganization.com/nonprofits-versus-business/
Worth, M. J. (2019). Nonprofit management: Principles and practice (5th ed.). Los Angeles, CA: Sage Publications.
One of the main differences between for and not-for-profit organizations is in the allocation of funds (Vizcaino Andres, N.D.). Revenue is not distributed among members in a non-profit, but rather used to help achieve the mission (Anheier, 2014, & Smith, Stebbins, & Dover, 2006, as cited in Vizcaino Andres, N.D.). Non-profits rely heavily on donors and volunteers (Worth, 2019; Vizcaino Andres, N.D.). Some organizations have even more volunteers than paid employees (Vizcaino Andres, N.D.). In 2010, volunteers represented nearly 9 million full time employees (Anheier, 2014, as cited in Vizcaino Andres, N.D.). The for-profit sector, on the other hand, is said to be more efficient and competitive due to a higher rate of professionalization and a reliance on paying employees (Vizcaino Andres, N.D.).
Another difference between for and not-for-profit organizations is that in for-profits, and activity that is not considered financially beneficial is discontinued (Worth, 2019). In health care, for example, for-profit hospitals are less likely to participate in biomedical research (Henderson), whereas not-for-profit organizations may sacrifice straining their resources in order to meet their mission (Worth, 2019).
Whether an organization is for-profit or not-for-profit, it has to be capable in order to survive (Newhouse, 1970, as cited in Henderson, 2018). While the main goal of a non-profit agency maybe a social one, they are ultimately still a business and do require financial success in order to remain solvent (Worth, 2019), just like a for-profit organization would. Both types have a certain number of finite resources, and must use them to achieve their goals (Non Profit Organizations, N.D.).
Also, like for-profit organizations, not-for profit organizations have boards, management and leadership, and various levels of staff helping to increase the efficiency of the organization (Non Profit Organizations, N.D.). The structure may vary slightly, as the flow of authority is not a clear top-down model in a non-profit organization, requiring negotiation and compromise (Worth, 2019), but all must work together to achieve a common goal.
Henderson, J. W. (2018). The hospital service market. In Health economics and policy (8th ed.). pp. 305-339. Boston: Cengage Learning.
Non Profit Organizations. (N.D.). Similarities & differences between non profits & for-profits. NPO Central. Retrieved from https://www.startnonprofitorganization.com/nonprofits-versus-business/
Vizcaino Andres, L. M. (N.D.). For-profit vs. nonprofit organizations. Learning to Give. Retrieved from https://www.learningtogive.org/resources/profit-vs-nonprofit-organizations
Worth, M. J. (2019). Nonprofit management as a profession and a field of study. In Nonprofit management principles and practice (5th ed.). pp.1-17. London: CQ Press.