About That Deficit

I recall a Kiwanis Club Meeting around 1994 where the local Congressman was talking about cutting the deficit but people were confused as to why the national debt was still going up.

The reason is that a non-profit organization by definition does not report profits or losses. Instead they report surpluses and deficits.

That’s why management may report cutting its deficit while still increasing its debt. Cutting the deficit just means that the organization is loosing less money than before but it is still loosing money. In fact, an organization may actually report a surplus while still increasing its debt. It all depends on whether it uses the surplus to pay down debt or use it for something else.