What is a non-profit organisation?

On the most recent figures available, as at October 2005, there were some 97,000 non-profit organisations in New Zealand.  In contrast, there are currently just over 25,000 charities registered with the Charities Commission. While what constitutes a charity is generally reasonably well-understood, the concept of a non-profit organisation and what benefits there may be in obtaining recognition as a non-profit organisation are generally less clear to most people. Statistics New Zealand suggests (see http://www.charities.govt.nz/faqs/general/) that a non-profit organisation must be: Organised, to the extent that it can be separately identified, Not-for-profit and not distribute any surplus that may be generated to those who own or control it, Institutionally separate from government (that is, private), Self-governing (that is, in control of its own destiny), and Non-compulsory (that is, membership and participation are voluntary). The IRD’s Perspective The Inland Revenue Department states (at http://www.ird.govt.nz/non-profit/np-glossary/np-glossary.html) that a non-profit organisation is any society, association or organisation (incorporated or not): that is not carried on for the profit or gain of any member, and whose rules do not allow money, property or any other benefit to be distributed to any of its members. While these definitions are helpful the concept of a non-profit organisation may actually be best understood by contrasting a non-profit with charitable organisation. The Inland Revenue Department states (at http://www.ird.govt.nz/non-profit/np-glossary/np-glossary.html) that a charity is an organisation (incorporated or not) that carries on charitable activities or exists exclusively for charitable purposes, and notes that some charities may be registered by the Charities Commission. Under s 5(1), Charities Act 2005, “charitable purposes” include: the relief of poverty, the advancement of education, the advancement...