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Society would collapse if non-profits disappeared

29 September 2006


Society would collapse if non-profits disappeared

The chair of a committee that has overseen a major new study, released in Wellington today, says New Zealand society would collapse if it wasn’t for non-profit organisations.

Garth Nowland-Foreman, chairperson of the Committee for the Study of the New Zealand Non-Profit Sector, says the report has been widely anticipated and will be viewed with great interest by both non-profit organisations and government.

Defining the Nonprofit Sector: New Zealand is a major step in understanding and increasing the profile of non-profit organisations in New Zealand.

It is published by the Center for Civil Society Studies, which is part of the Johns Hopkins University in Baltimore, USA. This report on New Zealand is part of a bigger international research project involving more than 40 countries. The Center is working to improve the understanding of the role and contribution of non-profit organisations around the world.

“We are a nation of joiners. For too long, however, non-profit New Zealand has been overlooked and under-valued. Non-profits are a unique form of social organising. At last, this is a chance to increase their profile and give due recognition to the crucial role they play in our society,” said Mr Nowland-Foreman.

“If you wiped out non-profit organisations, there is hardly a part of our society that would not collapse. Our churches and political parties are non-profits. So are our trade unions, federated farmers, and employers associations. Even the Business Roundtable decided that the best way to organise itself was as a non-profit.

“Most of our sporting groups, many arts and cultural groups, hobby groups, fraternal societies, ethnic associations, residents groups, service clubs, environmental groups, historical societies, professional associations and many advocacy groups are all non-profits. Not to mention the thousands upon thousands of health, welfare and other charities and self-help groups that hold our community together. From Alcoholics Anonymous to Zonta Clubs, where would New Zealand be without them?”

The New Zealand research has tested the applicability of international definitions and classifications to New Zealand-grown non-profits. The work done here for this study is likely to make a contribution to further research around the globe in two important areas:

- Statistics New Zealand, working in close collaboration with this research, has developed ‘decision trees’ to help clarify which organisations meet, or do not meet, the international definition of non-profit organisations developed by Johns Hopkins University.

- For the first time, indigenous tribal organisations have been recognised in their own right in a major international study. This research proposes a way to classify ‘tangata whenua governance’ organisations, which could very well set a precedent for similar research in other parts of the globe.

Defining the Nonprofit Sector: New Zealand is a significant milestone not only as a part of this major international study, but also because it is a part of the first major national study attempting to measure and report on the non-profit sector in this country. It will culminate in the first comprehensive statistical report by Statistics NZ in 2007 and a national overview report from the Center in 2008.

The research has been carried out by a team from Massey University. They have been advised by the Committee for the Study of the New Zealand Non-Profit Sector, made up of representatives of non-profit organisations, researchers, and the Office for the Community and Voluntary Sector.

The researchers have worked closely with Statistics New Zealand in defining and classifying non-profit institutions in New Zealand, as a first step in developing detailed statistics on these organisations.

[NOTE: The definition of non-profit organisations that has been used for this research is “the set of entities that are organised, private, non-profit distributing, self-governing, and non-compulsory”.]




1. Why do we want to define the non-profit organisations?

Non-profit organisations play an important role in many areas of New Zealand life, including sports, arts, culture, social services and the environment. But information on their size and nature is patchy. We do not have good data on how many non-profit organisations there are, in what fields they operate, where their funding comes from, how many staff they employ, and how many volunteers are involved in their work.

Work is underway to build a better picture of the non-profit organisations in New Zealand. The first important step is to be clear about the parameters. With this clarified, it will be possible to collect data on the different types of organisations, to identify trends, describe the nature of the sector of non-profit organisations in New Zealand and estimate its economic value.

Getting an accurate picture of non-profit organisations will enable better policy and planning by both government and non-profit organisations themselves. It will help make non-profit organisations more visible and will generate greater understanding of their importance to New Zealand.
2. Who is involved in this work?

Defining the Nonprofit Sector: New Zealand has been written by a team of researchers at Massey University, contracted by the Office for the Community and Voluntary Sector (OCVS).

