How do profit and non-profit organisations differ in objectives?

Profit organisations aim to maximise profits for their shareholders, while non-profit organisations seek to fulfil a social or environmental mission.

Profit organisations, also known as for-profit businesses, are primarily established with the objective of generating profits. This is achieved by selling goods or services at a price higher than their cost of production. The profits generated are usually distributed to the owners or shareholders of the business, or reinvested back into the business for expansion and growth. The primary focus of these organisations is to increase shareholder value, which often involves strategies to increase market share, improve operational efficiency, and innovate product offerings.

On the other hand, non-profit organisations operate with a different set of objectives. These organisations are typically established to fulfil a social or environmental mission. This could involve providing services or support to underprivileged communities, promoting environmental sustainability, or advocating for social change. The primary objective of non-profit organisations is not to generate profits, but to maximise the positive impact they can have on society or the environment. Any surplus funds generated by non-profit organisations are typically reinvested back into the organisation to further its mission, rather than being distributed to owners or shareholders.

It's important to note that while the objectives of profit and non-profit organisations are fundamentally different, both types of organisations require sound financial management to sustain their operations. Profit organisations need to generate profits to satisfy their shareholders and fund future growth, while non-profit organisations need to manage their funds effectively to maximise their social impact and ensure their long-term sustainability.

In summary, the key difference between profit and non-profit organisations lies in their core objectives. Profit organisations are driven by the goal of maximising profits and shareholder value, while non-profit organisations are driven by a mission to create positive social or environmental change.