This chapter considers institutions that perform or fund research and experimental development (R&D) and identifies their shared characteristics. These characteristics are used to group institutions into sectors, which are then used for the presentation of statistics on R&D. The chapter draws upon the approach of the System of National Accounts (SNA) to identify five sectors, Business enterprise, Higher education, Government, Private non-profit, and, for funding purposes only, the Rest of the World, (formerly referred to as Abroad). While four of the sectors can be related to those of the SNA, the Higher education sector, because of its policy relevance, is unique to this manual and is made up of institutions that can be in any of the SNA sectors. While there are chapters in the manual devoted to each sector, this chapter discusses the features of each sector and the boundaries that separate them.