5256.0 - Australian National Accounts: Non-Profit Institutions Satellite Account, 1999-2000  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 28/11/2002   
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The national accounts are a comprehensive set of economic data which are fully consistent and complete within the boundary of the economic activities they cover. Gross domestic product (GDP) is perhaps the most recognisable and important economic statistic from the core national accounts. Satellite accounts allow an expansion of the national accounts for selected areas of interest while maintaining the concepts and structures of the core accounts. Satellite accounts present specific details on a particular topic in an account which is separate from, but linked to, the core accounts. Therefore, a 'non-profit institutions' satellite account highlights non-profit institutions (NPIs) within the national accounting framework.

Implicitly, data in respect of NPIs are included in the national accounts. The value of NPIs sales and transfers, compensation of employees, and other items of income and expenditure are all part of the economic activity measured in the Australian national accounts. However, while all the production of NPIs are embedded in the accounts for industries such as health and community services, education and cultural and recreational services, they are not separately identified.

A NPI satellite account provides a means by which the economic aspects of NPIs can be drawn out and analysed separately within the structure of the main accounts. One of the major features of a NPI satellite account is that it is set within the context of the whole economy, so that NPI's contribution to major national accounting aggregates can be determined. The NPI satellite account has two dimensions. The first is equivalent to production and other economic aggregates defined in the national accounts. The second dimension extends the national accounts to include values for NPI services provided by volunteers. A more complete picture of the value of NPIs to society can be obtained by adding the value of volunteer services to the estimates included in the national accounts.


The international standard for national accounting is the System of National Accounts. The latest edition was released in 1993 (SNA93). It makes recommendations about the scope, concepts and classifications to be used. Australia's national accounts, like those of most other countries, are as far as possible compiled according to those guidelines. While SNA93 contains recommendations about the separate identification of a sub-set of NPIs (see below), the ABS, along with many other countries, has not yet implemented those recommendations.

The concepts and methods used in the Australian NPI satellite account are based on The Handbook on Nonprofit Institutions in the System of National Accounts. The Handbook was endorsed by the United Nations Statistical Commission in March 2002. It was prepared in co-operation with the Center for Civil Society Studies at the Johns Hopkins University, Baltimore, USA.


SNA93 identifies five institutional sectors which are the core building blocks of the national accounts. These are:

  • Financial corporations
  • Non-financial corporations
  • General government
  • Households, and
  • Non-profit institutions serving households (NPISH).

Each of these institutional sectors is made up of individual units capable of engaging in economic activities and transactions with other units. NPI units are concentrated in the NPISH sector but may also be included in the other sectors. The identification of a separate NPISH sector is a new development in the SNA, as prior to the 1993 edition they were included with the household sector. Table 1 shows the composition and structure of institutional units and sectors recommended in SNA93.

Institutional unitsNon-financial corporations sectorFinancial corporations sectorGeneral government sectorHouseholds sectorNon-profit institution serving households sector

CorporationsNon-financial corporationsFinancial corporations

Government units
Government units


Non-profit institutions (NPIs)Non-financial market NPIsFinancial market NPIsNon-market NPIs controlled and mainly financed by government unitsNon-market NPIs serving households

Institutional units can be engaged in market and non-market production and this affects the sector of the economy to which they are allocated in the national accounts.

Market producers are those that sell most or all of their output at prices that are economically significant-i.e., at prices which have a significant influence on the amounts the producers are willing to supply and on the amounts purchasers wish to buy. NPIs which are market producers are allocated to either the non-financial or financial corporations sector.

Non-market producers provide most of their output to others free or at prices which are not economically significant. Thus, institutional units engaged in non-market production may be distinguished by the fact that they must rely principally on funds other than receipts from sales to cover their cost of production or other activities. Non-market NPIs are allocated to either the general government or NPISH sector, depending on whether it is general government or households that are deemed to have control of the NPI operations.

