Regulatory Challenges and Non-profit Welfarism

Abstract

The debate over non-profit organisations and then proper role in the liberalisation era continues, periodically grabbing public attention for sustainability, tax exemption, etc. However, as the non-profit sector grows in size and commercial activities, it is becoming indistinguishable from the private sector? The competition between non-profit sectors and private is made even more complex by the fact that the former are moving into activities that have previously been the domain of profit firms; and private firms are expanding into traditionally non-profit areas. To what extent this occurs is important for public policy, since the justification for subsidies, receiving donations and tax exemptions to non-profit sectors hinges on their differentiation from private firms. This is not only questioning the social welfarism philosophy, but also the one of the regulatory challenges that stand in front of us. Attention to NPOs growing commercial activity is necessary because it highlights both the difference between what society expects from them and private firms, and the similarity in the financial constraints that they face. Nevertheless this article aims to understand the available revenue factors that affect NPOs and their activities. In addition, this article also suggests regulations that affect the use of accounting procedures that minimise or eliminate taxable profit, and rules that affect commercial alliances with, or conversions into, private firms.