Understanding Nonprofit
Organisations
An Introduction
1
On a typical day, our lives are touched
repeatedly by the world of nonprofit
organisations.
 E.g., daycare center, school, hospital,
YMCA, college, museum, job-training
center, nursing home, environmental
protection group, Girl Scouts

2
Figure 1.1 The Role of Nonprofits In Society
Government
Private Sector
Enterprise
Third
Sector
3
Private Sector – Or Market

‘It is not from the benevolence of the
butcher, the brewer, or the baker that
we expect our dinner, but from their
regard to their own self-interest. We
address ourselves, not to their
humanity but to their self-love, and
never talk to them of our own
necessities but of their own advantages’
Adam Smith (1776, p119)
4
Public Sector

‘…those public institutions and those
public works, which though they may be
in the highest degree advantageous to a
great society, are, however, of such a
nature that the profit could never repay
the expense to any individual, or small
number of individuals; and which it,
therefore, cannot be expected that any
individual, or small number of individuals,
should erect or maintain.’
Adam Smith (1776, p122)
5
Non-Profit Sector
‘The essence of voluntary action is that it
is not directed or controlled by the State
and that in the main it is financed by
private, in contradistinction to public,
funds. It embodies the sense of
responsibility of private persons towards
the welfare of their fellows; it is the
meeting by private enterprise of a public
need.’
(Nathan, 1952, p12)
6
Other Terminology
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Independent Sector
Nonprofit Sector
Voluntary Sector
Civil Society
Nongovernmental organisations
Nonproprietary organisations
People’s organisations
Community organisations
Third sector
The commons
Charitable sector
7
Non-Profit Organisations (NPOs)
The terms of non-profit would be dissimilar because in
different countries or by different scholars, they focus on
different aspects of an NPO. Some look at its mission or
objectives. The others may stress on its characteristics
or functions.
隨著不同國家，不同學者，強調的重點與思考角度不同，
用詞偏好有所不同。有的以組織的目標或宗旨為考量，有
的依據法源基礎的觀點，或根據組織管理基礎的獨特性，
也有從組織不同的角色功能來思考。
8
What Is a Nonprofit?


Tax & regulatory definition: an organization that
- Enjoys special tax status
- Faces a non-distribution constraint (profit=0)
Functional definition: an organization that forms to
- Perform “public tasks”
 environmental protection, social service provision
- Perform tasks for which there is demand but no supply
from for-profits or governments
 religious activity, art museum
- Influence the direction of public policy
 political party, issue organization
9
Cont.

Not conducted or maintained for the purpose of
making a profit.

not commercially motivated

A nonprofit organization is one that has
committed legally not to distribute any net
earnings (profits) to individuals with control over
it such as members, officers, directors, or
trustees. It may pay them for services rendered
and goods provided.
10
Cont.

A nonprofit organisation is formed for
the purpose of serving a public or
mutual benefit other than the pursuit or
accumulation of profits for owners or
investors. The nonprofit sector is a
collection of entities that are
organisations; private as opposed to
governmental; non-profit distributing;
self-governing; voluntary; and of public
benefit .
11
Salamon’s definition
Formal
 Private
 Non-profit-distributing
 Self-governor
 Voluntary

12
Thomas Wolf’s definition
Must have a public service mission
 Must be organised as a non-for-profit or
charitable corporation
 Governance structures must preclude
self-interest and private financial gain
 Must be exempt from paying tax
 Must possess the special legal status
that stipulates gifts made to them are
tax deductible

