Today’s Wonder of the Day was inspired by Wonder Team. Wonder Team Wonders, “How Does a Nonprofit Work?” Thanks for WONDERing with us, Wonder Team!
News reporters like to keep an eye on the health of the economies of countries around the world. In today's world, global markets interact daily, and events across the world can affect supply, demand, and prices right at home.
If you keep your eye on the economy, you'll pay a lot of attention to the stock market. The ups and downs of the stock market reflect the successes and failures of the largest companies in the country.
On a regular basis, companies project what they expect their earnings to be. Then they measure their profits and report them publicly. If their earnings exceed expectations, stock prices might rise. If not, they might fall.
So what exactly are profits? Imagine you have a lemonade stand. If you bought $10 worth of supplies to make lemonade and then sold all the lemonade for $15, you would earn a profit of $5. Your profit equals your total earnings less your costs.
Did you know that not every company has a primary goal of making as much profit as possible? It's true! They're called nonprofits. Sometimes they're called not-for-profit organizations or non-commercial organizations.
Why would a company or organization conduct business but not want to make money? Well, nonprofit companies don't have a goal of not making money. Nonprofits often make money, but what they do with the money they make separates them from for-profit businesses.
So what exactly are nonprofits? As a general rule, they're organizations, such as businesses or community groups. They're usually private, which means they're not affiliated with any governmental entities. They also often have a philanthropic mission.
But the thing that truly defines a nonprofit legally is what they do with the money that they generate. Instead of paying out their earnings to investors in the form of profits or dividends like for-profit companies, nonprofits funnel their earnings back into their organization's efforts.
In most countries, nonprofits have a variety of legal rules and regulations they must follow to maintain their nonprofit status. These rules and regulations often involve the taxes, if any, they must pay, as well as how they must report their earnings and what they do with them.
Nonprofits support a variety of philanthropic efforts. Some examples include literacy, protecting the environment, saving endangered species, charity, education, safety, supporting the arts, and various political or social reform efforts.