The OCVS is overseeing this work in partnership with the Committee for the Study of the New Zealand Non-Profit Sector (the Committee) which comprises a cross-section of experienced people with an interest in the sector. It includes members who are actively working with non-profit organisations, along with independent researchers and academics.

The Committee also provides advice to Statistics New Zealand on the development of a “satellite account” for non-profit institutions, which involves collection and analysis of statistics on non-profit organisations.

3. Why has this paper been published by Johns Hopkins University?

Defining the Nonprofit Sector: New Zealand is part of a series of papers published by Centre for Civil Society Studies in Johns Hopkins University, Baltimore. The series analyses the nature of non-profit organisations around the world. New Zealand’s participation in this international study enables non-profit organisations in this country to be compared and contrasted with those in over 40 other countries.

4. What is the content of Defining the Nonprofit Sector: New Zealand?

The paper describes the non-profit organisations in New Zealand. It discusses:
1 the history of non-profit organisations in New Zealand
2 the legal environment for non-profit organisations in New Zealand
3 how Johns Hopkins University’s “structural-operational” definition, for deciding whether an organisation is part of the non-profit sector, applies in the New Zealand situation
4 how the United Nations’ International Classification of Non-profit Organisations (ICNPO) can be applied to classifying the major types of non-profit organisations in New Zealand.

5. Who is funding this work?

Funding for this project has been provided by the Ministry of Social Development, the Tindall Foundation and the combined Community Trusts.
The related project, to develop the satellite account for non-profit institutions, is funded by Statistics New Zealand.
6. Who has been consulted or involved in the writing of Defining the Nonprofit Sector: New Zealand?

The Committee, OCVS and Statistics New Zealand have held community workshops in Auckland, Hamilton, and Christchurch on progress with this work. In Wellington, presentations and reports have been provided at regular forums organised by the Association of Non-Governmental Organisations of Aotearoa. Presentations have also been made at several conferences, and Massey University undertook expert interviews as part of its work.

Consultation with Māori about classification of iwi/Māori organisations was organised by Committee member Tuwhakairiora Williams and Iris Pahau of the Community Sector Taskforce. This involved two workshops and collation of written and oral responses to a Statistics New Zealand paper.

The OCVS has regularly provided updates on progress with the work in its newsletters to non-profits and other government agencies.

7. Which groups/organisations are included in the definition of the non-profit sector, and why?

To be classified as “in scope” for the purposes of this work, organisations are assessed against Johns Hopkins University’s structural-operational definition. This definition has also been used by the United Nations in its guidance to statistical agencies on collecting data on non-profit organisations.
The structural-operational definition suggests that non-profit organisations can be defined as the set of entities that are:
- organised – have some degree of internal organisational structure, meaningful boundaries, or legal charter of incorporation
- not-for-profit – do not return profits to their owners or directors and are not primarily guided by commercial goals
- institutionally separate from government – while government funds may be received, the organisation does not exercise governmental authority
- self-governing - the organisations control their management and operations to a major extent
- not compulsory - membership and contributions of time and money are not required by law or otherwise made a condition of citizenship.
Defining the Nonprofit Sector: New Zealand includes five decision trees which have been developed by Statistics New Zealand to test each of the criteria. Where an organisation meets all five criteria, it is considered “in-scope” for the non-profit institutions satellite account.

8. What about very informal groups and volunteers whose activities aren’t arranged by non-profit organisations (eg volunteers for government programmes or people who help their neighbours) – aren’t they part of the non-profit sector?

Defining the Nonprofit Sector: New Zealand includes discussion of the degree of formality and structure that is required for an entity to be considered a non-profit organisation. The structural-operational definition requires that entities have ”some degree of internal organisational structure; persistence of goals, structures and activities; meaningful boundaries; or a legal charter of incorporation” . This is still a wide definition that would generally include even very informal groups. Activities outside an organisation, for example a person helping their neighbour, are not considered to be a part of non-profit organisations. In addition, it is recognised that there may be a number of very small, very informal or ephemeral organisations which fall within this definition but will in practice be difficult to locate and identify for data collection purposes.

