Counting Non-profit Institutions in New Zealand 2005

Business Frame population

The primary source of information for counting the number of non-profit institutions is Statistics NZ's Business Frame. The Business Frame identifies enterprises (refer Terms and definitions). For an enterprise to be on the Business Frame it must meet any of certain criteria. The most relevant of which, for the count of non-profit institutions, are:

• annual GST expenses or sales of more than $30,000
• an employment count greater than zero
• IR10 income (rent received, interest and dividends and total income) greater than
  $40,000.

A snapshot of the Business Frame was obtained for the first week of October 2005. This date was chosen because it was the most recent date for which consistent data was available across all three data sources used. The Business Frame classifications used to identify non-profit institutions included:

• Institutional sector (NZISC)
• Industrial activity (ANZSIC 96).

At the highest level the NZISC recognises five distinct sectors:

1. non-financial producer enterprises
2. financial enterprises
3. general government
4. non-profit institutions serving households
5. households.

All of sector four was included by default in the count for this release. Incorporated societies in other sectors were also included, unless under government control. Unincorporated associations in other sectors were assessed by industry to determine whether they were non-profit institutions. Also included were charitable companies. However, trading or family trusts, which made up the majority of trusts, were excluded. Examples of organisations included from the other sectors are racing clubs, business associations, industry training organisations and primary health organisations.

Kindergartens, although classified to the government sector in the national accounts, are included.

Non-Business Frame population

Because the Business Frame includes only non-profit institutions that meet one of
the criteria listed above, other sources were required for the thousands of
smaller organisations that do not meet the threshold. The sources of information used for
these organisations include the Companies Office lists of incorporated societies and
charitable trusts.

Reconciling the populations

The institutions from the overlapping population sources were integrated and reconciled. A hierarchical approach was initially taken to remove institutions duplicated in the overall list. For example, those institutions that were in the Business Frame population were removed from all other population subsets, as the Business Frame provides the most information.

Beyond this other methods employed included name matching and ‘fuzzy’ matching where only high probability matches were actioned (see Terms and  definitions for further detail).

Classifying by activity (NZSCNPO)

The New Zealand Standard Classification of Non-Profit Organisations (NZSCNPO) has been developed for the Non-Profit Institutions Satellite Account, and can be obtained from Statistics NZ. The NZSCNPO groups together organisations involved in similar activities or serving similar purposes. It comprises 12 major activity groups, with the twelfth being a catch-all group, ‘not elsewhere classified (residual category)’.

Three principal adaptations of the United Nation’s classification have been made for New Zealand as follows:

• The first makes provision for early childhood education in the larger education group. While the international classification combines non-profit institutions active in early childhood education with school education, data on these two groups can be easily presented independently in New Zealand.
• The second acknowledges the important role that Māori play in governing tangata whenua outside of central and local government. A new category recognises tangata whenua governance organisations that manage the affairs of iwi, hāpu and marae.
• Thirdly, where appropriate, institutions have been classified as support and ancillary services within each major group, rather than to the residual group ‘not elsewhere classified'. This covers non-profit institutions not adequately covered in the activity descriptors of the main groups, but related in purpose. Examples are school hostels and parent teacher associations that are classified to support and ancillary services to education, and Christian bookshops which are classified to support and ancillary services to religion.

For the Business Frame population the initial classification was done using an ANZSIC concordance. For example, preschool education (ANZSIC N8410) is concorded with early childhood education (NZSCNPO 2 110), hospitals (ANZSIC O8611) with hospitals and rehabilitation (NZSCNPO 3 100), and residential property owners (ANZSIC L7711) with housing (NZSCNPO 6 200). It should also be noted that where a non-profit institution carries out two or more distinct activities, its ANZSIC code is that of the majority activity.

For unallocated institutions from this first analysis, extensive keyword search lists were applied. Although several hundred keywords (for example ‘tennis’ and ‘church’) could be used, the list is still not exhaustive. Finally, manual classifications were made for the largest institutions (in terms of sales of goods and services) that remained, plus those units where their activity was known. After all these steps were completed, the number of non-profit institutions from the Business Frame remaining in the group ‘not elsewhere classified’ is below three percent.

For those organisations added from non-Statistics NZ lists, the overall method was similar. Where possible the ANZSIC-NZSCNPO concordance was applied. For the remainder the keyword analysis was applied. A further allocation was then based on the results of the manual classification of a 10 percent sample of non-profit institutions in the 'not elsewhere classified' group, using the name of the institutions. A further two-thirds of institutions in this group could be coded. The institutions that remain in the 'not elsewhere classified' group are those where either their activity is truly different to those included under any of the other eleven main groups, or where there is insufficient information about them available to allow coding.

