Differences in Goals Goals other than profits can influence an organization’s behavior, though they need not. Not-for-profit firms gain benefits from the pursuit of goals other than profit. Managers should consider how their decisions affect the benefits derived from these other goals. To best realize its goals, a not-for-profit agency An arrangement in which one person (the agent) takes actions on behalf of another (the principal).
organization should strive to make marginal revenue plus marginal benefit equal to marginal cost. Marginal benefit is the net nonfinancial gain to the firm from expanding a line of business. Three cases are possible:
1. If the marginal benefit is greater than 0, the not-for-profit will produce more than a for-profit.
2. If the marginal benefit equals 0, the not-for-profit will produce as much as a for-profit.
3. If the marginal benefit is less than 0, the not-for-profit will produce less than a for-profit.
A further complication is that the marginal benefit may depend on other income. A struggling not-for-profit may act like a for-profit, but a highly profitable not-for-profit may not.
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