Common Pool Resources are a prime example of a paradigm that escapes this dichotomy.
Privatize is an acceptable verbiage for a government or government-owned entity which has outsourced to a private corporation.
Not all non-profits are corporations–many non-profits are trusts, and legally speaking trusts are not corporations (although it is not uncommon for them to own corporations, or to have corporations as their trustees–or even beneficiaries). Many small non-profits are unincorporated associations. Nonprofit versus for-profit status is an orthogonal dimension from corporate vs non-corporate legal structure.
Also, "non-profit" isn't a "colloquialism", it is an official legal term in several jurisdictions: for example, 37 US states have (at least partly) adopted the American Bar Association's "Model Nonprofit Corporation Act" [0]. And it isn't just an official legal term in the US, see section 48 of the Australian state of Victoria's Payroll Tax Act 2007, entitled "Non-profit organisations" [1]
[0] https://en.wikipedia.org/wiki/Model_Nonprofit_Corporation_Ac...
[1] https://austlii.edu.au/cgi-bin/viewdoc/au/legis/vic/consol_a...
I think you mean to say, "a non-profit entity cannot be owned by a for-profit entity in such a way that would give it controlling interest"
A corporation can be non-profit (aka not-for-profit), and there is no problem with non-profit corporation A owning non-profit corporation B. Non-profit vs for-profit is orthogonal to corporate vs other (e.g. trust) legal structure.
Given how the term is conventionally used, 'privatize' implies that for-profit enterprise has taken over, and even pedantically - looking at what the root word of the term technically means instead of how the term is conventionally used - it implies for-profit enteprise, given private ownership, in the strictest sense of the term, means no restrictions on how the private actor who owns the property may use that property, including no restrictions on distributing profits to shareholders.
Granted this would be an uncommon use of the verbiage given the situation, that does not mean it is incorrect usage. You are correct that typically privatization occurs when a government service is executed by or government infrastructure is transferred to a private for-profit corporation, it is not necessarily the case that it has to be a for-profit corporation for privatization to occur.
Non-profits can still be and are privately owned, what’s different about them is the accounting rules they are subject to and their status per statute. In exchange for their tax advantaged status, they give up their ability to return a profit to the owners, but it still has owners.
Also just a side note, I would be interested to hear if anyone wants to chime in if any of this is fundamentally different under Portuguese law.
Whether non-profit private entities have the same properties that - in the case of for-profit enterprise - motivate critics of privatization to oppose government reliance on them, is orthogonal to that point. But on the subject, that might be true, but my take is that the important part to most critics of privatization is the entities are motivated by profit.
So this still qualifies as privatization, no?
If your contention is more rooted in the amount of direction that the government gives the private entity it is "delegating" to, then maybe that's something to explore?
That said, I would still say that using contractors like Blackwater or Lockheed Martin is "privatizing" various aspects of the military industrial complex, even if their actions are to greater or lesser degrees guided by government mandate.
In this sense, the fact that this was delegated to non-profit organizations, which have the same objectives as the state (provide help, rather than profit) makes some difference.
So the issue here seem more the funding cuts rather than who manages them.
The counter-argument is that the 5 orgs can be somewhat more efficient than the one monolith, but the key is the conditional: they can, but there is no guarantee, whereas the 4 extra overheads are guaranteed. That's one of the many systemic flaws of privatized/delegated systems.
Because, as organizations scale up and enough time passes, the usual outcome is a gigantic web of inscrutable policies and procedures. And lots of people to write and enforce them. Getting something done that in a small organization can trivially be handled by the person originally seeing the need for it, will in a large organization often involve five other people in a messy chain of emails. Or it can't be done at all, unless one is willing and able to play politics to get it done.
Example: I work at a school/university with some 30 thousand students, that is the merger product of many smaller schools, each targeting different professions. These mergers were done for efficiency reasons. I'd estimate the teacher/support head count overhead for these originals schools to be somewhere between 30 and 50%. Currently, we're well over 100% overhead. So we employ more non-teachers than we employ teachers. (And on top of that, teachers handle a lot of non-teaching-related work, of course.) Somehow, the merger is seen as a success.
Small organizations are awesome. It's a shame that government rules and regulations often make them unsustainable.
/rant