True or False: Not for profit organisations are created for a purpose other than making money.

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Question restatement: True or False: Not for profit organisations are created for a purpose other than making money.

Option 1: True. This statement aligns with the fundamental idea behind not-for-profit (NFP) organizations. They are typically established to pursue a mission or public benefit rather than to generate profit for owners or shareholders. Any surplus funds are usually reinvested back into the organization to advance its mission, support services, or programs, rather than distributed as personal profits. In many jurisdictions, NFPs also benefit from tax exemptions or special status because their activities serve the public good, which reinforces the distinction between profit-driven and mission-driven entities.

Option 2: False. This option would be incorrect because it asserts that not-for-profit organizations are created for purposes that include or rely on making money in the same way as for-profit entities. While NFPs may still engage in revenue-generating activities to support their mission, the primary aim is not to earn profits for individuals or owners but to achieve a defined social, charitable, or public outcome. If a not-for-profit were primarily formed to generate profits for private individuals, it would not fit the standard classification or governance model of a not-for-profit organization. The statement in this option overlooks the central characteristic of NFPs: their purpose is mission over monetary gain for private stakeholders, and any profits are reinvested into the mission rather than distributed.

In summary, option 1 correctly captures the essence of not-for-profit organizations’ purpose, while option 2 mischaracterizes their fundamental goal by implying profit distribution is the primary driver. The nuance hinges on whether the organization’s motive is mission-centric and whether surplus funds are reinvested rather than distributed to private individuals.

MCD2040 - T1 - 2025 Week 3 Quiz 1

True or False: Not for profit organisations are created for a purpose other than making money.

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