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You are here: Home The basics Introduction to the non profit sector

Introduction to the non profit sector

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Are you a new volunteer, member of staff or trustee? This section is all about making sense of the non profit sector.

by W Editor last modified Apr 08, 2014 04:50 PM

This section addresses some of the key questions you may be asking if you are new to the non profit sector:

What is the non profit sector?

The purpose of the  non profit sector is to improve  and enrich society.

It exists to create social wealth rather than material wealth.

It is sometimes referred to as civil society, the third sector, the Voluntary and Community Sector (VCS), the not-for-profit sector, the charity sector, the social sector and even the beyond profit sector. It is made up of many different categories of activity affecting many aspects of society. The various terms are used by different people to include different combinations of activity which can be confusing.

The common understanding behind our categorisation of the sector is that it exists to make a difference to society rather than to make financial profits.

Where does it fit in society?

The term, the third sector, indicates its positioning; that is it sits between government (the public sector) and the private or commercial sector.

The three sections of society

Government/public sector

Where taxation revenues, from companies and individuals, are used to fund the legislature and to provide a basic range of services (the welfare state) in areas such as health education, social welfare.

The non profit/third sector/civil society

Home to general charities, trades unions, social enterprises,public arts organisations, community interest, companies,voluntary and community organisations, independent schools, faith groups, housing associations, friendly societies, mutual societies which broadly exist 'for public benefit' and are therefore eligible for a range of income and property tax exemptions.

The private or commercial sector

Where goods and services are produced and traded to make a profit in which surpluses which do not need to be kept in the business are distributed to owners and shareholders and which pay taxation towards funding the activities of the government sector.

There is a circular dynamic between all three sectors - social wealth creation requires material wealth creation for its existence.

How big is the non profit sector?

The answer depends on which groups are included in any definition. Working on the statistics from NCVO’s UK Civil Society Almanac 2014, possibly the most widely used and accepted, there are 161,266 voluntary organisations in the United Kingdom. The table below illustrates the spread of organisations in terms of size and income:

Micro
Small
Medium
Large
Major
No. or orgs
82,391
52,815
21,257 4,270
533
Proportion % 51.1 32.8 13.2 2.6 0.3
Income (£m)
228.5 1,856.1 6,544.2 11,821.5 18,798.8
Proportion % 
0.6 4.7
16.7 30.1 47.9

So, the largest number of organisations are tiny ones with income of less than £10,000. The biggest organisations are the smallest proportion but by far the largest in terms of the proportion of income they represent. Total income for the sector is in the region of £39.2 billion based on 2011/12 values.

In 2012 there were 800,000 people in paid work within the sector, of which 64 per cent were full-time employed, 36 per cent part-time and 66 per cent of the total were women and 34 per cent, men.

In the year 2012/13 the Community Life Survey estimates that 28 per cent of the UK population were formal volunteers at least once a month and this rose to 44 per cent of the population volunteering at least once a year.

In what areas of activity is the non profit sector involved?

  • Culture and recreation
  • Education
  • Parent Teacher Associations
  • Playgroups and Nurseries
  • Research
  • Health
  • Social Welfare
  • Scout groups and youth clubs
  • Environment
  • Community development
  • Housing
  • Employment and training
  • Village halls
  • Law and Adovocay
  • Grant-making
  • Umbrella bodies
  • International
  • Religion

Have your say

If you're new to non profits, why not join in one of the discussions and learn from people who are already working in the sector. Ask questions and share your thoughts on one of KnowHow's discussion forums.

Further help and advice

Why not try the KnowHow 'Careers' e-learning training course?

Comments (2)

A KnowHow member

A KnowHow member wrote on Nov 24, 2011 06:39 PM

The article refers to a circular dynamic effect which was to be illustrated by a diagram in reference to the three sectors

A KnowHow member

A KnowHow member wrote on Nov 24, 2011 06:45 PM

The article refers to a circular dynamic effect which was to be illustrated by a diagram in reference to the three sectors. I was confused by its apparent absence.