Australia implemented the majority of the recommendations of SNA93 in 1998. However, a decision was made to continue the existing practice of combining accounts for the household and NPISH sectors into a single sector pending the development of satisfactory data to allow a separate NPISH sector to be identified in the accounts. This satellite account is part of that development process.


Non-profit institutions are typically thought of as charities or community service organisations, but they are more than this. NPIs cover a wide range of activities and include organisations serving corporations and governments as well as households. NPIs may be engaged in either market production or non-market production, or a combination of both. SNA93 defines non-profit institutions in the following terms:

‘...NPIs are defined as being legal or social entities created for the purpose of producing goods or services, whose status does not permit them to be a source of income, profit or other financial gain for the units that establish them.’ (SNA93 4.54)

‘Non-profit’ in the title does not mean that such institutions do not, or are not capable of making a profit in the generally accepted sense.

‘...In practice, their productive activities are bound to generate either surpluses or deficits but any surpluses they happen to make cannot be appropriated by other institutional units. The articles of association by which they are established are drawn up in such a way that the institutional units which control or manage them are not entitled to a share in any profits or other income which they receive. For this reason, they are frequently exempted from various kinds of taxes.’ (SNA93 4.54)

SNA93 (4.56) describes the characteristics that distinguish NPIs from other institutional units. In summary, these include:
  • Most NPIs are legal entities created by process of law whose existence is recognised independently of the persons, corporations or government units that establish, finance, control or manage them.
  • Many NPIs are controlled by associations whose members have equal rights, including equal votes on all decisions affecting the affairs of the NPI.
  • There are no shareholders with a claim on the profits or equity of the NPI.
  • The direction of an NPI is usually vested in a group of officers, executive committee or similar body elected by a simple majority vote of all the members.
  • The term 'non-profit institution' derives from the fact that the members of the association controlling the NPI are not permitted to gain financially from its operations and cannot appropriate any surplus which it may make.

While it was considered that the SNA93 definition of institutional units was broadly appropriate for NPIs, the Handbook provides a 'structural-operational' definition of NPIs as entities that share the following set of five characteristics. The NPI sector consists of units that are:
  • organisations;
  • do not exist primarily to generate profits and are non-profit distributing where they do make a profit;
  • institutionally separate from government;
  • self-governing;
  • non-compulsory.

These characteristics are complementary to the SNA93 description of a NPI's characteristics, though the notion of 'non-compulsory' is introduced for the first time.

'...Non-compulsory means that membership and contributions of time and money are not required or enforced by law or otherwise made a condition of citizenship' (Handbook, 2.19).

While non-profit organisations can perform regulatory functions that make membership in them necessary in order to practice a profession, the organisation can still be considered non-compulsory so long as membership is not a condition of citizenship.

In the Australian context, an organisation is deemed to be a non-profit company for taxation purposes if it is a company that is not carried on for the purposes of profit or gain to its individual members. Organisations satisfy this criteria if the constituent documents prohibit it from making any distribution, whether in money, property or otherwise, to its members, and the organisation's actions are consistent with this requirement (Australian Taxation Office, 2000).

There is also a group of organisations that generally do not allow the distribution of profits but permit the distribution of assets to members if the organisation is wound up or taken over. Examples include credit unions, building societies, mutual insurers and some trading co-operatives. Lyons and Hocking (2000) use the term 'third sector' to include NPIs plus these organisations. See Dimensions of Australia's Third Sector by Lyons and Hocking (2000) for a more detailed discussion and estimates of the third sector for 1995-96.


The Australian NPI satellite account does not attempt to measure the universe of entities that could be legally defined to be NPIs. This is partly for practical and partly for conceptual reasons. It excludes NPIs mainly controlled by governments. The boundary between government units and NPIs controlled by governments is particularly difficult to draw and the ABS has not yet classified the many units in the general government sector in this way. The decisions made on scope can have a significant effect on the size of the NPI sector as many of the institutions within this grey area are quite large. Examples include universities and public hospitals operated by religious orders but funded by the government. Consistent with the recommendations in the Handbook, units operating in the finance and insurance industry and other trading cooperatives are not included in this satellite account as they are in the commercial sphere and are primarily guided by commercial goals and considerations. For further details on the types of NPIs in Australia see Lyons and Hocking (2000).

