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 Critically, an NFP’s money isn’t earned but donated to support the mission. A company can horde as much cash as it wants, but an NFP is supposed to do something with that cash, otherwise, why would people donate? An NFP is allowed to keep a reasonable amount of cash or other liquid assets on hand but is expected to invest them in either bettering & expanding the NFP or in investments for future security. I’m not sure if this helped answer your (very good) question, but I can dig up my notes from the class if you’re interested in more. I think NFP regulation is a topic a lot of people have opinions on but very little knowledge of and Cute Skull Harley Davidson Motorcycles Metallica T-Shirt am happy to talk about it. I think the key is that non-profits do not have shareholders or owners to distribute profits too - if they take in more money than expected, they have to find more uses for that money related to the mission of the non-profit. And while what you're describing is true - all those things are just new operating costs - a non-profit does need to be net 0 every year. Just because they took in X dollars this year doesn't mean they also have to spend X dollars, but they are not allowed to take in X dollars, spend less than that, and then give out the rest to the founder.

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