Jun 1, 2026 · 21 min · 12 segments
In this podcast, Joe Blatt discusses the finance and governance of nonprofit organizations. This is the first in a series of podcasts meant to help board members finance executives as well as other…
Let's start with the most basic question, what makes a not-for-profit organization different from every other type of organization? In the for-profit world, the goal is simple, to generate profits for the owners.
Whether it's a publicly traded company or a local candy store down the block, the financial statements ultimately answer one question, how much value is being created for the owners? Nonprofit organizations are fundamentally different.
If a nonprofit generates a surplus, the surplus stays in the organization and needs to be used to further the organization's mission.
The difference has a ripple effect across everything a not-for-profit organization does.
In the for-profit business, the difference between the assets and the liabilities of the organization is called equity.
Because nonprofit organizations have no owners, they operate under what's known as public trust.
Donors, regulators, beneficiaries, and the general public are effectively the stakeholders.
That's why transparency, governance, and accountability play such an important role in the not-for-profit sector.
They still need good management and good governance, strong financial controls, but their success is not measured by profit.
All nonprofits need to have the resources, though, to pay their bills, and as such, they need to have positive net assets.
Let's start with the most basic question, what makes a not-for-profit organization different from every other type of organization? In the for-profit world, the goal is simple, to generate profits for the owners.
Whether it's a publicly traded company or a local candy store down the block, the financial statements ultimately answer one question, how much value is being created for the owners? Nonprofit organizations are fundamentally different.
If a nonprofit generates a surplus, the surplus stays in the organization and needs to be used to further the organization's mission.
The difference has a ripple effect across everything a not-for-profit organization does.
In the for-profit business, the difference between the assets and the liabilities of the organization is called equity.
Because nonprofit organizations have no owners, they operate under what's known as public trust.
Donors, regulators, beneficiaries, and the general public are effectively the stakeholders.
That's why transparency, governance, and accountability play such an important role in the not-for-profit sector.
They still need good management and good governance, strong financial controls, but their success is not measured by profit.
All nonprofits need to have the resources, though, to pay their bills, and as such, they need to have positive net assets.
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