The scope of the Australian NPI satellite account is therefore all NPIs classified either as NPISH or to the non-financial corporations sector. There are only two types of NPIs included in the latter - hospitality clubs and business and professional associations.

The scope of NPIs to be included in a NPI satellite account is worthy of further consideration and the ABS would welcome comments from users of the statistics.


The first dimension of the NPI satellite account provides estimates of production consistent with the production boundary of the national accounts. The second dimension focuses on NPI production attributable to volunteer labour and extends the production boundary beyond that defined for the national accounts. For market NPIs, the valuation of output is consistent with the valuation of output for incorporated and unincorporated enterprises more generally in the national accounts. It is the sum of:
  • the total value of goods and services sold;
  • the total value of goods or services bartered;
  • the total value of goods and services used for payments in kind, including to employees; and
  • the total value of changes in inventories of finished goods and work in progress intended for one or other of the above uses.

The NPIs that have been valued in this way are hospitality clubs and business and professional associations. (For the latter, member subscriptions are treated as sales receipts for services.)

The output of non-market NPIs is valued as the sum of costs incurred, excluding interest payments and other transfers, that is the sum of:
  • intermediate consumption of goods and services;
  • compensation of employees;
  • consumption of fixed capital; and
  • taxes, less subsidies, on production (e.g. payroll tax) other than those on products.

Valuation of the output of non-market NPIs at its cost of production is based on the absence of a market price for non-market services. It is consistent with the convention adopted for the valuation of general government sector output in the national accounts. When compared with market valuation, it excludes a return to capital (net operating surplus).

Although non-market NPIs receive most of their income from sources such as government grants or donations, they may also receive substantial revenue from sales of goods and services (e.g. school fees). If these were also included in the measure of output the value would be distorted by double counting. Once a NPI is defined as a non-market producer because it provides most of its output of goods and services free or at significantly reduced prices, all output is valued at cost.

Appendix 3 contains an example of the valuation of output and gross value added of market and non-market NPIs.


NPI gross value added and NPI GDP are the major economic aggregates derived in the satellite account.

Gross value added shows only the 'value' which a producer adds to the raw material goods and services it purchases in the process of producing its own output. NPI gross value added is measured as the value of the output of NPI goods and services less the value of the intermediate consumption inputs used in its production. As non-market NPI output is valued at cost, gross value added for non-market NPIs is also equivalent to the sum of compensation of employees, consumption of fixed capital and other taxes less subsidies on production.

Output and value added is measured at 'basic prices', that is before any taxes on products are added (or any subsidies are deducted). SNA93 states that basic price measures are to be used for comparisons between sectors and industries and across countries.

NPI GDP, on the other hand, measures the value added of NPIs at purchasers' (market) prices. It therefore includes taxes paid less subsidies received on NPI goods and services as these are reflected in prices that consumers actually pay. The only product taxes identified are poker/gaming machine and alcohol taxes applying to hospitality clubs.


NPIs receive income from market sales of goods and services, from government grants, private sponsorship and donations and from other sources such as interest and dividends received on investments in financial assets. The satellite account and the national accounts make a distinction between what is termed 'transfer' income and 'sales of goods and services'. Transfers are transactions in which one unit receives resources from another unit without providing a good or service in return. Receipts of donations, bequests, government grants, and most membership dues and subscriptions are classified as transfers received. Sales of goods and services on the other hand are transactions where payment is received in return for a benefit provided, such as school fees, admission charges and food and beverages. In principle it should also include the imputed value of goods such as food and clothing provided free but data are not available to do this. The distinction between sales and transfers is not always clear cut in practice. Funds received from sponsorships and business/community partnerships have been included as sales of goods and services because the sponsor receives advertising or promotional benefits from the NPI. Membership dues received by business and professional associations (market NPIs serving businesses) are also treated as sales of goods and services by the NPI (SNA93, 8.94).