13
Why Nonprofits?
There are economic, historical, and political
theories regarding the reason why nonprofit
organizations exist in today's society.
Economic Theories:
 Market failure - This theory is based on the
premise that not enough people desire a service
or program to attract for-profit corporations to
provide such services. Also, the fact that an
organization exists without a profit-motive instills
trust in the constituent.
14
Cont.
Government failure - The government will not
provide a service because of high cost or limited
interest by the public. If there is not a large
presence of constituents demanding a response
from government, then the government is not
likely to act. A small group of individuals can create
a nonprofit organization to provide mutually
desired services rather then trying to convince a
majority of citizens to support such efforts. There
is also a cultural resistance to "big" government.
Citizens are skeptical about the government being
involved in all aspects of community life.
15
Cont.
Historical Theory - Communities in America were
formed well before formal government. Citizens were
forced to come together to address issues within
their communities and work together to form a
solution. Even when government developed a
presence within a community, citizens were afraid of
the bureaucracy and often sought out solutions
through voluntary association. Religion also provides
a strong foundation for charity and altruism through
Scripture and a sense of duty taught within the
church.
16
Cont.
Political Science Theory - Nonprofit
organisations provide an avenue for civic
participation. People are able to assemble and
work towards a common goal with an intent to
benefit the public. Nonprofit organisations
provide an outlet for pluralism and solidarity.
17
Cont.
In a book by Lester Salamon called America's Nonprofit
Sector, the author concludes that the nonprofit sector
exists to serve four critical functions:
Service Provision: Nonprofit organizations provide
programs and services to the community. Often times,
nonprofits are formed or expanded to react to a
community need not being met by the government.
Nonprofits also tend to have the ability to act faster
then government in response to an issue. Nonprofits
do not have to wait for a majority of citizens to agree
upon a proposed solution. Rather, they have the
ability to react to a specialized need or a request by a
small group of citizens.
18
Cont.
Value Guardian: Nonprofit organizations
provide a mechanism for promoting individual
initiatives for the public good. Nonprofit
organizations provide a means by which members
of a community can take action in an attempt to
change the community they live in. These actions
may take the form of developing a local
neighbourhood watch program or, on a larger scale,
developing an organisation that responds to world
relief efforts.
19
Cont.
Advocacy and Problem Identification :
Nonprofit organisations provide a means for
drawing public attention to societal issues.
Nonprofit organizations make it ‘possible to
identify significant social and political
concerns, to give voice to underrepresented people and points of view, and
to integrate these perspectives into social
and political life’.

20
Cont.
Social Capital: In America, the nonprofit sector
can be seen as a bridge between capitalism
and democracy. Nonprofit organisations
develop a sense of community among the
citizens by providing a means to engage in
social welfare.
21
Issues topics for Nonprofits
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Poverty
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Poverty is a relative concept, not an absolute standard.
Poorest
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Richest
In the United States, the richest 1 percent of
households owns 38 percent of all wealth.
The top 20 percent owns over 80 percent of all
wealth. In 1998, it owned 83 percent of all
wealth. (Wolff, 2003).
22
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The top 1% of Americans own as much wealth
as the bottom 95% percent.
The total wealth of the top 60% of Americans
is 500 times the total wealth of the bottom
40%.
The bottom 40% of households own one-fifth
of 1% (or 0.2%) of the nation's wealth.
Bill Gates (net worth approximately $50 billion)
alone has more wealth than 40% of the U.S.
population combined, or 120 million people.
Ratio of the net worth of the richest 1 percent
of U.S. households to the size of the national
debt: 2:1.
23
Cont.
Share of national wealth by percentage of population. –
Edward N. Wolff, "Recent Trends in Wealth Ownership, 19831998," April 2000 (Original graph by Devesh Kumar)
24
Source: Edward N. Wolff, "Recent Trends in Wealth Ownership,
1983-1998," April 2000. Table 2. (Courtesy, United For a Fair
Economy)
25
North-South Debate (南北論戰)
(factors: e.g. weather, geographical
location, natural resources, social
customs, religion, historical
development, ideologies)
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Save the Children
http://ww.savethechildren.org/
United Nations Children’s Fund
http://www.unicef.org/
World Vision http://www.worldvision.org/
One: make poverty history
http://www.one.org/about/
Grameen Foundation
http://www.grameenfoundation.org/
27
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Issues on Medical Care
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Health is a complete physical, mental
and social well-being, and not merely the
absence of disease or infirmity. (WHO)
Places without health care system;
people get sick, people get help
Sick people should get treated equally,
not because they are rich or poor.
28
Cont.
AIDS.ORG
Educating, Raising HIV Awareness, Building
Community, http://www.aids.org/
 British Heart Foundation, http://www.bhf.org.uk/
 National Kidney Foundation, UK
http://www.kidney.org.uk/
 British Lung foundation, http://www.lunguk.org/
 British Nutrition Foundation,
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http://www.nutrition.org.uk
29
Cont.
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Organ Donation and nonprofits
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Organ Donor Foundation, South Africa
http://www.organdonor.org.za/
Mohan Foundation
(Multi Organ Harvesting Aid Network),

