Nonprofit Organizations

Firms use scarce resources to produce goods and services in order to make a profit for their owners. Other organizations operate on a “not-for- profit” basis. A nonprofit organization operates like a business to promote the collective interests of its members rather than to seek financial gain for its owners.

Nonprofits Examples: schools, churches, hospitals, welfare groups, and adoption agencies. Many of these organizations are legally incorporated to take advantage of unlimited life and limited liability. They are similar to profit-seeking businesses, but do not issue stock, pay dividends, or pay income taxes. The profits they produce are used to further the goals of the group.

Goal of Cooperatives Cooperative - a voluntary association of people formed to carry on some kind of economic activity that will benefit its members. Producer and worker cooperatives are associations in which the members join in production and marketing and share the profits.

Cooperatives The consumer cooperative is a voluntary association They buy bulk amounts of goods such as food and clothing on behalf of its members. The goal is lower prices for members.

Credit Unions An example of a cooperative is a credit union. It is a financial organization that accepts deposits from, and makes loans to, employees of a particular company or government agency.

Labor Unions A labor union is an organization of workers in the same industry. Examples are: UAW Teachers’ Unions like NEA Firefighters’ unions Screen Actors’ Guild

What is the purpose of labor unions? To negotiate with management to get the best working conditions they can, including: – pay – working hours (lunches & breaks) – health plan coverage & other benefits – vacation days – clean air and other environmental issues This is called “collective bargaining.”

What can labor unions do if they don’t get their way? STRIKE!

Professional Associations Many workers belong to professional societies, trade associations, or academies. For example: ABA, AMA, etc... Professional associations are similar to unions, but the goal is usually keeping high standards for the skill level and public perception of their profession. Membership requires keeping their standards. These associations also seek to influence government policy on issues that are important to them.

Business Organizations Chamber of Commerce: promotes the welfare of its businesses by lobbying and education Better Business Bureau: provides info on local companies, keeps records of complaints, offers consumer education programs. Industry or Trade Associations: try to influence government policy on imports, tariffs, minimum wage, new construction, and regulations on free enterprise.

Direct & Indirect Role of Government The role is direct because the government supplies a good or service that competes with private businesses OR that could be provided by private companies instead. – Many federal agencies are organized as government- owned corporations. (USPS, FDIC, TVA) The government plays an indirect role when it acts as an umpire to make sure the market economy operates smoothly and efficiently. – One such case is the regulation of public utilities, investor-or municipal- owned companies that offer important products to the public, such as water or electric service. They have few competitors because the cost of doing this business is SO high (laying pipe, wire, or cable for an entire city).

One last thing! The government also acts in the economy when it provides money to people who wouldn’t otherwise have it: Social Security checks Welfare * Veterans’ Benefits College Student Financial Aid (loans &grants) Unemployment insurance The money these people spend influences the goods and services offered in the economy.