We tend to divide the world of organisations into two types or sectors – government and business. And we tend to overlook a third, distinct sector, commonly called the non-profit sector. Non-profit organisations (or ‘non-profits’) are the product of commitments by groups of people to provide a service for themselves or others, to represent their interests or lobby on behalf of others, or to practice a religion. They are not part of government, even though they may perform a public service; neither are they established or operated to make a profit for their owners.

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There are some key features to non-profit organisations. I need you to know them all.

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1. They are organisations. They have a set of rules or a constitution that gives it a life beyond the group that began it.
2. They may be formally incorporated. A legal term meaning that the organisation has a legal identity independent of its members.
3. Are private organisations, institutionally separate from the State. That is, they are not directly subject to government control or direction.
4. Operate on a ‘not-for-profit’ basis (do not return profits to owners). While in some respects they are like private, for-profit companies, they differ from the latter in that they do not distribute any surplus or profit they might make to their members.
5. Possess significant elements of voluntary contribution. Most non-profits rely entirely on work performed without pay by their members or supporters.
6. With very few exceptions, non-profit organisations are member-owned organisations and are therefore self-governing.
7. The financing of non-profits is complicated (more so than for government or for-profit organisations of similar size.