Non-profit organisations (NPOs) are generally known as endowments, foundations, or non-government organisations (NGO) that raise funds and carry out operations to fulfil unmet social, environmental, or cultural needs of individuals, thus contributing significantly to the social well-being of people.

NPOs offer social services and programmes through federal, provincial, and local entities for purposes other than profit. In many countries, NPOs are described as the third sector of society, working parallel to, but independently from the government and private profit-generating sectors engaged in a range of activities to promote the social and economic progress of the country.

According to the Federal Board of Revenue (FBR), there is a total of 3,184 NPOs registered with the FBR and an additional 676 registered with the Securities and Exchange Commission of Pakistan (SECP). In addition, several unregistered NPOs are also working in different provinces of Pakistan, including 1,548 NPOs in Balochistan, 958 in Khyber Pakhtunkhwa, 3,640 in Sindh, 7,292 in Punjab, and 55 in Islamabad Capital Territory. In this way, the total number of registered and unregistered NPOs working in Pakistan comes to 17,408 in 2022.

The Pakistan Centre for Philanthropy has been authorised as a Certification Agency to evaluate the performance of non-profits on behalf of FBR and certify that NGOs, non-profits, and community-based organisations meet the desired standards of operation in legal and financial management matters for certification.

In 2016, Shaukat Khanam Hospital, Indus Hospital and The Citizens Foundation employ over 25,000 people and generate over Rs13 billion in revenue reflecting the fiscal impact of non-governmental organisations in Pakistan

The NPO sector in Pakistan has grown immensely over the years, with the basic objective to work for social causes and community development. In this context, NPOs can play a crucial role in enhancing skill development, improving income-generation opportunities, and in turn, accelerating economic activity in the country.

NPOs’ welfare-oriented initiatives of serving humanity and uplifting vulnerable communities are widely recognised and appreciated but their contribution to improving the Pakistani economy is often overlooked. A review of some case studies as empirical evidence to substantiate the argument about the economic impact of these non-profits is revealing.

For instance, Shaukat Khanam Memorial Trust (SKMT), The Indus Hospital (TIH), and The Citizens Foundation (TCF) are some reputable non-profit organisations working in Pakistan. The Indus Hospital has employed over 8,000 people and earned Rs2.7 billion, Shaukat Khanam Memorial Trust has employed over 2,000 people and Rs8.5bn, and The Citizen Foundation has employed over 15,500 people and earned Rs2.6bn in 2016. These figures highlight the fact that non-profit organisations contribute considerably toward job creation and income generation in the country.

Given that there are 17,408 non-profit organisations currently operating in Pakistan, it would be plausible to assess the tremendous contributions of these organisations in job creation and income generation as a result of their social-welfare programmes.

This argument is further reinforced by the General Theory of Employment, Interest, and Money, developed by John Maynard Keynes, which explains the relevance of an economy’s overall spending and its impact on output, employment and inflation. Mr Keynes stated that spending in the economy has a positive impact on a country’s output through the creation of more jobs. According to this statement, spending on social services and non-profits creates jobs in the country, hence increasing economic output.

In conclusion, we can say that growth in non-profit organisations as the third sector of Pakistan will significantly improve the social and economic conditions of the marginalised segments of society. As discussed earlier, the organisations such as SKMT, TIH, and TCF employ over 25,000 people and generate over Rs13bn in revenue, reflecting the economic impact of non-governmental organisations in Pakistan.

However, it is worthwhile to note that only 22 per cent of non-profit organisations are registered with SECP and FBR, while the remaining 78pc NPOs are operating in Pakistan without being registered. NPOs receive donations to fund their activities, and after registering with the SECP and the FBR, they can receive donations through appropriate channels and procedures, which would strengthen and improve NPOs’ legality and ability to assist society by raising their income and enhancing the job market opportunities in Pakistan.

This signifies the importance of expanding the network of registered organisations to improve the efficacy of the non-profit sector in the country.

The author is a Junior Programme Officer-Research Unit at the Pakistan Centre for Philanthropy, Islamabad

Published in Dawn, The Business and Finance Weekly, May 16th, 2022