Twelve-year-old Paul asks about for profit and non-profit
I, of course, knew that eventually my adopted niece and nephew – ages twelve and six – were going to want talk about the ethics of money. Thus, I was not surprised when Paul, the twelve-year-old called last night and asked if he could come over and talk about money and values. I am sure it was just the first of many such discussions with both he and his sister.
Since it was a school night I had already made the hot chocolate and gotten some of the cookies we had made last Saturday out of the freezer.
Paul: Uncle Jim!
Me: Hi Paul. Come on in. How was your day?
Paul: Good Uncle Jim. How are you?
Me: I am fine. Here is your hot chocolate and some of the cookies you, Sam, and I made last Saturday.
Paul: Thanks, Uncle Jim.
Me: What can I help you with Paul?
Paul: Our homework assignment is to write about the difference between a for-profit hospital and a non-profit hospital. There was an article in the newspaper about one of the local non-profit hospitals being sold to a profit chain in 2013. Since then they have been helping fewer people.
Me: I read that story. After the hospital was sold to a for-profit chain, charity care went from 5.1 per cent to 3.2 percent and from $63 million to $51 million in the same period. Is that the case you are talking about?
Paul: Yes, Uncle Jim. I do not understand Uncle Jim.
Me: What is you do not understand Paul?
Paul. To start with what is the difference between non-profit and for-profit. Doesn’t profit mean that you make money? Does non-profit mean you do not make any money?
Me: You remember when you and Sam had the lemonade stand Paul? I loaned you the money to buy lemons, sugar, glasses, and straws. Your parents and I agreed to rent you and Sam a table, an umbrella, and the juice machine. All together you and Sam spent $48.00. You sold 50 glasses of lemonade for $1.00 each netting $48.00. You made a total of $2.00 profit because you and Sam were donating your time. The purpose of making a profit was donating money to the church Christmas fund for needy families.
Paul: I remember. That was a lot of work for not very much money.
Me: It certainly was. If you and Sam had been trying to make money to pay for rent, utilities, clothing and all the other things you and Sam want and need, $2.00 would not have paid for much.
Paul: No kidding. We just bought new running shoes and they cost $60.00 on sale. Some of the gym shoes were over $100.00!
Me: So you and Sam would have had to sell a lot of lemonade to make enough profit to even buy the shoes.
Paul: So a for-profit stand would mean that we were making enough money to buy shoes for both me and Sam.
Me: Not exactly Paul. A non-profit still can make enough money to pay the employees enough to allow them to pay for food, clothing, electric and other necessities. A for-profit hospital would have enough left over to pay more money to some of the employees. Your non-profit stand would do the same and make sure that me, your mom and dad who invested in the lemonade stand make money.
Paul: So you all would make money just by lending us money and equipment?
Me: That is right Paul. We would be the investors and we expect to make money from helping you and Sam get started.
Paul: Where does the charity come in Uncle Jim?
What if Maria is thirsty and really needs something to drink?
Me: Good for you Paul for remembering that this is one of the concerns we need to explore. So, if this is a non-profit business we can share some of our lemonade with Maria. This means that we have to still pay the bills but me, your mother and dad do not have to have make any money. You and Sam just have to pay for the initial investment or ask us if we could afford to donate it.
Paul: So a non-profit still has to make money or get money donated because they have to buy equipment and pay everyone a salary.
Me: That is very good Paul. So if you and Sam run the business well and manage and have some extra money should you pay yourselves a lot and buy a big house and a fancy car?
Paul: Then we could not help Maria and others who were thirsty.
Me: That is right, Paul. A for-profit business might tell Maria she could only have something to drink once a month so that there was enough money to pay bigger salaries and to pay me, mom and dad some money.
Paul: But you, mom and dad already have jobs and enough money to live don’t’ you?
Me: Yes, we do but some people want more. What if we wanted one of those big houses with a swimming pool and someone to clean and someone else to cook and someone else to do yard work? We would need you and Sam to make a lot of money and only help Maria and others a little bit if there was enough money.
Paul: Isn’t Maria important?
Me: Well yes, but with the money we were making we would hire her and she would have some money to buy something to drink.
Paul: So for profit is good Uncle Jim?
Me: Well, not everyone thinks so because sometimes some people have a lot of money and some people have very little and still need help. For example, medical care can be very expensive. Remember we started with the example of the difference between for-profit and non-profit hospitals?
Paul: Uncle Jim, people have to have medical care but not lemonade.
Me: Ah! So perhaps some things could be profit and some things could be not for profit?
Paul: It gets complicated doesn’t it Uncle Jim?
Me: Yes, it does Paul. Perhaps the teacher would be happy if we came up with a list of questions or issues rather than saying what is best. What do you think Paul?
Paul: Will you help me with those Uncle Jim?
Me: I sure will Paul. Do you want to type or since it is late do you want me to type while you tell me what to type?
Paul: Will you type Uncle Jim?
Me: Sure Paul. Let’s get to work. We can do a draft and then work on the wording tomorrow since it is late.
Paul: Great. Thanks Uncle Jim.
