Other organisations do not see profitability as their main objective. Such not-for-profit organisations (‘NFPs or NPOs’) are unlikely to have financial objectives as primary.
Instead they are seeking to satisfy particular needs of their members or the sectors of society that they have been set up to benefit.
Illustration 2 – The nature of organisations
NFPs include the following:
§ government departments and agencies(e.g. HM Revenue and Customs)
§ charities (e.g. Oxfam, Red Cross, Red Crescent, Caritas) and
The objectives of NFPs can vary tremendously:
§ hospital could be said to exist to treat patients.
§ Councils often state their ‘mission’ as caring for their communities.
§ A charity may have as its main objective ‘to provide relief to victims of disasters and help people prevent, prepare for, and respond to emergencies.’
§ Government organisations usually exist to implement government policy.
One specific category of NFPs is a mutual organisation. Mutual organisations are voluntary not-for-profit associations formed for the purpose of raising funds by subscriptions of members, out of which common services can be provided to those members.
Mutual organisations include
§ Some building societies
§ Trade unions and
§ Some working-men’s clubs.
Many NPOs view financial matters as constraints under which they have to operate, rather than objectives.
§ Hospitals seek to offer the best possible care to as many patients as possible, subject to budgetary restrictions imposed upon them.
§ Councils organise services such as refuse collection, while trying to achieve value for money with residents’ council tax.
§ Charities may try to alleviate suffering subject to funds raised.