Third sector

The term ‘third sector’ is often used because it appears as a neutral term, free of an a priori link with any theoretical or ideological tradition. This, however, implies that the same word, ‘third sector’, can have different meanings.

Some organisations are clearly considered as belonging to the third sector, whatever the meaning given to the term. This is the case, for example, of organisations which are limited to political goals and to the social and cultural self-expression of their members – no one would doubt that NGOs, cultural associations wherein people spend their free time and similar forms belong to the third sector. However, things are getting more difficult with respect to those organisations that provide goods and/or services for others.

The inclusion or exclusion of these organisations will depend on the definition used. Definitions as they are often found in the US imply that only those organisations that do not make a surplus and/or do not distribute it among their members belong to the third sector; this first approach is at first glance especially convincing as long as the organisations considered as belonging to this sector are seen as social, cultural and political bodies, where economic aspects play no or just a very limited role (voluntary organisations, charities, foundations).

However, there also exists a broader and somewhat different definition. According to the latter, the main criterion for deciding whether an organisation belongs to the third sector is the fact that the organisation is governed in a way that ensures that the potential surplus is used and reinvested alongside social criteria. This is ensured through having the organisation governed by stakeholders with a multi-goal agenda, or by a set of different stakeholders, who have to agree on a balanced set of material goals or other purposes; such organisations would then not have to be non-profit, but they would have to be not-for-profit. This second definition is mostly linked with a view that acknowledges that many third sector organisations have an important economic dimension and an economic purpose; this is the case of cooperatives and mutual societies, but as well of new and other forms of “social enterprises”; similarly, nowadays, many voluntary and charity organisations can also be seen as different forms of organizing actions with a clear economic dimension – as contributors to a different, “social” or “solidarity-based” economy.

Finally there can be differences in defining the third sector regarding the degree to which sectorial borders are seen as clearly demarcating it. From what point onwards does a tight link of a third sector organisation with the public authorities turn it into a state-related agency? And from what point does the concern with the economic stabilization and growth of a third sector service provider turn this organisation into an enterprise where concerns with making a surplus are as dominating as in for–profit enterprises? These questions do not only indicate that the boundaries between sectors are often hard to draw and that there are “grey zones” of transition between sectors; they also underpin a viewpoint that argues that it is not the total absence of state concerns and profit considerations which defines a third sector organisation, but rather the degree to which these motives are outbalanced by other ones.

By Adalbert Evers.


To read more about the theoretical debates on this question, see the first introductory chapter in the Third Sector in Europe and the article by Borzaga, C. and Mittone, L. “The multi-stakeholder versus the non-profit organisation” (Working paper, 7, Università degli Studi di Trento, 1997).

What are you interested in?