The second dimension of the NPI satellite account focuses on NPI production attributable to volunteer labour.

Two alternative methods that have been widely canvassed in the literature for the valuation of unpaid work are the individual function replacement cost method and the gross opportunity cost method. Consistent with the general approach recommended in the Handbook, the value of volunteer services in this NPI satellite account is calculated using a variant of the individual function replacement cost method.

The individual function replacement cost approach assigns values to the time spent on volunteering according to the cost of hiring a market replacement for each type of volunteer service. For example, time spent volunteering in the field of education is valued according to the rate of pay for education workers. While this is the preferred method, the value of volunteer services may be under or over estimated depending on variations in the productivity of volunteers compared with labour provided to the market sector.

Where detailed wage and volunteering information is not available, the Handbook recommends that the average gross wage for the community, welfare and social service occupation category be used. The Handbook argues that the work of volunteers is likely to resemble that occupational category, and that the wage rate is typically toward the low end of the income scale. This is the approach that has been used in this satellite account.

The opportunity cost method values voluntary work in terms of income assumed to be foregone by individuals when time is devoted to voluntary, rather than paid, work. A discussion of this technique can be found in Unpaid Work and the Australian Economy, 1997 (cat. no. 5240.0). The ABS has reservations about the appropriateness of this method as it assumes that paid work is foregone in order to undertake voluntary work. Most workers however, have limited choices in the hours they work and are more likely to be giving up leisure time for voluntary work. This being the case, the opportunity cost should not be based on the wage they receive in the market but on the value they place on leisure. Valuation of goods and services at market prices is at the heart of national accounting. In this context, two volunteers involved in an identical unpaid activity should be valued at the same hourly rate irrespective of what they could each earn in their paid occupations.


The classification system used in this satellite account is a reduced version of the classification that is recommended in the Handbook, the International Classification of Nonprofit Organisations (ICNPO). Although ICNPO does include some purpose criteria, it is fundamentally an activity classification, and it permits a fuller specification of the components of the non-profit sector than the industry classification used in Australia, the Australian and New Zealand Standard Industrial Classification (ANZSIC). In some instances the detailed ANZSIC codes cut across several ICNPO groups and subgroups. A number of the broad level ICNPO groups have been combined in this publication in keeping with the current availability of data.

See Appendix 4 for a full version of ICNPO and Appendix 5 for a concordance between ICNPO and the industries in the ANZSIC classification.

Data on voluntary work was collected using an activity classification very similar to ICNPO, at least at the Group level. A concordance between ICNPO and the type of organisation for which volunteers worked is shown in Appendix 6.



The ABS has not conducted a dedicated survey of non-profit institutions. Data presented in these accounts are compiled from a variety of economic and social collections conducted by the ABS and other agencies. The objective of the majority of these collections is to provide industry or activity rather than institutional sector data. For some collections data for NPIs are part of the survey outputs. For others, data for NPIs had to be derived from input data. Although the ABS industry surveys use the ABS business register as a survey frame, NPIs were self-identified by a question on the Economic Activity Survey (EAS) and Service Industry Survey (SIS) forms rather than by reference to a register of NPIs. There are a number of issues arising from this that may affect the quality of the estimates (see 'Quality of estimates' below).


The main data sources used to compile the NPI satellite account are listed below.

Service Industry Surveys
Sports Industries, Australia 2000-01 (cat. no. 8686.0),
Community Services, Australia 1999-2000 (cat. no. 8696.0)
Clubs, Pubs, Taverns and Bars, Australia 1997-98 (cat. no. 8687.0)
The SIS collections are conducted on a rotating basis (generally every three or six years) for selected service industries. They are designed to collect data at the detailed industry level (4 digit ANZSIC ), and as such have large sample sizes for the target industries. SIS data were used for sports clubs, hospitality clubs, nursing homes, social services and for interest groups nec. Where surveys related to a different year, the data were extrapolated to the 1999-2000 reference year of the satellite account using indicators.

