6.3 Private Sector Institutions

Private-sector institutions are funded by revenues made from the sale of products or services, through investment by stockholders, or through donations. There are two types of private-sector institutions: for-profit and non-profit. Under for-profit institutions there are two types: Publicly-held and privately-held. The distinction is important because different types require different kinds of reporting of information.

For-profit private-sector institutions:

By definition, a for-profit institution “is a corporation that is intended to operate a business which will return a profit to the owners.^[1]” There can be two types of for-profit private-sector institutions: publicly-held and privately-held. The distinction between the two is that the publicly-held corporation sells stock in the company – the public, therefore, can essentially be “co-owners.” Privately-held corporations do not sell stock; all of the company’s assets are in private hands.

For-profit private-sector institutions generate multiple types of information in support of the running of the business, to promote their products, or as required by the government. The required documentation for government differs with publicly-held corporations requiring more reporting than privately-held corporations (this is due to the government’s interest in protecting citizen’s investment in companies.)

Unlike public-sector institutions where some neutrality of position is expected, private-sector institutions may be more agenda driven since their information is generated to support their product, organizational goals or policy line. Much of what private-sector institutions produce is for their internal use only, but some is created for use both inside and outside of the institution.

Non-profit private-sector institutions  

Non-profit private-sector institutions differ from the for-profit in their ultimate objective. The for-profit’s goal is to generate revenue through the sales of goods and services. The non-profit’s goal is to influence, persuade, or receive support for a cause. They generate donations that support the efforts of the organization but that funding is invested back into the organization, not as revenue that delivers income to “owners.”

Non-profits are organizations like associations, churches, fraternal organizations, and other groups that have a focused set of activities that support the interests or concerns of the organization.

In both for- and non-profit private-sector institutions, information is generated and used for different purposes: some because law requires they make the information available, some to promote the organization, some to satisfy the organizational mission to inform the public or stakeholders about an issue or topic, some to support the network of members of the organization. The information may be available in databases of statistics, on institutional websites, as part of media kits prepared by the public relations department, in directories or annual reports, and in many other formats.

Private-sector institutions generate both public and private records about their own activities.

Private information created by both for-profit and non-profit private-sector institutions is intended for use by the company or organization and can be difficult to obtain by someone outside the institution. These can include:

• internal correspondence

• proprietary product recipes or unique manufacturing processes (for profit)

• marketing research about their customers or constituencies

• business plans for product line expansions (for-profit) or service expansions (non-profit)

But other records generated by private-sector institutions are public and more easily obtained. These can include:

• Public financial disclosure documents if they sell stock to shareholders or operate as a non-profit institution with tax exemption

• Compliance documents if they operate in an environment that requires licenses or regulatory oversight

• Information verifying compliance with tax laws, social security contributions, worker’s compensation payments for employees

• Evidence they are complying with federal and international trade and commerce laws and regulations if they operate overseas

You have legal and legitimate access to much more information from private-sector institutions and through public records than you would likely ever think to request. In fact, the potential problems involved in seeking information about for-profit and non-profit institutions is not the chance that your requests might be denied but, rather, that you will be overwhelmed by the quantity and complexity of it all.

You can reasonably expect for-profit and non-profit institutions to be reliable, accurate and complete in their information-producing and -disseminating functions. But you should not expect the information to be neutral in respect to social values and social structures. Nor should you expect that institutions will remain static as laws change and as social values and structure evolve. Rather, you should recognize that when you use information from these institutional sources, you have to decode the biases, assumptions and vested interests inherent in the information.