Allocation of nonprofit institutions to sectors
3.48. In allocating NPIs to sectors, the distinction between market and non-market NPIs is important. Market NPIs are classified to the corporate sectors and non-market NPIs are allocated to the general government sector or the NPISH sector. Market NPIs that are engaged primarily in financial intermediation (as defined in paragraph 3.54) or auxiliary financial services (as defined in paragraph 3.56) are classified to the financial corporations sector. These include NPIs formed as associations of financial corporations to provide services to member corporations. All other market NPIs are allocated to the non-financial corporations sector, including NPIs formed as associations of non-financial corporations to provide services to member corporations.
3.49. Non-market NPIs that are controlled and mainly financed by government are classified to the general government sector. SNA93 defines government control of NPIs as 'the ability to determine the general policy or programme of the NPI by having the right to appoint the officers managing the NPI'. (SNA93, paragraph 4.62.)
3.50. According to SNA93, government-controlled NPIs may be engaged in research or development or the setting or maintenance of standards in fields such as health, safety, the environment, accounting, finance, education, etc., for the benefit of both corporations and households. Governments create NPIs for such purposes rather than using agencies of government to carry out the same functions. This is because NPIs concerned with public standards may need to be seen as detached and objective, and not subject to political pressures that might apply to government departments. NPIs controlled and mainly financed by government are allocated to the general government sector, irrespective of the types of units that mainly benefit from their activities.
3.51. In some cases, the SNA93 criteria for including NPIs in the general government sector are not sufficiently definitive, and other factors have to be taken into account. Such factors can include:
- the proportion of government appointees to NPI management boards
- the extent to which control and majority financing lies with one government or is divided among different governments and non-government sources
- whether government control exists without predominant government financing or predominant government financing exists without government control
- the degree of independence from government influence able to be exercised by the NPI in day-to-day management of its affairs.
3.52. The most prominent Australian NPIs classified to the general government sector are the public universities. The issues addressed in the classification of the universities to the general government sector are discussed in paragraphs 3.41-3.44.
3.53. All other non-market NPIs (i.e. those that are not controlled and mainly financed by government) are classified to the NPISH sector.
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