Economic Activity Survey

The ABS Economic Activity Survey (EAS) is an annual survey designed to provide data for all industries at the 2-digit level of ANZSIC and is a key source for the national accounts. As it is an economy wide survey it has a relatively small sample size compared with the SIS for those industries where NPIs are significant. It was therefore only used where no other sources were available.

EAS data were used for education other than primary and secondary schools, research, health other than private hospitals and nursing homes, culture, business and professional associations, unions, and the remainder of 'other' NPIs.

National Report on Schooling in Australia

The National Report on Schooling in Australia is an annual report by the Ministerial Council on Education, Employment, Training and Youth Affairs. The incomes and expenditures of non-government primary and secondary schools reported in the 2000 publication were used in compiling the school estimates in the education and research ICNPO.

Private Hospitals

Private Hospitals, Australia 1999-2000, (Cat. no. 4390.0) was used in the compilation of private hospitals. This publication presents details from the 1999-2000 census of private hospitals.

Australian Electoral Commission

The incomes and expenditures of political parties were sourced from the Australian Electoral Commission website. Associated entities were excluded from the scope of NPIs. These include units that hold assets for a political party, investment / trust funds and fundraising groups.

Public finance data

ABS public finance data were used for government transfers to NPIs (transfers received by NPIs from general government).

Generosity of Australian Businesses

Corporate donations to NPIs (transfers received by NPIs from corporations) were derived from data published in Generosity of Australian Businesses, 2000-01 (Cat. no. 8157.0). The Business Generosity Survey was conducted as a supplementary survey run in conjunction with the 2000-01 EAS. Survey data are available by broad types of activity for which donations were given, but not by type of institution receiving the donation. It was necessary to adjust the data for donations made to government organisations such as universities and museums as they are out of scope of this satellite account. This had to be done using rather arbitrary assumptions. Also, as the data related to 2000-01, it had to be extrapolated to the 1999-2000 reference year of the satellite account.

Household Expenditure Survey

Household donations to NPIs (transfers received by NPIs from households) were obtained from Household Expenditure Survey: Detailed Expenditure Items (Cat. no. 6535.0). As the survey related to 1998-99, estimates were extrapolated forward to 1999-2000.

Imputation of the Value of Volunteer Services

The principal data sources used to compile estimates of volunteer hours and imputed compensation were Voluntary Work, Australia 2000 (Cat. no. 4441.0) and Employee Earnings & Hours, Australia May 2000 (Cat. no. 6306.0).

Voluntary Work, Australia 2000 (Cat. no. 4441.0) contains results from the Survey of Voluntary Work conducted in 2000 using the Population Survey Monitor, a quarterly household based collection. The major aim of the survey was to collect data on rates of participation in voluntary work, characteristics of people who volunteer, the broad purpose categories of organisations they work for, and the activities they undertake.

As data for annual hours of voluntary work also include volunteering for government organisations which are out of scope of this satellite account, adjustments had to be made to exclude this volunteering. This was done using a combination of the proportions used in Lyons and Hocking (2000) and a skirmish of units reported in 4441.0.

The value of volunteer services was calculated by multiplying annual hours of voluntary work by average hourly ordinary time earnings of full-time adult non-managerial employees in selected occupations. A single average hourly earnings rate was used for all ICNPO categories of NPIs. Ideally, rates based on the earnings of similar occupations in the paid work sector should be used to derive estimates for each of the ICNPO categories. It was not possible to do this as, although data on the types of activities undertaken by volunteers are available by ICNPO, the time spent on each type of activity by ICNPO could not be determined.

The average hourly rate was derived by a two step process. First, volunteer activities were matched to occupations in the Australian Standard Classification of Occupations, Second Edition (Cat. no. 1220.0). The second step was to calculate a weighted average earnings estimate for these occupations using average earnings data from Employee Earnings & Hours, Australia, May 2000 (Cat. no. 6306.0). The number of persons engaged in each of the volunteer activities were used as weights. The average earnings estimate derived for 1999-2000 was $15.90 per hour.

