Chapter 13, Problem 1Q

To determine

Identify the four categories of not-for-profit organizations and identify the types of entities are included in each category.

Explanation of Solution

Not-for-profit (NFP) entities: It is an individual or group of people who work together to attain the goals and mission that is something other than making profit for its shareholders or owners. Not-for-profit entities’ success is measured by how much the entity serves to the well-being of public or poor people with the available resource of the entity.

The following are the four categories of not-for-profit entities:

1. Voluntary health and welfare organizations (VHWOs): These types of organizations obtain a huge amount of their incomes through non-exchange transactions. They are operating to provide welfare or health service at low cost or at free of cost. The following are some type of entities in VHWOs:
   • Country A Diabetes Association.
   • Country A Cancer Society.
   • Country A Heart association.
2. College and universities: It is a self-explanatory category and these kinds of organizations provide education service to the students at low or free of cost. The state or federal support organizations or private education trusts are examples of college and university not-for-profit entities.
3. Health care entities: It includes those who offer health care service and entities whose’ primary activity is related to oversight or organize the operations of health care entities. The following are the examples of health care entities:
   • Clinics.
   • Hospitals.
   • Home health care organizations.
   • Rehabilitation facilities.
   • Continuing care retirement communities.
   • Laboratories.
4. Other nonprofit organizations (ONPOs): It is the organization running for non-profit motive other than the ones listed above. The following are the examples:
   • Libraries.
   • Religious organizations.
   • Museums.
   • Professional associations.