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Non-profits and the cost of capital from contributions.

Comment of the following statement. When a not-for-profit facility receives a contribution from a member of the community, the cost of capital is inconsequential when deciding how to use this contribution, because it is, in effect, free money.

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This statement is incorrect. The money is not free for the non-profit organization. The money is revenue in the form of a contribution. The money has to be accounted for properly as revenue, but it doesn't stop there. The non-profit must also practice corporate governance, ...

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The solution discusses the following comment:

When a not-for-profit facility receives a contribution from a member of the community, the cost of capital is inconsequential when deciding how to use this contribution, because it is, in effect, free money.

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