In the simplest terms, a nonprofit organization earns no profits for its owners … intentionally. While these organizations can be unincorporated or incorporated, money earned by, or donated to, a nonprofit organization funds the organization’s altruistic objectives, such as furthering a particular social cause or advocating a specific perspective. Surplus revenues further achieve these purposes or missions, rather than being distributed to the organization’s shareholders (or equivalents) as profit or dividends.
There are over 6,900 nonprofit organizations in New Jersey. A significant number of these are in the health care industry, an industry which experts project will expand while simultaneously experiencing a contraction of service providers that are undergoing severe financial distress; the multiple hospital closings, mergers and sales in New Jersey in the past two years will attest to this trend. A similar phenomenon is occurring in higher education, particularly among nonprofits, where commentators have noted that decreasing enrollment and increasing costs have contributed to the financial difficulties faced by these organizations. The combination in both of these industries, of a projected increase in demand, present contraction of providers, and the growing need for nonprofit organizations to seek relief from distressed debt, suggests the likely growth in bankruptcy filings and out-of-court restructurings for nonprofit organizations during the next several years.
