Finance & Accounting: For-Profit v. Not-For-Profit Business Entity

Background on this topic

Calculus of Decay

A for-profit conducts business operations to maximize shareholder wealth. The shareholders appoint the Board of Directors (via voting allocated along the lines of shares held) to oversee the financial well-being of the business from a bird’s eye view. The Board of Directors hire the management. Management is responsible for the carrying out of business operations with the primary objective of maximizing shareholder wealth. When things do not meet the expectations of shareholders, they will initiate the surgery; remove existing Board members. Newly appointed Board members hire new management. And the cycle continues.

A not-for-profit conducts business operations in order to carry out the mission statement of the business entity. The Board of Directors is typically appointed by the largest people, companies, foundations and the like that contribute the largest sums of money to the not-for-profit. The Board is responsible for monitoring business operations from a bird’s eye view and appointing…

View original post 54 more words

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.