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World Futures: Profit, Non-Profit, Not-For-Profit Part 3

on June 3, 2019 - 4:02pm
By ANDY ANDREWS
Los Alamos World Futures Institute
 
In the previous article we explored profit making businesses as bubbles in society and concluded that they possibly could be non-profit organizations if they lose money.
 
If that is the case, they usually do not have to pay taxes, at least not on profits. But used in this sense the term “non-profit” is a misleading adjective in the legal sense. The use of the term has a governmental connotation, obviously making it ambiguous.

A non-profit, as commonly used, is a non-business activity or a not-for-profit organization or institution. Technically, as being used here, the hyphen should not be in “non-profit” and the term should be spelled nonprofit.

A nonprofit is a religious, charitable, or educational based organization and is tax exempt. The nonprofit conducts fund raising efforts while relying on volunteers and unpaid (?) employees for the labor. Obviously, not all employees are unpaid, but this takes us unto the legal realm and lawyers and CPAs.

A nonprofit organization returns any excess income back to the organization. While the nonprofit obviously must survive, its primary focus is on helping others external to the organization.

A non-for-profit organization is formed under other legal requirements for tax-exemption and is focused on pleasure, recreation, and other nonprofit purposes such as sports clubs. The legal aspects can be very confusing, but a set of principles or aspects should be noted.
Nonprofits and not-for-profits require accountability, trustworthiness, honesty, and openness to everyone investing time, money, and faith in the organization. It is okay to be an employee of a nonprofit or not-for-profit and make a profit for yourself, your individual bubble, but what are the limits?

Per nccs.urban.org (National Center for Charitable Statistics) there are over 1.5 million nonprofits in the United States, or about one for every 220 people.

These nonprofits can be grouped into 10 areas: art, culture and humanities; education; environment and animals; health; human services; international, foreign affairs; public, societal benefit; religious related; mutual/membership benefit; and unknown or unclassified. It quickly becomes very complicated and one begins to question what is going on.

Per the Internal Revenue Service, religious, charitable, and educational organizations fall under the 501(c)(3) category. Agreeing with the separation of church and state, “religious: makes sense to me barring the debate over the definition of religion.

Charitable organizations are giving to people in need, assuming accountability, trustworthiness, honesty and openness. But what percentage of revenues actually goes to the needy? And, finally, what is a nonprofit educational institution?

If you go to owlguru.com, you can find a graded list of nonprofit colleges and universities. There are 98 pages of colleges listed with 20 per page or over 1950 institutions. Heading the list is Harvard University with a ranking of A-plus, a graduation rate of 97 percent and a graduation salary of $106,300. Harvard’s current tuition is over $47,000 per year. If Harvard is a nonprofit, why is the tuition so high?

Further, when you add room, board, and fees, the cost for a four-year degree is over $260,000. But you can expect a starting salary of $106,000 per years.

Actually, one might argue that Harvard tuition is cheap when compares to Stanford: $45K; Cornell: $47K; Columbia: $51K; Chicago: $49K; and 14 others on the first page at owlguru.com, all of which receive an A-plus rank.

In contrast, in New Mexico, the University of the Southwest in Hobbs has an annual tuition of $14,600 and a rank of C. But the graduation rate is only 18 percent and the expected starting salary is a mere $31,300. And then there is St. John’s College in Santa Fe: tuition of $47K, graduation rate of 53 percent, no guru ranking and an expected graduation salary of $25.3K per year.

While the numbers imply a grim picture about the cost of graduating from Harvard, the university is a nonprofit. Yes, the staff and faculty are well paid profiteers, but the university does not make a “profit.”

In actuality, per Harvard.edu, 55 percent of Harvard College students receive need-based assistance and the average grant for the year was $53,000.

Harvard and St. John’s are classified by the federal government as nonprofits and exempt from taxes, but their staffs and faculty are not. Assuming it is the government’s responsibility to educate its emerging populous, nonprofits seem like a brilliant concept for, at some point on the educational ladder, removing the burden from the taxpayer.

But they do not. The number of government (federal, state, and local) supported colleges and universities greatly outnumber the nonprofits. It raises the question of what is our collective responsibility to prepare future taxpayers to be able to pay taxes and how should they be able to do it? Who is in charge?

Today, with the rapid growth of information distribution technology we are much more aware of significant social issues. New organizations are emerging creating new overhead structures to manage the individual profiteers doing the necessary jobs.
New organizations may be addressing problems and issues the “government” should be resolving and directing, or is this denying freedom? What are the issues and what should be tax exempt? What are the bubbles and how do they influence the fluid of humanity?
 
Till next time…
 
Los Alamos World Futures Institute website is LAWorldFutures.org. Feedback, volunteers and donations (501.c.3) are welcome. Email andy.andrews@laworldfutures.org or email bob.nolen@laworldfutures.org. Previously published columns can be found at www.ladailypost.com or www.laworldfutures.org.

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