Legal Definitions - surplus revenue

Surplus revenue refers to the amount of income or funds that an organization, particularly a government entity or a non-profit, has remaining after all its expenses, debts, and obligations for a specific period have been fully paid. It represents the positive difference between total revenue collected and total expenditures incurred. This excess revenue can then be saved, reinvested, or allocated for future projects or unforeseen needs.

Here are some examples illustrating surplus revenue:

• City Government Budget: Imagine a city government that collects taxes from its residents and businesses, along with various fees for services like permits and licenses. At the end of its fiscal year, after paying for all public services such as police and fire departments, road maintenance, schools, and administrative costs, the city discovers it has more money in its treasury than it spent. This leftover money is the surplus revenue. The city council might then decide to place this surplus into a "rainy day fund" for emergencies, use it to pay down municipal debt, or allocate it towards a new public park or infrastructure project for the following year.

• Non-Profit Charity Organization: Consider a charitable organization dedicated to providing educational resources to underprivileged children. Throughout the year, it receives donations from individuals and grants from foundations. After covering all its operational expenses—including staff salaries, rent for its offices, the cost of educational materials, and program delivery—the organization finds that its total income from donations and grants exceeded its total expenditures. This remaining amount is the surplus revenue. The charity could decide to use this surplus to expand its programs to reach more children, invest in new technology to improve its services, or build up a reserve fund to ensure financial stability for future operations.

• State-Owned Public Utility: A state-owned water utility company generates revenue by charging customers for water usage. Over a particular financial period, due to efficient management, lower-than-expected maintenance costs, or a slight increase in customer base, the utility's total income from water sales and service fees surpasses its total operating expenses, which include maintaining pipelines, treating water, and paying staff. This excess amount is the surplus revenue. The utility might then use this surplus to upgrade aging infrastructure, invest in new water purification technologies, or even reduce water rates for customers in the next billing cycle, depending on its mandate and regulatory framework.