Regional case study

To test the quality of coverage of the administrative registers, the small geographic area of the Masterton District Council was used as a case study to examine in detail how many non-profit institutions were actually being captured by the registers.

The additional lists and information used were as follows:

• Tourism Wairarapa directory of Wairarapa Regions Clubs and Organisations
• Local and Regional Grants Schemes
  • Eastern and Central Community Trust
  • Masterton Licensing Trust
  • Lottery Grants
  • Community Organisations Grants Scheme.

Organisations that were duplicated with the same or similar name were removed using key word searches. Further checks were done on the identified institutions to make sure they were actually in the Masterton District Council area and also that they were still operating.

The study revealed that the administrative registers had good coverage of all non-profit institutions in the Masterton District Council. Across all the sources used, these three registers had 92 percent of the institutions recorded.

Limitations of the data

As the study of the Masterton District Council revealed, the number of non-profit institutions identified may still be under-counted. On the other hand, it may also be overstated because of the failure to remove all duplicates from the various registers and the inclusion, not having full information, or organisations not meeting the full definition, of a non-profit institution.

Registers are generally maintained for an organisation's operational purposes. Non-profit institutions may continue to have current registrations with organisations when they no longer meet the statistical concepts required for inclusion in the population of Statistics NZ's Business Frame.

Classification coding by keyword

Keyword coding was applied where either no industrial code was available, or where there was no one-to-one match between the ANZSIC and NZSCNPO classification codes. This was applied for the majority of the non-Business Frame population and some of the Business Frame population. Where multiple keywords are in the name, a precedence list has to be applied. For example, The Church of XYZ Tennis Club would be classified to
sports organisations because in the use of keywords ‘tennis’ is given a higher classification ranking than ‘church’.

NZSCNPO subgroup data

It can be very difficult to identify some of the non-profit institutions in the NZSCNPO subgroups, for example 'income support and maintenance' (4 300) or 'employment and training' (6 300).

An undercount in those subgroups is likely, because some organisations may have been coded to the overarching groups of social services or development and housing instead, based on their industry code or keywords. Therefore, the results of the subgroup counts need to be interpreted with caution. In contrast, the results at the main group level are far more robust.

A further point to note is precisely which organisations and activities are included under each subgroup. For example, group 8 210 includes large, nationally active organisations with fundraising as their main activity, whereas organisations fundraising to support a specific activity covered under one of the other main groups will be coded to 'support and ancillary services' under this respective group. A second example is that rest homes and other aged residential care (except nursing homes that provide first and foremost medical services) are under social services, not under the health subgroup of nursing homes. Further information about NZSCNPO is available from Statistics NZ (http://www.stats.govt.nz/).

Employment counts

Where non-profit institutions employ staff on self-employed contracts rather than on a wage  or salary, the number of people engaged in paid work for the institutions will be under-counted.

Terms and definitions

ANZSIC 96

Australian and New Zealand Standard Industrial Classification. Institutions are classified according to the predominant activity in which they are engaged.

Business type

The legal status of a business organisation (including non-profit institutions).

Charitable companies

Companies accepted by Inland Revenue as charitable organisations. Shareholders must themselves be approved charities and profits can only be distributed to these charitable entities.

Charitable trusts

Organisations registered under the Charitable Trusts Act 1957 whose purpose is deemed to be charitable under New Zealand law but includes every purpose that is religious or educational, whether or not it is charitable according to the law of New Zealand.

Employee count

Head count of all salary and wage earners for the reference month. This is mostly employees, but can include working proprietors who pay themselves a salary or wage (in for-profit organisations). Employee count is now the indicator of business size (employment levels) used by Statistics NZ. It has replaced the previous full-time equivalent (FTE) measures.

Enterprise

A business operating in New Zealand. It can be a company, partnership, trust, estate, incorporated society, producer board, local or central government organisation, non-profit institution or self-employed individual.

Fuzzy matching

A search function enabling names of institutions to be grouped according to whether they have a high probability match, a medium probability match or some other possibility. The need for such matches arises from the name of an institution being on two or more lists but with different formatting, spelling or completeness. Refer to the following table for examples:

Incorporated societies

Societies of not less than 15 persons associated for any lawful purpose but not for pecuniary gain registered under the Incorporated Societies Act 1908.

Institutional sector

Broad economic groupings which bring together organisations that play similar roles in the economy and react similarly to various market prices and/or economic policies.

Unincorporated associations

Clubs, societies and other groups that are formally organised but are not incorporated and hence not registered under any act of parliament.

Copyright

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Timing

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