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Scope of the NPI satellite account

Australian System of National Accounts: Concepts, Sources and Methods
Reference period
2020-21 financial year

23.87    The Australian NPI satellite account does not attempt to measure the universe of entities that could be defined as NPIs. This is partly for practical and partly for conceptual reasons.

23.88    The UN handbook defines non-profit institutions in paragraphs 2.15 to 2.19 as organisations which are:

  • not-for-profit and non-profit-distributing;
  • institutionally separate from government;
  • self-governing; and
  • non-compulsory.

23.89    This definition forms the basis of what is included within the scope of the NPI satellite account.

Organisational existence

23.90    Organisational existence means that in order to meet the definition of an NPI, an entity must have some institutional reality and a meaningful organisational boundary separate and distinct from its members.

23.91    For the purposes of the satellite account, a practical means to identify that an entity meets this criterion is the existence of an ABN. Without an ABN, an entity cannot have employees or accept tax deductible donations. There are many non-profit groups in Australia who do not have an ABN, some of which if examined closely could be argued to have a separate organisational existence. The economic significance of such units is likely to be negligible if such groups are unable to employ or accept tax deductible donations.

Not-For-Profit and Non-Profit Distributing

23.92    To meet the definition of an NPI, an entity must be both not-for-profit and non-profit-distributing. This means that the organisation does not exist primarily to make a profit, and any surplus it accumulates must not be distributed to owners or members.

23.93    For the purposes of the satellite account, this means that units are excluded from the scope of the account if they are able to distribute surpluses to members, either on an ongoing basis or on liquidation. The handbook mentions that to the extent that they are able to distribute profits to members, co-operatives and mutual societies are excluded from the NPI sector. Also excluded from the satellite account on this basis are strata titles, credit unions and building societies and any other units classified to either the finance or insurance industries such as religious charitable development funds.

Institutionally separate from Government

23.94    To meet the definition of an NPI, an entity must be institutionally separate from government. This means that the organisation must have sufficient discretion with regard to both its production and use of funds, and that its operating and financing activities cannot be fully integrated with government finances.

23.95    For the purposes of the satellite account, this means that any unit classified to the general government sector is excluded on the basis that if the unit is sufficiently controlled by government to be included in the general government sector, its finances are integrated with those of the government and the unit is not sufficiently separate from government to satisfy this criterion.

Self-governing

23.96    To meet the definition of an NPI, an organisation must be self-governing. This means that the organisation must be able to control its own activities and is not under the effective control of any other entity.

Non-compulsory

23.97    To meet the definition of an NPI, an organisation must be non-compulsory. This means that membership or contributions of time and money cannot be required or enforced by law or otherwise made a condition of citizenship. A unit is still considered to be an NPI if membership is a necessary condition to practice a particular profession. For the purposes of the satellite account, this means that professional associations are within scope.