Carlminie DB-Response
Public Service Organizations Earning Profits (Erika P.)
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Both theoretically and legally, the public's trust plays a primary role in the purpose and performance of a nonprofit organization.1 A public service organization performs a service for the public, and is expected to maintain and grow its social capital for the public's benefit. To maintain the public's trust, organizations must minimize violations of the public's expectations, such as following and strengthening missions, policies, and responsibilities, as well as monitoring the distribution of contributions.1
Financially, these organizations rely on reimbursement for services, as well as donations. And due to minimal return on investments, the financial option of investors is limited.2 This leaves organizations needing to make a profit to cover operating expenses (salaries, offices, equipment, research, travel, etc.).2 In exchange for services, nonprofits are granted tax benefits and donations,1 but the 'real money cost' of grant and donation management alone is enough of a reason to allow nonprofits to earn profits within their organization. The financial capital to properly and effectively solicit and monitor contributions can prove to be more difficult and costly than marketing and sales.2
Based on these examples, public service organizations should earn profits, but should follow the parameters of their business entity to ensure the public's trust. Financial regulations are set in place to prevent misuse, overuse, and abuse of profits, donations, and other forms of reimbursement for services.
References
1. The public’s trust in nonprofit organizations: The role of relationship marketing and management| nonprofit quarterly. Non Profit News For Nonprofit Organizations | Nonprofit Quarterly. 2016. https://nonprofitquarterly.org/2016/01/11/the-publics-trust-in-nonprofit-organizations-the-role-of-relationship-marketing-and-management/. Accessed Sep 3, 2017.
2. Zwilling M. If you think making money is hard, try a nonprofit. Huffington Post. 2011. http://www.huffingtonpost.com/marty-zwilling/nonprofit-business_b_1155988.html. Accessed Sep 3, 2017.
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