Dear Bobby,
Non-commercial (NC) means it doesn't belong on Wikimedia Commons. For more detail on Commons licensing
read this page.
Non Commercial use is one of the sticking points when talking to potential GLAM partners. Some people have decided on Non-Commercial use because they are a non-commercial organisation and don't see a need to having anything to do with anything commercial, others are happy to release material under a non-commercial license in the expectation of getting commercial revenue from anyone they can argue is commercial. As far as the Wikimedia projects are concerned a decision was taken to standardise on not accepting NC licensed files in the early days of the project, and that decision is highly unlikely to change. So this is one of the things to resolve when negotiating a residency, and if an organisation is committed to Non-Commercial use then we need to focus on other things. That doesn't mean we can't have a residency with an organisation that is committed to NC licensing of images. But it would need to focus on other things such as access to archives and training of their volunteers. Of course persuading an organisation to move from NC licensing to a license compatible with Wikimedia Commons can also be a big part of a residency, but there is no point digitising and or sorting out metadata for images until you are confident that they will be licensed sufficiently to go to Commons.
Hope that helps. Happy to talk on Skype or maybe at Wikimania if you want advice as to how to persuade an institution to go for a compatible license with us.