Aren't all private colleges for-profit?

No. Harvard doesn’t have shareholders.

The people who work for it get paid, but then so do the people who work at other not-for-profit institutions.

A not-for-profit (or non-profit) organization does not make money for owners or shareholders.

Harvard money can be used to run the school. Nobody gets to take the money home.

Devry University on the other hand is a for-profit school. You can buy stock in Devry. Your local cosmetology school is probably a privately owned for-profit.

“Non-profit” or “not-for-profit” generally means that whatever is left after the bills are paid stays within the company’s coffers.

You’re right to question it, and Congress has questioned it as well. Harvard’s endowment reached over $40 Billion at its peak before the market crash. Contrary to some previous answers, Harvard effectively DOES have shareholders, through annuities handled by its planned giving office. If you “donate” a million dollars to the endowment, for instance, they will guarantee life income to you as an annuity, as shares of the performance of the endowment.
http://www.alumni.harvard.edu/give/planned-giving/pay-income
Under pressure from Congress, Harvard decided to become a bit more generous with financial aid to students, since Congress threatened to otherwise require Harvard to spend a minimum of 5% of its endowment per year.
http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2007/12/31/the_real_story_on_harvards_generosity/
There’s no question that Harvard’s operations have been very profitable, and that is how its endowment became so large. It’s essentially a loophole that allows them to maintain their “non profit” status.

For me it’s similar to a Hospital being for profit or not for profit. The end goal is either to use the money available to provide the best care for patients, or to make sure there is money to give to the owners.
Theoretically in education, if the for profit school does a good job, more people will go, and the school will grow. However, it appears that the growth of non-profit schools based on getting as many students as possible through federal scholarships, which the students are then required to repay (whether or not the promised job appears), and the school then can do whatever kind of shoddy work they want—since they have the money through the scholarship. The investors make money regardless, since it is the growth and not the quality that they appreciate. A non-profit organization does not mean it doesn’t make money, it means that the money is used for the good of the institution.

@GeorgeGee But all colleges/universities have an official status of for-profit or non-profit, right? Perhaps one they list somewhere on their website?

Yes @papayalily, they all have an official status, but many schools don’t clearly announce their status, and as in the case of Harvard, many try to stretch the boundaries further than congress thinks they should. Whether they are “for profit’ or not is really only an issue for the IRS, it has little bearing on whether or not they’re providing a good education.

I did a 40 page case study on the Apollo Group for one my business classes so I have some knowledge. Traditional schools like Harvard (private) or UCLA (public) are not-for-profit institutions. How they get their primary funding depends if they are public or private. Private schools run entirely off of their endowment, which has to be very well managed. PIMCO’s CEO used to run the Harvard endowment, which has like $18 billion. Any excess money a school gets from tuition, sports revenue, donations, etc are used to cover the operating costs of running a school. Any excess money gets retained and put into the endowment. Public schools get money from the state’s tax payers, which helps to keep the tuition cost down for in-state students.

For-profit education instituions are different since they don’t get funding from the state, and alumni don’t give donations (at least I am not aware of). It is run just like any other corporation and they have to worry about costs and revenue more than a traditional school since they have shareholders and want to increase their stock price. For example, the Apollo Group which owns the University of Phoenix, has gotten a lot of criticism since they have a very low selectivity for the quality of students they let in. They pay their recruiters for the amount of students they can get to apply to the school. Since the quality of the students are low on an aggregate the teachers can’t give challenging assignment as they would like. This lowers the education value and employers question whether if a degree from there even matters much. However, the Apollo Group doesn’t care too much since they just want to grow revenue by letting more people in. Also, they really try to keep operating costs down, which hurst the education experience for the students.

Haha more than you wanted to know probably.

Here you can look up registered non-profits
http://www.irs.gov/app/pub-78/

Thanks @Zag_grad2010 but a few corrections are in order. Private schools do NOT run on their endowments, they run mostly on TUITION income. You can see the budget for a typical year at the University of Pennsylvania here:
http://www.upenn.edu/almanac/v42/n14/budget.html
The largest portion (by far) of their operating income comes from tuition, $364 million. Only $20 million came from investment income from their endowment.
For-profit institutions tend to run nearly 100% on tuition income. Your assertions about quality however are NOT intrinsic to for-profit education. Some are very selective, some are not selective at all. The same is true of not-for-profit institutions. While Harvard is very selective, your local community college is not at all selective.
And while state institutions generally DO receive funds from state budgets, that is rarely the only source of their operating revenues. At Penn State, for instance, where state appropriations have been steadily cut for the past 30 years, State and federal funds now comprise less than 1/12 of the $4 billion annual cost of operating the university.
http://live.psu.edu/story/47432

GeorgeGee – I don’t completely understand why you would unprovokedly attack me and take the time to look up and post those hyperlinks. I was just trying to help answer the question by trying to recall research off the top of my head I did nine months ago.

A few corrections for your researched response are in order. Don’t cite financial statements that are 15 years old. I am sure the financial landscape has changed a lot since then. Also, your example of an ivy league school doesn’t hold much water since the average school cannot charge as much in tuition as an ivy league does. Furthermore, ivy league schools in the past few years have gotten in trouble for how big their endowments are so they have been giving more grants to students who cannot afford to pay; this means less tuition money is coming in. I looked it up and Harvard has a $26 billion dollar endowment and have had talent like Mohamed El Erian (CEO of PIMCO which has $1.1 trillion in assets under management) run it. A modest return, during normal times, of 10 percent yields $2.6 billion dollars- a lot more than tuition revenue. Albeit, no school has as large of an endowment as Harvard, but most schools don’t need $2 billion to cover operating cost. Even at my high school, which was private, couldn’t run off of tuition alone- not even close actually.

I highly doubt a for-profit school is very selective like you said. They run advertisements on TV and have naming rights to a NFL stadium. Their goal is to increase sales, plain and simple. I would venture to guess an education from any four year university is going to be better than one from a for-profit. Also, no one applies to a community college, you just enroll there. You can’t compare oranges to apples.

@Zag_grad2010 first, my correcting the facts is not attacking you, it’s merely setting the record straight. Second, citing financials from 15 years ago is more typical than the last 5 since the stock market crash has been atypical, and third, your most recent posting is again filled with incorrect assertions that again need correction. Your assertion about “average” schools doesn’t hold water since the reverse is true. Lower end schools tend to have NO endowments and must recover ALL of their costs from tuition, while Harvard has much more of a cushion, and less of the real cost of educating students there comes from tuition.
Further, El-Arian has not worked with Harvard’s endowment since 2007; he was succeeded by Jane Mendillo.
And many for profit schools are indeed quite selective, including the Game Art and Design program at the Art Institute of Los Angeles, the Doctor of Pharmacy degree program at South University. You can pretend that you can just walk into these programs as you could at your local community college, but you can’t.

Most Universities in Canada are privately run and operate on a cost-recovery basis only. Most depend heavily on public support to operate.

What I think the takeaway here is that the central difference is the way for-profit organizations are structured and managed contrasted with how not-for-profits are. But don’t let the name fool you…not-for-profits are still out to make money. ;-)

Agreed, @iamthemob. And further, for-profit schools can and will be quite selective when it is in their best/business interests to do so.

For that matter, many public schools have big endowments too – though no doubt dwarfed by “private” ones.