The methodology chosen here is consistent with the general tenor of the approach recommended in the Handbook. Where specific volunteer activity data are not available, the Handbook recommends that the average gross wage for the community, welfare and social service occupation category be used. It argues that the activities are most likely to resemble that occupation and that the wage rate is typically toward the low end of the income scale. One alternative would have been to use average earnings per hour by industry rather than by occupation which would enable ICNPO specific averages to be used. However industry estimates relate to a variety of professional and unskilled paid activities and are thought not to be representative of the activities undertaken by volunteers. Full-time equivalent volunteer persons were derived by dividing the annual hours volunteers worked by the average annual hours worked in full-time jobs.


Overall, the ABS considers that the estimates are of good quality, especially at the most aggregative level, such as total NPI gross value added and NPI GDP. However, some care should be exercised in the use of the finer level components as the satellite account was compiled from a range of data sources of varying suitability for the purpose. As discussed above, NPIs are not a selection variable in ABS economic collections and a fully updated list of the NPI population was not available for use in the sample process. This problem is likely to be most significant for those ICNPO components that were estimated using input data from the EAS as that survey is not designed to provide estimates at a fine level of industry detail and therefore the sample size may not be sufficient for the target industries. In order to reduce the impact of this, some of the ICNPO groups for which EAS data have been used have been combined in this publication into a single 'other' category.

The following illustrates the estimation of NPI activity using input data from EAS. Assume there are 100 businesses in one of the EAS strata (N) and 10 (n) are sampled. The population weight is N/n = 100/10 =10. If one of those sampled identifies itself as a NPI, then the data provided by that NPI are expanded by a factor of 10 to provide an estimate of the NPI population in that stratum.

NPIs are self identified in the surveys. The quality of the estimates depend upon accurate self identification. There is a slight tendency for some businesses to identify themselves as NPIs simply because they did not make a taxable profit. As far as possible, these records were discarded in the estimation process. It is also possible that this effect could be more or less offset by legitimate NPIs that may not have identified themselves as such in the surveys.

SIS data is the major data source used to compile these estimates. While the same estimation strategy as that described above is used, the NPI estimates so derived are considered to be of good quality because the surveys used target industries at a more detailed industry level (ANZSIC 4 digit) where NPIs are likely to be very significant or even predominant. They have a larger sample size for the target industry and NPI activity is often an output variable in the surveys. The main drawback is that they are only available periodically. Where the reference year of the surveys are different to the 1999-2000 reference year of this satellite account, broad indicators were used as an extrapolator.

Most ABS business surveys use the ABS register of employing businesses to draw a sample frame. To the extent that NPIs are employers, their chances of selection in these surveys are the same as any other unit of that size. There are a large number of very small NPIs that are non-employers, and these would not be included on the business register. However, a significant part of their activity would be accounted for in the estimates of the value of volunteer services because the volunteer estimates are based on a household survey.

Changes currently underway in the ABS statistical infrastructure are likely to improve our capacity to make higher quality estimates of NPI activity in the future. With the introduction of the new tax system, organisations apply for an Australian Business Number (ABN) and are placed on the Australian Business Register (ABR). Businesses with an annual turnover of $50,000 or more and NPIs with a turnover of $100,000 or more must register for the goods and services tax (GST) and receive an ABN, while those with a lower turnover may choose to register. It is expected that most businesses and NPIs who are under the turnover threshold will register as they need an ABN to get GST credits. ABS is now moving to use the ABR together with additional information from the ATO as the source of information for the majority of businesses included on the ABS business register. The identification of NPIs on the new register should provide the opportunity for improved NPI estimates from ABS business surveys. The ability to identify all NPIs in the population, rather than relying on self-identification in the sample, will allow the ABS to use alternative estimation techniques to improve the quality of NPI estimates.

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