Nongovernment organisations

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Session 2: ‘For-profit’, ‘Not-for-profit’ and ‘Nongovernment organisations’ (P1- part 1)
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P1: Explain different types and purposes of organisations; public,
private and voluntary sectors and legal structures.
Prepared by: Dr Gilbert Zvobgo
Dr Reza Aboutalebi
 Business environment is the surrounding conditions in
which the business operates
 Divided into two broad categories
◦ The internal environment (microenvironment)
 Includes those factors over which the business has some
control, such as employees, managers, management
style, corporate culture and company policies
◦ The external environment (macro-environment)
 Includes those factors over which the business has little
control, such as economic conditions, government policy,
competitors and technology
 It may be further divided into the operating environment
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One way to categorise organisations or separate
organisations from each other is considering
importance of ‘profit-making’ for each category of the
organisations. There would be three types of
organisations including:
❖ For-profit organisations
❖ Non-profit (not-for-profit) organisations
❖ Non-government organisations (NGOs)
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A for-profit business seeks to generate income for its
founders and employees.
Profits can be shared with owners, employees, and
shareholders.
The vast majority of organisations in the world are forprofit companies. They can be very small, small,
medium, large or very large sized.
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 What makes an organisation a non-profit has to do with
purpose, ownership, and public support.
 These elements create:
◦ A mission that focuses on activities that benefit society and
whose goal is not primarily for profit
◦ public ownership where no person owns shares of the
corporation or interests in its property
◦ income that must never be distributed to any owners but is
recycled back into the non-profit corporation’s
public benefit mission and activities.
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 Purpose: To provide public services.
 Ownership: Is owned by the public. It belongs to no private
person, and no one person controls the organisation
 Control: Control of a non-profit lies with a governing board of
directors or trustees. The responsibility of that board is to see
that the organisation fulfils its purpose.
 Accountability: Are accountable to the public and must file
annual information returns with the government – regarding its
finances.
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Not-for-profit is one type of organisation. There are four
types of not-for-profit (non-profit) organisations:
 Charitable organisations
 Advocacy organisations
 Social/recreational organisations
 Satellite organisations
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There are three types of organisations:
❖ For-profit organisations
❖ Non-profit (not-for-profit) organisations
❖ Non-government organisations (NGOs)
These include a wide variety of institutions involved in
 Poverty assistance (soup kitchens, counselling centres,
homeless shelters, etc.)
 Religion (churches and their ancillary possessions, such as
cemeteries, radio stations, etc.);
 Science (independent research institutions, universities);
 Health (hospitals, clinics, nursing homes, treatment centres)
 Education (libraries, museums, schools, universities, and
other institutions)
 Promotion of social welfare;
 Preservation of natural resources (National Trust)
 Promotion of theatre, music, and other fine arts.
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These groups attempt to influence legislative process and/or
political process, or otherwise champion particular positions
 May call themselves ‘social welfare organisations’ or perhaps
‘political action committees.
 Not all advocacy is lobbying and not all political activity is
political campaign activity. Some of this type of programme
can be accomplished through a charitable organisation, but
that outcome is rare where advocacy is the organisation’s
primary undertaking.
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 Examples: Country clubs, hobby and garden clubs, sports
tournament organisations all can qualify as non-profit
organisations, provided that they adhere to basic guidelines
of net earnings distribution, etc.
 Unlike other tax-exempt organizations, however, their
investment income is taxable.
Satellite organisations:
 Satellite Not-for-profit organisations are deliberately organised
as auxiliaries or subsidiaries of other organizations.
 Examples: cooperatives, retirement and other employee benefit
funds.
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 Success depends on its reputation in community
 Customers can enhance or damage this reputation,
depending on level of satisfaction with service they receive.
 Meeting and exceeding expectations of donors, volunteers
and clients ultimately results in increased donations of
financial and human resources to the agency.
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 Non-government organisations (NGOs) are institutions that
conduct their affairs for the purpose of assisting other
individuals, groups, or causes rather than garnering profits for
themselves.
 Are tax-exempt businesses that benefit the good of the public.
 Have no shareholders; do not distribute profits in a way that
benefits members, directors, or other individuals in their
private capacity.
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 One of the differences between not-for-profit
organisations and NGOs is that not-for-profit organisations
generally do not have political activities but the majority of
the Non-government organisations (NGOs) are directly
or indirectly involved in political activities.
Examples of NGOs are:
 Political parties
 Political pressure groups
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