http://www.india4u.com/mohan/index.htm
‘Don't take your organs to heaven for heaven
knows they are needed here’.
30
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Environmental Issues
Kyoto Protocol (1997)
 Green Peace International
http://www.greenpeace.org
 Earth force (engages young people as active
citizens who improve the environment and their
communities now and in the future)
http://www.earthforce.org
 Environmental Defense
http://www.environmentaldefense.org/home.cfm
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Seacology http://www.seacology.org
31
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Employment issues
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Equal opportunity
Free from discrimination
Especially for the disabled and racial
minority.
Gender issues, equal pay
Job security, workplace safety
Etc.
32
Cont.
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Employment Opportunities
Employment Opportunities is a national charity helping
people with disabilities find and retain work. We also
provide a wide range of support and advice to employers
on disability and employment issues.
http://www.opportunities.org.uk

Skill:
National Bureau for Students with Disabilities
(Skill is a national charity promoting opportunities for young
people and adults with any kind of disability in post-16
education, training and employment across the UK.)
http://www.skill.org.uk
33
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Education issues
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The importance of education
One way to get away from poverty
Equal opportunity to receive education
Educational resources should be shared by
all
34
Cont.
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Special Kids Fund– for children with disabilities and atrisk youth http://www.specialkidsfund.org
The Federation for Children with Special Needs– Early
Childhood, Education & Special Needs, and Health
Care http://www.fcsn.org
Charity for African Education
http://www.africaneducation.org
Did You Know...
£25/$40 will keep one African child in school
for a whole year! (World Bank figures for 1998)
35
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Traffic or Transportation issues
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Private owned cars vs. mass transit
system
Environmental concerns, historical sites
vs. developmental issues (Hsuehshan
Tunnel)
36
Cont.
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Charity Motor– Donate your car and choose your favorite
charity to receive the proceeds
http://www.charitymotors.org
37
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Safety/security Issues
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NPOs that deal with Terrorism
Civil society and community
Free from Fear for humans
38
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Definition
Civil society refers to the set of institutions,
organisations and behaviour situated between
the state, the business world, and the family.
Specifically, this includes voluntary and nonprofit organisations of many different kinds,
philanthropic institutions, social and political
movements, other forms of social participation
and engagement and the values and cultural
patterns associated with them. (LSE)
39
Cont.
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Civil society International http://www.civilsoc.org
The African Center for the Constructive Resolution
of Disputes – creating African solutions to African
challenges http://www.accord.org.za
Center for War/Peace Studies– think tank
http://www.cwps.org
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The Center for Security Policy
http://www.centerforsecuritypolicy.org
40
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Issues on underprivileged people
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Ethnic minority (rights to education,
employment, etc)
Women
People with disability
41
Cont.
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Ethnic Minority Foundation– building a security base
http://ethnicminorityfund.org.uk
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Women Helping Women
http://whwnj.com/
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Women for Women International
http://www.womenforwomen.org
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Calvary Women’s Services–
A safe caring place for tonight.
Support, hope and change
for tomorrow.
http://www.calvaryservices.org
42
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Child Protection Issues
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Ownership: children can be considered
as Public goods
inferior goods??
Children can’t choose their parents
Some are born with a silver spoon,
some are quite opposite
Child protection: medical care,
parenting, education, etc.
bullying, child prostitution, pornography,
trafficking, emotional, physical, sexual
abuse, neglect
