IBBusiness ManagementHLRevision Notes1. Introduction to Business Management1.2 Types of Business EntitiesTypes of Non-profit Social Enterprises

Types of Non-profit Social Enterprises (HL IB Business Management)

Revision Note

Flashcards
Lisa Eades

Non-profit Social Enterprises

  • A non-profit social enterprise is an organisation that combines the characteristics of both a non-profit organisation and a social enterprise

  • Non-profit social enterprises pursue a social or environmental mission while using business strategies to generate revenue and achieve financial sustainability
    • These organisation rarely make a surplus or profit
  • Two of the main forms of non-profit social enterprises are non-governmental organisations (NGOs and Charities

Non-governmental organisations (NGOs)

  • NGOs operate locally, nationally and/or internationally and are independent of government
     
  • These are typically voluntary, community-based organisations which do not aim to make a profit but seek to meet a need or provide a service

  • NGOs are typically financed by a combination of government funding and donations from businesses or private individuals

  • With a community based emphasis, they are able to
    • Engage in small scale projects giving control to community stakeholders
    • Draw on local skills
    • Encourage sustainability & remove the need for aid
    • Tackle environmental sustainability using local knowledge & resources 
    • Lobby governments to support their cause
       
  • NGOs have played a major role in many LEDCs and their aid often comes with fewer conditions or expectations than that provided by overseas development agencies

  • Examples of NGOs include Oxfam International, Save the Children International and Amnesty International  

Charities

  • Charities have a specific purpose defined by law and are subject to strict regulations governing their activities

  • They primarily rely on donations from individuals, corporations and governments and often actively fundraise and engage in campaigns to attract donations
Examples of non profit charities include the Bill and Melinda Gates Foundation, The Wellcome Trust, and Spain's La Caixa Foundation
Examples of charities around the world
 
  • The terms NGO and charity are often used interchangeably and there are variations in their definitions and usage between countries or regions
     

An Evaluation of Charities and NGOs


Advantages
Disadvantages

  • NGOs and charities can gain support for particular needs from a very wide audience including the global public and many wealthy governments

  • They often have specialists working for them who provide in country support so as to increase the efficiency of their aid

  • They conduct research, gather data and as a result often make highly specific project proposals aimed at directly improving the standard of living

  • NGOs and charities can help develop human skills in the countries in which they work and this helps to break families out of poverty

  • The country or group receiving the charitable support or aid can become overly dependent on it

  • The scope of what an NGO or charity can do may be limited or only focussed on one segment of the population e.g children

  • Salary levels of senior managers of NGOs and charities is often closely examined and spending decisions sometimes attract negative media attention

  • Funding for NGOs and charities can be irregular which makes financial planning difficult

Exam Tip

Make sure that you fully understand the differences between charities and NGOs. 

Whilst they are both types of non-profit organisation, charities are regulated by national Charity Commissions and have a relatively narrow scope of operations.

NGOs can also be charities - but not always. Oxfam and Médécins sans Frontières are both registered as charities in several countries but operate as NGOs in other countries around the world, particularly where the domestic third sector is underdeveloped.

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Lisa Eades

Author: Lisa Eades

Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.