Those volunteers whose activities are not undertaken for the benefit of non-profit organisations (for example, volunteers with government agencies or with businesses) will not be included in the non-profit institutions satellite account. However, statistics on volunteers in general (including volunteers with government agencies or business and a person helping neighbours or friends) will be identified by Statistics New Zealand through a Time Use Survey in 2008. The OCVS maintains an interest in volunteering in all forms.

9. Which groups/organisations have been excluded in the definition of the non-profit organisations, and why?
Generally a group falls outside the definition of a non-profit organisation for the purposes of this research, and especially for the Statistics New Zealand satellite account, if it does not meet each of the five criteria of the structural-operational definition outlined above. Examples of such organisations include:
- the large proportion of arts activities undertaken by individual artists and commercial enterprises
- commercial sports businesses and franchises
- public elementary and secondary schools, public universities and most polytechnics
- public hospitals and for-profit rest homes and some aged care hospitals
- statutory child protection services, commercial home help services and emergency services set up by local government
- local government housing.
The Statistics New Zealand paper Identifying Non-Profit Organisations in New Zealand (April 2006) is a complementary document to Defining the Nonprofit Sector: New Zealand and includes a number of detailed examples of New Zealand organisations that fall in or out of scope for the satellite account.

1 What is the International Classification of Non-Profit Organisations?
Once an organisation has been determined as in-scope according to the structural-operational definition, it is then categorised using the United Nations International Classification of Non-profit Organisations (ICNPO) developed in conjunction with Johns Hopkins University. The ICNPO allows organisations involved in similar economic activities or serving a similar purpose to be grouped together, thereby providing a basis for meaningful international comparative analysis. It comprises 12 major groups, as outlined below, and these groups are further divided into 29 subgroups.
i. Culture and recreation – many local art groups, most sports groups and many museums and art galleries not owned by local government or private companies
Examples: Aotearoa Maori Tennis Association Inc., Cycling New Zealand Federation Incorporated, Canterbury Botanical Art Society, Tautai Contemporary Pacific Arts Trust
ii. Education and research – kindergartens and playcentres, a few primary and secondary schools, most informal and small adult or community education, some non-profit research bodies
Examples: Adventist Early Childhood Centre Trust, Arohanina Te Kohanga Reo Charitable Trust, New Zealand College of Physiotherapy Incorporated
iii. Health – a small number of community health services and all Primary Health Care Organisations, most palliative care services and some mental health services, including iwi providers
Examples: Aoraki Primary Health Organization, Hauora Waikato Maori Mental Health, Schizophrenia Fellowship New Zealand Inc., Wanganui Air Ambulance Trust
iv. Social services and emergency relief – most providers of social services, including iwi providers, non-profit employment services, non-profit emergency services
Examples: Auckland City Mission, Barnardos New Zealand Incorporated, Te Aroha Noa Community Services, Coastguard New Zealand
v. Environment and animal protection – most environmental and animal protection groups
Examples: Coromandel Watchdog, Greenpeace, Royal Forest and Bird Protection Society, Yellow Eyed Penguin Trust
vi. Development and housing – organisations focused on economic, social and community development, housing organisations, employment and training groups
Examples: NZ Housing Foundation, Habitat for Humanity, Neighbourhood Support New Zealand

vii. Civic and advocacy – advocacy groups representing particular and local interests, political parties, ethnic associations, legal aid services, residents and ratepayers associations, parent teacher associations

Examples: Tenants Protection Association, Grey Power, the Chinese Association, the Polynesian Society, National Council of Women, Otara Community Law Centre

viii. Philanthropic and other intermediaries – volunteer centres, philanthropic trusts and foundations
Examples: Trust Waikato, Rotorua Energy Charitable Trust, Tindall Foundation, Lion Foundation, Volunteering Wellington
ix. International organisations, aid and relief – most overseas aid and development organisations
Examples: Amnesty International, Christian World Service, Red Cross, Save the Children, Oxfam
x. Religious congregations and associations – churches, mosques, temples, synagogues
Examples: The Anglican Centre, Destiny Church, Kurinji Kumaran Temple, Beth El Synagogue
xi. Unions, business and professional associations – professional associations, trade unions, business associations and chambers of commerce

