This is the Cato Daily Podcast for Thursday, April 17, 2014.

I'm Caleb Brown.

It may surprise you to learn that non-profit colleges and universities are actually quite profitable. The difference in how a

for-profit and non-profit deals with that excess revenue has implications for

students and taxpayers and higher ed in general.

Vance Freed is an adjunct scholar at the Cato Institute

and Director of the Institute for Free Enterprise

and Entrepreneurship at Oklahoma State University.

We spoke this week.

First you need to realize that the basic definition of what makes something a non-profit organization

isn't that it doesn't make profits rather that there are no residual

owners of the the organization.

So in a normal for-profit corporation,

you have shareholders that have a claim

to the earnings and all the assets ultimately of the corporation, where is the nonprofit legally that you

don't.

Many nonprofits sell services,profit colleges being one, hospitals do the same thing, and to the

extent the revenues they collect exceed for providing the service

exceed the actual cost of providing a service then they have a profit and

sometimes you can pick this up just by looking at their financial statements.

There's often a line that shows excess of revenues over cost for the year.

But the actual level of profits

...