Question

"Our firm is able to provide a better deal for consumers because it is 'non-profit'. Our competitors have to add profits on to their costs." Does this make any sense? Does a non-profit firm not make profit or losses?

Answer 1

Although these companies are considered non-profit, they will make money. But these gains can't be used by the organization's owners or investors. Instead, for charitable, educational, scientific and religious purposes, this surplus money is used. That's why the government exempts these organizations from tax. There are times, though, when this income is taxed and depends on how the gain was generated-either through "related" or "unrelated" activities. So, if the profit is due to "unrelated activities," it is not exempted from tax.

Every organization needs money to run and non-profit organizations generate money from "related" programs for this purpose. When generated by this income, the sum of its expenditures increases, it falls under the scope of gain. But this profit generated goes untaxed if it is generated by non-profit organizations ' "related activities." Related activities are the tasks determining the non-profit corporation's purpose / mission.

Unrelated operations are the practices that do not fulfill the non-profit organizations ' intrinsic intent. Therefore, if the profit generated is from unrelated activities, it will be subject to taxation. Although making money from non-related activities is taxable, it does not mean that the non-profit organization will lose the status of "tax exempt." Nonetheless, a particular point should not be reached by the profit earned from unrelated activities and no member of the company should be fully involved in unrelated activities. To prevent the loss of tax-free status,

Law does not allow the management of non-profits to siphon off profits, but then there are loopholes, and healthier communities benefit from them. We earn a good salary and use other services such as a driver, vehicle, home, newspaper, sponsored travel, hotel stays, and so many other non-profit-funded allowances. But in their activities, all good non-profits are very transparent, have audits and post their audited account statements on public platforms, on their websites, etc

Law does not allow the management of non-profits to siphon off profits, but then there are loopholes, and healthier communities benefit from them. We earn a good salary and use other services such as a driver, vehicle, home, newspaper, sponsored travel, hotel stays, and so many other non-profit-funded allowances. But in their activities, all good non-profits are very transparent, have audits and post their audited account statements on public platforms, on their websites, etc.