43
Cont.
Australian Childhood Foundation
Counseling, Advocacy for Children, Education, Child abuse
programmes, inspiring and supporting parents, research.
http://www.aaca.com.au
 Advocates for Survivors of Child Abuse
Primary mission is the healing and well-being of survivors.
Ultimate goal is the prevention of all child abuse.
http://www.asca.org.au
 Kids First foundation
http://www.kidsfirst.com.au
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44
Self-portrait, Jacob, 6
Jacob is one of five children under the age of seven.
Life at home is chaotic as Mum and Dad, while
struggling to cope with their children, become
physically and emotionally abusive.
When Jacob appears to be distressed and anxious, he
will become withdrawn and engross himself in his art.
This is a self-portrait that Jacob produced on one such occasion.
When Jacob arrived at the early childhood program, he was very
upset and curled up on a rug, cuddling into a teddy bear, while he was
gently patted. After some time, he settled, rejoined the group of
children and then quietly wandered over to the easel and produced
this masterpiece.
Source: Kids First Foundation
45
Happy Me, Jessica, 5
Jessica lives at home with her mother, step-father,
brother and two sisters. Because Jessica is the eldest
child in the family, she has been expected to take on
far too many adult responsibilities within the home.
Dad is a strong disciplinarian, which has led to physical
and emotional abuse, and has included being locked in
an outside shed as punishment. Jessica always appears to be hungry
and will raid rubbish bins and steal food from other children’s lunch
boxes. Jessica has become a very sad, anxious little girl who suffers
significant mood swings. Often Jessica is reluctant to participate in
activities and will become extremely withdrawn. However, during a
party at school when Jessica appeared to be having a wonderful time,
she painted this happy picture of herself.
Source: Kids First Foundation.
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National society for the Prevention
of Cruelty to Children (NSPCC)
(Since 1884)
http://www.nspcc.org.uk
 International Society for Prevention of Child Abuse
And Neglect (ISPCAN)
 Kidscape
Preventing bullying and child abuse
http://www.kidscape.org.uk
 Barnardo’s
Giving Children Back Their Future (Since 1876)
http://www.barnardos.co.uk
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47
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Issues on Elderly people
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Gerontology
McDonalds (1980) invites elderly people to
drink coffee (3~5 pm.), marketing strategy:
corporate social responsibility.
Medical care
thanatology (study of death among humans)
Fighting isolation, poverty, neglect
48
Global Action on Ageing
Elderly rights, Health, Pension watch, Rural Ageing
http://www.globalaging.org
 Age Concern England
http://www.ageconcern.org.uk
 Ageing and ethnicity
Provide info to minority ethnic older persons
http://www.eng.aeweb.org
 Ageing in New York Fund
to enhancing the quality of life for older New Yorkers and their
families http://www.anyf.org
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Help age International http://www.helpage.org/
49
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Issues on Housing
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Basic human rights?
Rent seeking
Low income people can’t afford
Homelessness
Affordable housing
50
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BC Non-Profit Housing Association
formed in 1993; representing the interests of the
non-profit housing sector to government and the
public;participates in housing policy and program
development with all levels of government.
http://www.bcnpha.bc.ca/
Canadian Housing and Renewal Association: Your National
Ally for Affordable Housing
promotes access to adequate, affordable housing for
low- and modest-income households, and seeks to
heighten awareness of affordable housing issues
through research, advocacy, networking and
communications. http://www.chra-achru.ca
51
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Older homelessness
http://www.olderhomelessness.org.uk/
Glasgow homeless network
http://www.ghn.org.uk
Centrepoint http://www.centrepoint.org.uk/
52

Issue Advocacy

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Patients vs. doctors (asymmetric information)
Information Ethics
Patients are Powerful
A diverse group of "managed care experts"
singularly dedicated to helping patients improve
their managed medical healthcare. Healthcare
insurance companies have put profits before
patient care. Cost containment measures have
limited your ability to See a Specialist, Get a 2nd
Opinion, Receive High Quality Medications and
have your Surgery performed at your choice of
institution. http://www.patientsarepowerful.org
53
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