avatar! wrote:Yeah, and I also don't believe that the government is a non-profit institution either! It should be, and as a whole maybe it is... but as someone already pointed out, there are PLENTY of people who milk it for all that they can, and "non-profit be damned" is their motto. Much like some universities. Universities claim to be non-profit, but I want to know how a university that sits on many billions of dollars and just invests it in real-estate, hedge funds, etc, can possibly be non-profit??
cheers,
-avatar!
I think most universities are for-profit. Non-profit does not mean that the organization has zero profit. It means that all profits are directly reinvested back into the organization. The profit is not given back to any stakeholders.
Universities want huge endowments (accumulated assets) to generate interest. The university typically uses the interest, not the principal, to pay for operating expenses. This is good when enrollment is down, as the university can still pay the bills and not affect the quality of life for students or faculty badly.
I know of universities whose operating expenses are paid by tuition payments. When enrollment is down, the university has trouble paying its operating expenses, so the students and faculty suffer. This is why these universities aggressively seek alumni donations, especially from wealthy alumni. A university would like to have enough money to establish an endowment.