Examples: New Zealand Council of Trade Unions, Employers Federation, Federated Farmers of New Zealand
xii. Those not elsewhere classified

Many non-profit organisations have multiple activities. In these cases, for the purposes of the Non-profit Institutions Satellite Account, the institution’s primary economic activity is used to assign an appropriate ICNPO category.

10. Is there a danger of New Zealand’s non-profit organisations being mis-represented because the definitional criteria and classification systems did not originate in New Zealand?

This issue is considered by the research, which analyses the applicability to the New Zealand circumstances of the Comparative Non-profit Project definitions criteria developed by Johns Hopkins University and the International Classification System for Non-Profits. While recognising there are ‘grey areas’ in any system of classification, it concludes that these are broadly appropriate for New Zealand.
There will be some minor adaptations to the international system, for instance, under the Education and Research group, early childhood organisations will be specifically identified as a sub-group, rather than being in the same sub-group as primary and secondary schools.
11. Are Maori organisations considered to be non-profit organisations?

Many Māori organisations clearly fit the five structural-operational criteria. For instance, kohanga reo are controlled by Te Kohanga Reo National Trust Board, and are considered sufficiently private, independent of government, self-governing and non-compulsory to fall within the non-profit sector.

“Tangata whenua governance organisations”, such as runanga and marae committees, have been given specific consideration. These organisations focus on the ongoing stewardship of iwi, hapū and marae in perpetuity. In terms of the structural-operational criteria, they are clearly “organised”, “non-profit” and “self-governing”. In terms of the criteria “institutionally separate from government” they provide “governance” but are not part of “government”, so fall within scope for the non-profit sector. In terms of the “non-compulsory” criteria, whilst membership derives from birthright and members’ engagement in such bodies may reflect a sense of cultural obligation, there is still an element of choice. After consultation, it has been concluded that such organisations are within the parameters of this research.

12. How have Māori organisations been classified?

Many Māori organisations will be included in the group that represents their primary activity. Examples include marae health centres (included under Group iii: Health), National Māori Journalists Association (Group xi: Business and professional associations, unions) and the Māori Party (Group vii: Law, advocacy and politics).

Consultation with Māori has confirmed that while Māori concepts and structures cannot neatly fit international categories of measurement, it is important that statistics on these organisations be specifically recorded. Statistics New Zealand has determined that tangata whenua governance organisations will be given a separate sub-category within Group vi (which includes economic, social and community development organisations).

13. What has analysis of the history and legal environment highlighted?

The initial work on the historical and legal dimensions of the project has identified the enormous diversity and continuing adaptability of the non-profit sector. The sector has deep historical roots that underpin its current activities and relationship with government. There are a number of ways in which the work in New Zealand is paralleled by studies of the sector elsewhere around the world, most especially the sector’s vast expansion since the 1970s. There are also some important differences, for instance around Māori organisations. While there is an increasingly wide range of legislation now impacting upon the sector, historically it was not tightly regulated, and this has been important in facilitating its diverse forms and flexibility.

14. How will Defining the Nonprofit Sector: New Zealand be publicised and distributed?

The publication will be available in hard copy from the OCVS and can be downloaded from http://www.ocvs.govt.nz/work-programme/non-profit-study.html or from the Johns Hopkins University’s Centre for Civil Society website (www.jhu.edu/ccss/cnp/).

15. What happens next in the Study of the New Zealand Non-Profit Sector?

The next major milestones for the project are as follows.
- Statistics New Zealand is to release the initial non-profit institutions’ satellite account by September 2007.
- Johns Hopkins University will publish a National Report by June 2008 that compares New Zealand’s statistical data with that of other countries and also provides contextual qualitative information on non-profit organisations in New Zealand.

Published September 2006


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