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Honest question: what is the difference between a “for profit” school and one that ends the year with more than that it started with? If Harvard manages itself
by mwsherman 11y ago
Honest question: what is the difference between a “for profit” school and one that ends the year with more than that it started with? If Harvard manages itself such that its endowment increases, is this not a profit? What is the practical, operational difference?
- TheCoelacanth 11y ago"For profit" vs "non profit" describes the ownership structure of the organization, not what happens on its financial statements. If a for profit school makes a profit, it has the option of paying out a dividend to its shareholders. If Harvard makes a profit, that profit must remaining within Harvard; there are no shareholders that the profit could be distributed to.
- piker 11y agoFor profit schools have shareholders/members who are privately entitled to the equity that accumulates. They generally will have to pay some form of taxes (income, capital gains, etc.) on that leftover. Non-profit institutions like Harvard have received a federal exemption from most US taxes, provided that they continue to pursue their stated purpose and jump through some hoops. No individuals are legally entitled to Harvard's endowment.