The non-profit sector is characterized by its service to the public good, a multi-faceted concept, defined by the current needs of society. The public sector (government), for-profit sector (business), and non-profit sector collectively create the political economy. Examination of the three sectors shows many similarities and differences not only across their respective commodity production, but also participation, finance, governance, and values.
Each sector produces commodities for consumption. Businesses produce tangible products and services - clothing, electronics, Pilates instruction – which consumers purchase. The government produces regulatory and protection agencies, and laws, which are consumed by one’s participation in society. The non-profit sector produces services, in the form of items and services – food, clothing, legal services, medical attention, etc., which are generally consumed by those who lack the means of purchasing these items through the business sector. The non-profit sector also produces services that are not available through the other sectors, such as places of worship and education. The non-profit sector fills the gaps between society’s needs and what is offered through the government and business sectors.
The participants in each sector are unique, but overlapping. The consumers of each sector are certainly participants. The business and government sectors also hire paid workers to create and deliver its commodities. Such employees are experts in their field and undergo extensive training and vetting. The non-profit sector largely relies on volunteers, though there are also paid workers who operate in the sector. The volunteers are likely to also be employees of one of the other sectors who donate their time and/or money.
The business sector thrives in this category, as it is what guides their operations. Their goal is to create a profit: create a commodity which can be sold to consumers at a higher price than the manufacturing price. This serves the employees, who receive part of the profit in the form of wages, increasing their disposable income. The government has an annual budget, deliberated over each year, with which they fund their commodities, i.e. military protection. The non-profit sector relies on employees of these sectors spending some of their disposable income on donating to their causes, and the government allocating some of its budget to fund their causes.
The business sector is accountable to laws set forth by the government sector, regulating their production and sale of commodities. The government is regulated by its society through elected representatives. The non-profit sector is regulated by the government sector, in large part by tax provisions, to maintain their tax-exempt status. The government also regulates how donations are taxed, used, and who may receive them. Each sector also has an internal governing body, or board, which works to maintain the sector’s purpose.
Each sector values success, as defined by their purpose. The business sector is driven to success by maximizing profits. The government succeeds when it adequately represents society in the laws it enacts and upholds the integrity existing laws. The non-profit sector succeeds when its programs and projects are sufficiently funded, staffed with volunteers, and effectively delivering its commodities to those who need them.
The non-profit sector is unique, formed as an adaptation to meet society’s needs, by the hands of society itself. Business and government sector participants use their disposable time and income to ensure that the non-profit sector thrives, as it offers services that are not available (or affordable to all) through the other sectors. The non-profit sector would not exist as it does today without its working, interdependent relationship with the public and for-profit sectors.
Berman, Howard J. "Doing “Good” vs. Doing “Well”: The Role of Nonprofits in Society." INQUIRY: The Journal of Health Care Organization, Provision, and Financing 39.1 (2002): 5-11.
Renz, David O. The Jossey-Bass handbook of nonprofit leadership and management. John Wiley & Sons, 2016.