Edited by Ruth Towse
Chapter 42: Non-profit Organizations
Dick Netzer In all rich countries, firms organized on a not-for-profit basis produce cultural goods and services, along with for-profit firms (including independent professional artists) and the state. This is also true in many poorer countries. Non-profit firms are defined as organizations that have a formal structure and governance, which differ greatly among countries but share the characteristics that (1) the managers of the organization do not own the enterprise or have an economic interest that can be sold to other firms or individuals and (2) any surplus of revenue over expenditure may not be appropriated by the managers of the organization, but must be reinvested in ways that further the stated purposes of the organization. Obviously, such organizations will not be formed and continue to exist unless the organizers and managers expect and realize some economic rewards, including money compensation for their own services and non-financial rewards like consumption benefits (producing cultural goods and services that they want to enjoy but which will not be produced without their efforts) and personal status. The rules under which non-profit cultural firms are formed and function differ greatly among countries. In some, the rules are highly structured and sharply differentiate nonprofit firms from other culture-producing entities, especially in countries like the USA, in which the favoured tax treatment of non-profit firms is central to their success. In others, there is much less formality. For example, in Ireland, non-profit organizations may exist and receive favourable tax treatment without any formal legal status, although...
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