It means they probably siphon the money off somewhere (shell companies, the companies that hire / enlist them, etc) so that they're only non-profit because their books balance out and because of the tax exemption status it gets them.

Non-profit doesn't mean they don't make a profit.

What does it mean?

They can't have dividends, any profit must be reinvested or given to another non profit.

I presume it can also be spent on increased operational expenses, e.g. salary, perks, etc?

Up to a point, there are issues if you start a non profit and then pay yourself as CEO a truly insane income.

Can you elaborate on some of those issues? I've heard the unsubstantiated claim that the NYSE works on essentially that principle, and the much better-substantiated claim that that's what's going on with Morris Dees and the SPLC.

edit: stop impugning the SCLC; correctly impugn the SPLC.

How about business expenses, of the fake kind of course.

As with most things, it depends on if you do it right or not. Do it right, and you're good. Make it too transparent what is going on, and you are going to get nailed.