Written May 6, 2016
I, of course, knew that eventually my adopted niece and nephew – ages twelve and six – were going to want talk about the ethics of money. Thus, I was not surprised when Paul, the twelve-year-old called last night and asked if he could come over and talk about money and values. I am sure it was just the first of many such discussions with both he and his sister.
Since it was a school night I had already made the hot chocolate and gotten some of the cookies we had made last Saturday out of the freezer.
Paul: Uncle Jim!
Me: Hi Paul. Come on in. How was your day?
Paul: Good Uncle Jim. How are you?
Me: I am fine. Here is your hot chocolate and some of the cookies you, Sam, and I made last Saturday.
Paul: Thanks, Uncle Jim.
Me: What can I help you with Paul?
Paul: Our homework assignment is to write about the difference between a for-profit hospital and a non-profit hospital. There was an article in the newspaper about one of the local non-profit hospitals being sold to a profit chain in 2013. Since then they have been helping fewer people.
Me: I read that story. After the hospital was sold to a for-profit chain, charity care went from 5.1 per cent to 3.2 percent and from $63 million to $51 million in the same period. Is that the case you are talking about?
Paul: Yes, Uncle Jim. I do not understand Uncle Jim.
Me: What is you do not understand Paul?
Paul. To start with what is the difference between non-profit and for-profit. Doesn’t profit mean that you make money? Does non-profit mean you do not make any money?
Me: You remember when you and Sam had the lemonade stand Paul? I loaned you the money to buy lemons, sugar, glasses, and straws. Your parents and I agreed to rent you and Sam a table, an umbrella, and the juice machine. All together you and Sam spent $48.00. You sold 50 glasses of lemonade for $1.00 each netting $48.00. You made a total of $2.00 profit because you and Sam were donating your time. The purpose of making a profit was donating money to the church Christmas fund for needy families.
Paul: I remember. That was a lot of work for not very much money.
Me: It certainly was. If you and Sam had been trying to make money to pay for rent, utilities, clothing and all the other things you and Sam want and need, $2.00 would not have paid for much.
Paul: No kidding. We just bought new running shoes and they cost $60.00 on sale. Some of the gym shoes were over $100.00!
Me: So you and Sam would have had to sell a lot of lemonade to make enough profit to even buy the shoes.
Paul: So a for-profit stand would mean that we were making enough money to buy shoes for both me and Sam.
Me: Not exactly Paul. A non-profit still can make enough money to pay the employees enough to allow them to pay for food, clothing, electric and other necessities. A for-profit hospital would have enough left over to pay more money to some of the employees. Your non-profit stand would do the same and make sure that me, your mom and dad who invested in the lemonade stand make money.
Paul: So you all would make money just by lending us money and equipment?
Me: That is right Paul. We would be the investors and we expect to make money from helping you and Sam get started.
Paul: Where does the charity come in Uncle Jim?
What if Maria is thirsty and really needs something to drink?
Me: Good for you Paul for remembering that this is one of the concerns we need to explore. So, if this is a non-profit business we can share some of our lemonade with Maria. This means that we have to still pay the bills but me, your mother and dad do not have to have make any money. You and Sam just have to pay for the initial investment or ask us if we could afford to donate it.
Paul: So a non-profit still has to make money or get money donated because they have to buy equipment and pay everyone a salary.
Me: That is very good Paul. So if you and Sam run the business well and manage and have some extra money should you pay yourselves a lot and buy a big house and a fancy car?
Paul: Then we could not help Maria and others who were thirsty.
Me: That is right, Paul. A for-profit business might tell Maria she could only have something to drink once a month so that there was enough money to pay bigger salaries and to pay me, mom and dad some money.
Paul: But you, mom and dad already have jobs and enough money to live don’t’ you?
Me: Yes, we do but some people want more. What if we wanted one of those big houses with a swimming pool and someone to clean and someone else to cook and someone else to do yard work? We would need you and Sam to make a lot of money and only help Maria and others a little bit if there was enough money.
Paul: Isn’t Maria important?
Me: Well yes, but with the money we were making we would hire her and she would have some money to buy something to drink.
Paul: So for profit is good Uncle Jim?
Me: Well, not everyone thinks so because sometimes some people have a lot of money and some people have very little and still need help. For example, medical care can be very expensive. Remember we started with the example of the difference between for-profit and non-profit hospitals?
Paul: Uncle Jim, people have to have medical care but not lemonade.
Me: Ah! So perhaps some things could be profit and some things could be not for profit?
Paul: It gets complicated doesn’t it Uncle Jim?
Me: Yes, it does Paul. Perhaps the teacher would be happy if we came up with a list of questions or issues rather than saying what is best. What do you think Paul?
Paul: Will you help me with those Uncle Jim?
Me: I sure will Paul. Do you want to type or since it is late do you want me to type while you tell me what to type?
Paul: Will you type Uncle Jim?
Me: Sure Paul. Let’s get to work. We can do a draft and then work on the wording tomorrow since it is late.
Paul: Great. Thanks Uncle Jim.
Written May 6, 2016
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