Defining Boundaries: Towards an Identity of The Malaysian Third Sector

Abstract

Reviews of the literature suggest the Malaysian third sector lacks basic descriptive information. Research on what makes up the sector is scarce, indicating little effort was undertaken to define and identify its components from the Malaysian perspective. This paper proposes the scope of the Malaysian third sector by suggesting its boundaries and identifying the constituents. Inclusion was based on the structural-operational definition of third sector organisations developed by Salamon and Anheier (1992, 1996) and the primary basis for exclusion is distribution of profits to shareholders and promoters. It is proposed that social, voluntary, non-governmental and nonprofit organisations make up the Malaysian third sector, while state linked organisations and profit-distributing organisations such as cooperatives and social enterprises are excluded. Knowing the third sector’s boundaries and constituents would allow more focussed research to be undertaken; enabling actors, researchers, and policymakers to identify issues and develop policies and strategies to address them.

Downward Accountability as a Tool to enhance Malaysian NPO's Effectiveness

“…Nonprofit organisations must have access to information from various sources to construct their activities effectively (Saraite-Sariene et al, 2020). NPOs in Malaysia are obliged to submit several yearly reports to the Companies Commission of Malaysia (CCM) and the Registrar of Societies (ROS) (Hashim et al, 2014;Perai, 2019); however, NPOs are not required to release this information to the public. Thus, financial and non-financial information must be disclosed for NPOs to be held accountable.…”

“…The financial statement displays the effectiveness of the organisation's financial management. The fundamental purpose of a nonprofit entity's financial statements in its status as a corporation is to provide creditors, investors, and other parties with relevant information, therefore securing funding for NPO (Banding & Mayangsari, 2017;Perai, 2019). Financial reporting and financial statements are the primary responses financial reports provide stakeholders.…”

Board Member with Political Connections, Audit Committee Expertise, Competent Management Team and Timeliness of Financial Reporting: Malaysia Non-Profit Organization Evidence

“…Therefore, the importance of transparency and accountability for an NPO is very important, especially from the funder's perspective (Masdar, 2015), in order to ensure that the NPO's sustainability can be maintained. In Malaysia, the biggest challenge of NPOs are obtaining funds from individual donors or corporate bodies and government grants (Perai, 2021). The number of registered NPOs is increasing year by year; therefore, public trust, including corporate and government trust in NPOs, becomes an important asset.…”