Future Business Leaders of America (FBLA) Business Management Practice Test

Which of the following is a characteristic of a nonprofit organization?

1. They prioritize profit generation

2. They often provide a social or community service

3. They are government funded

4. They are exclusively for profit-making

The correct answer is: They often provide a social or community service

Nonprofit organizations are primarily distinguished by their mission to serve the public good rather than to generate profits for owners or shareholders. They often prioritize social or community service, focusing on issues like education, health, environmental protection, and other areas aimed at benefiting society. This commitment to serving a particular cause or community is a core characteristic of nonprofits. In contrast to businesses that prioritize profit generation, nonprofit organizations reinvest any surplus revenue back into their programs and services to further their mission. They can receive funding from various sources, including donations, grants, and fees for services, but their main goal is to fulfill their charitable objectives, not to make a profit. While some nonprofits may receive government funding, it's not a defining characteristic, as many operate independently through donations and private contributions. Additionally, the notion of being "exclusively for profit-making" is contrary to the very essence of a nonprofit organization, which is built around the premise of offering benefits to the community rather than maximizing financial return.