A nonprofit isn’t in business to enrich its shareholders, but it still needs revenues and incurs operating expenses while pursuing its community service mission. It, too, can experience cash flow problems or require considerable cash to fund a capital project or expanded services.
When that happens, the nonprofit faces many of the same choices a for-profit business does, though it draws from different funding sources.
While a for-profit business can offer investors a chance to share in the company’s fortunes by buying stocks, for example, a nonprofit relies on stakeholders who are motivated by public interest rather than self-interest.
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