Although there has been a debate in the USA for more than two decades about competition policy and non-profit organisations, the debate has not yet had the same prominence in Europe. Only in the last few years, even in the USA, has anti-trust policy toward the sector been examined. The paper examines the position for two groups of competition issues in European Community law: first, the problem of the lawfulness of grant aid, given the rules against state subsidies distorting competition; and second, the application of the rules for competition in the single market including EC anti-trust law. Particular legal problems are identified for non-profits which use geographical catchment area agreements with similar organisations. Finally, the paper examines a range of policy issues which arise on consideration of Community law, including the idea of community development as a locally autarchic objective, the terms of competition for grants and contracts, and the possible implications of the future application of European competition law to non-profits in the Community.