Some comments were made on Saturn Smith's live blog post of Obama's speech last night that made me realize something:  there are people out there who have a very basic misunderstanding of the term "nonprofit".

So, what does it mean when an organization or business is "nonprofit"?

Put quite simply, a nonprofit organization (NPO) is one that does not distribute its excess funds to shareholders.  Any surplus monies are put back into running the organization and providing services.  "Profits" and "salaries" are two different things.  You can have salaries without profits.  I think that many people are confused on this point.

So also, quite simply, employees of NPOs do not work for free.

The structure of my organization is probably pretty typical of many NPOs.  I work for what might be called a "mission-based organization". Our members pay dues to belong to the organization and to have access to our programs and benefits, and it is these dues which constitute our operating budget.  We have a board of directors elected by the membership, and that board employs the staff who carry out the goals and implement the programs of the organization.  The board controls the budget, the most significant line item of which (approximately 73%) is the salaries and benefits of the staff.  That seems like a lot, but it is the people who work here who carry out the work of the organization.  Our "products" are the services we provide.

As an employee of an NPO, I am here to tell you that I receive fair compensation for the work that I do, and I also have terrific benefits. Will I get rich working here?  Probably not.  But then again, getting rich has never been my goal.  It is important to me to know that what I do every day benefits the people who are members of my organization.  As Bill Maher said recently, not everything has to be done to turn a profit.  Making a comfortable living can be enough.

However, there are many employees here who are paid very well.  I'm not saying that they don't earn their salaries -- I am simply trying to dispel the myth that, if you work for an NPO, you have to be some kind of "pie-in-the-sky" do-gooder, living on peanut butter sandwiches and riding a bike to work.  NPOs want to attract talented, competent people, so salaries are competitive with the private sector.

Am I suggesting that the nonprofit structure is appropriate for all businesses?  Of course not.  Profit is the driving force behind our economy and, as a stockholder myself in many different companies, I like seeing a return on my investments.  However, I do believe that there are certain products and services that should not be subject to the constant demand for ever-increasing profits.  Health care is a prime example.

It seems fairly obvious that, when you combine a service like medical care with a system that demands increasing profits, it is the patient who is going to suffer.  By its very definition, a for-profit business cannot survive without providing those profits, and the most efficient way to boost profits is to cut services.  If you haven't seen interview with former Cigna executive Wendell Potter on Bill Moyers Journal, I would encourage you to watch it.  It's very simple - medical claims cut into profits, so you deny claims and cancel coverage.  Is there anyone out there who doesn't realize that this is how it works?

I think that there is certainly room for discussion about how much doctors should be paid in a non-profit healthcare system.  Doctors in other countries may earn less than doctors in the United States, but most of them don't incur the substantial debt that American doctors do with their medical training.  Here is a comparison of physician salaries between the U.S. and Canada, and the differences don't seem all that great.  As you can see, specialists earn well over $200,000 per year. 

And although doctors are certainly dedicated people with highly specialized knowledge, I don't necessarily believe that they have a divine right to become millionaires.  I would much rather be treated by a doctor who went into medicine out of a concern for people and a desire to alleviate human suffering, rather than one who went into medicine to get rich.  I believe that there is room in a non-profit healthcare system for doctors to be fairly compensated.