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The difference between a well-run non-profit and a well-run business: the non-profit puts 100% of profits back into its operations, while the business may re-invest the profit or distribute it to its owners.

Most states already require non-profits to operate like businesses; indeed, non-profits are expected to operate better than businesses -- most states require non-profits to maintain levels of capitalization that require devilish efficiency and reuse.

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A bigger difference is that the donors aren't the customers. A charity has positive cash flow so long as it pleases its donors, who don't necessarily know what's really happening with the people who receive the charity's services.

I don't think you understand quite how the donor-charity relationship works. The donors are the customers. The charity earns money by pleasing the donors. The venue for pleasing the donors is by performing charitable acts.

If a donor is pissed, it will force the charity to conform to his/her demands. The recipients of the charity's services are usually an afterthought, b/c they are far more easily replaced than any donor.

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