Health Care and Nonprofit Organizations

I have posted previously that I am a believer that a single payer health care system would, or at least could, provide us with the most savings and efficiencies of any other system. I also have gone on record as saying that I believe it should be administered by a nonprofit organization because the nature of the nonprofit lends itself to the objective of minimizing costs. The last time I posted that here I was taken to task by my fellow posters for not understanding that nonprofits do indeed have a profit motive.

I know that taking a position against profit is not popular in a capitalist society and the knee jerk reaction is to defend it since it is the profit motive that drives our economic engines and makes us all get out of bed each morning and go to work (at least the ones of us who DO get out of bed each morning and go to work). There is also a deep rooted fear imbedded in us Americans that it smacks of socialism, or worse (the c word). So our initial reaction is to reject it and then rationalize our rejection, much like if someone criticizes our immediate family member.

 Full disclosure: I am not against profits and unashamedly strive to maximize mine whenever I can and fully understand others doing the same.

Now, a word about my bona fides;  I have served on several boards of nonprofit organizations over the past 25 years and have been providing accounting and IRS compliance services to a number of nonprofits over the past 30 years, including assisting in applying for and acquiring exempt status.  They appear to be happy with my work since they keep coming back. No brag or intent to assume greater knowledge than the reader, if any.  Just showing where I am coming from.  You, assumed reader, may have experience and knowledge superior to my own.  If so, excellent! 

 Nonprofit organizations are a legal invention (unlike organizations that simply don’t make a profit like many of the dot coms of the 90s) and an organization cannot claim to be one without applying to the government and showing to the government that they meet a narrow criteria.  That criteria consist of, for one thing, showing the purpose of the organization, how that purpose fits one of the allowed purposes, and how that organization plans to fulfill that purpose.  Even once it has received its approval it must continue to show that its activities continue to be for the purpose of fulfilling its nonprofit purpose.  In other words, it’s all about the PURPOSE.

 A nonprofit organization enjoys a number of benefits generally not enjoyed by other organizations.  The big one is, of course, they are not generally subject to income taxes, federal or state, and they are exempt from sales taxes (although as in all tax law, there are exceptions to these exemptions, mainly for revenues earned that are not related to the organizations exempt purpose).  These benefits are in exchange for the organization fulfilling a purpose deemed beneficial to society.

A nonprofit organization has no actual owners (although I think the last round it was argued that the public is the owner and I would not disagree with that).  It is run by a board of directors, although in practice, particularly in a small fledgling organization, that board of directors may be the original creator of the organization and, maybe, a couple of friends or family.

Well, I see I have probably already gone over my limit for a single post so I will contine on another post.