The concept of ‘not-for-profit’ is well understood by economists when applied to government and fiscal policy. However, economists have major issues in understanding the rationale of a non-profit organisation that has to raise money but does not distribute profits to its owners. Orthodox economic rationality does not apply - why should you give money and not receive back any tangible benefit? The concepts of altruism and trust, often bounded in the word ‘philanthropy’, are still relatively unexplored outside a narrow economic literature, and yet as the world recorded its 1650th billionaire and the Band Aid record re-released at the end of 2014 philanthropy is more in evidence today then it has ever been as world phenomenon.
In the absence of a bottom-line profit, charitable organisations have developed a unique form of financial accounting based on fund accounting and trust law. Meanwhile new forms of management information indicators, which can evaluate the performance of a charitable organisation, are emerging. There is also the hybrid organisation that is both charitable and commercial as well as the new development of social finance.
All of these issues and many more are explored in this Series by two of the most influential people in their field Paul Palmer and Peter Grant. The Series will make a valuable contribution to those engaging at various policy and management levels with the sector to enable them to understand what they are engaging with or working for.