Third sector

From CEOpedia | Management online

Third sector (also nonprofit sector) the term refers to organizations that are neither public (i.e., the state) nor private (profit-making private enterprise). Includes social organizations and voluntary (including associations, self-help groups, and social groups), social enterprises, mutuals and co-operative. Not-for-profit organizations vary in size and scope. They operate from small local social groups to large international charities. They may work at a local or national level, or globally. Most of them work thanks to the work of volunteers, having no income from running the organization, but there are organizations run by special staff. They operate within a chosen interest, the purpose of which is to exert social influence rather than profit [1].

The third sector goal is above all to identifying social goals and striving for the good of the general public[2].

5 characteristics for each non-profit organization [3]:

  • Organized
  • Voluntary
  • Private organizations separate from the government
  • Self-governing
  • Profits from the organization intended for the purposes of the organization

Terms that define the third sector

Terms used to describe third sector organizations that contain the same basic elements are [4]:

  • Non-governmental - organizations that fulfill social or political goals, often collaborate with or receive funding from government agencies, but do not cooperate with them in any way
  • Non-profit - the organization raises funds and profits are donated to fulfill social, environmental or cultural goals. They bring no profit.
  • Values-driven - The most important thing is to fulfill social goals. The organization can work with political parties, but the parties itself cannot be a non-profit organization

Functions of third sector

Nonprofits deal with a specific issue that needs to be addressed. Most often, organizations register on key social problems, trying to counteract exclusions and focus on problems social. When considering the function of the third sector, you should pay attention to the mission of each organization it leads. Not all organizations are nonprofit, some are sponsored through various other external companies. Here are most popular three possible functions of a nonprofit [5]:

  • Charity and Social Welfare - organizations are exempt from tax because they help in society and thus save the government money
  • Religious - religious organizations provide services to their communities. Religion is often directed towards sharing faith and bringing good to others in the name of faith. In most cases they are exempt from taxes
  • Trade Organizations - they support the goals of a specific professional group, for example, librarians, teachers. They most often operate within a given profession, offering them assistance in the form of training and contacts
  • Research - is to conduct research in a given sector for the social good, completely non-profit
  • Education - aims to improve education in places par example where there is a shortage of appropriate teachers, the organization helps in recruitment.

Examples of third sector organizations

  • Charities: Charities are organizations that seek to help those in need. They are usually funded by donations from individuals and organizations, and are run on a non-profit basis. Examples of charities include the Red Cross, Amnesty International, and Oxfam.
  • Social Enterprises: Social enterprises are organizations that combine a social purpose with a business model. They use profits generated from their business activities to support their social mission. Examples of social enterprises include The Big Issue, which helps homeless people become self-sufficient, and KickStart, which helps young people get into work.
  • Co-operatives: Co-operatives are businesses that are owned and operated by their members, who also share in the profits. Examples of co-operatives include credit unions, which provide banking services to members and local communities, and food co-operatives, which provide healthy, locally sourced food to their members.
  • Community Organizations: Community organizations are non-profits that work to improve the lives of those in a particular community. Examples of community organizations include neighborhood associations, which work to address issues such as poverty, education, and crime, and community development corporations, which focus on economic development and job creation.

Advantages of Third sector

The third sector provides a number of advantages to society, including:

  • Enhancing civic engagement - The third sector is focused on improving the lives of citizens, and thus encourages citizens to become more involved in their local communities, resulting in a stronger sense of belonging and belonging to a larger, more connected society.
  • Supporting the most vulnerable - The third sector works to help those who are most in need, providing essential services and support to those who are most at risk.
  • Increasing efficiency - The third sector is often more efficient than public or private sectors, as it is typically volunteer-driven, with lower overhead costs. This allows third sector organizations to allocate more resources directly to their cause, making them more effective in achieving their goals.
  • Fostering innovation - Third sector organizations often have the freedom to experiment with new ideas and approaches, allowing them to develop innovative solutions to social issues.
  • Strengthening the economy - By providing employment and volunteer opportunities, the third sector helps to strengthen the local economy. In addition, the services and products provided by third sector organizations often add value to the local economy, helping to create a more vibrant and prosperous community.

Limitations of Third sector

The third sector is an important contributor to the social, economic, and political well-being of societies, but they also have their limitations. These limitations include:

  • Lack of funding: The third sector is often dependent on donations, grants, and other forms of funding to sustain itself, which can be unreliable and insufficient.
  • Lack of resources: This sector often struggles to compete with the private and public sectors when it comes to the resources needed to do their work.
  • Limited capacity: Many third sector organizations are small and lack the capacity to respond to global challenges.
  • Political interference: In some cases, the third sector can be influenced by political agendas, which can limit the effectiveness of their work.
  • Lack of visibility: As the third sector is often overshadowed by the private and public sectors, it can be difficult to raise awareness and gain public support for their initiatives.

Other approaches related to Third sector

  • The Third Sector is commonly seen as a type of entrepreneurship which is focused on creating social value and having a positive impact in society. It can also be defined as a type of economic activity which is neither public (state-run) nor private (profit-making).
  • Social enterprise can be seen as a type of Third Sector organization, characterized by a mix of social, environmental and economic objectives. This type of organization is focused on creating commercial value, with the aim of reinvesting profits in the organization's social objectives.
  • Self-help groups are another type of Third Sector organization, which are based on mutual support and collaboration. These groups are typically made up of members with a common interest or challenge, and they provide mutual assistance and resources to help each other achieve their goals.
  • Voluntary associations are also part of the Third Sector, and they are usually formed by people who share a common interest or cause and wish to work together to achieve their goals. These organizations are typically not-for-profit, and they rely on volunteers to carry out their activities.
  • Mutuals and co-operatives are also part of the Third Sector. These organizations are owned and controlled by their members, and they operate for the mutual benefit of all their members.

In summary, the Third Sector comprises a range of organizations, which have a focus on creating social value and having a positive impact in society. It includes social enterprises, self-help groups, voluntary associations, mutuals and co-operatives. These organizations are typically not-for-profit, and they rely on volunteers or members to carry out their activities.

Footnotes

  1. ↑ Lewis D., 2010
  2. ↑ Ciucescu N., 2009 p.18
  3. ↑ Popowska M., 2014, p. 39
  4. ↑ Popowska M., 2014, p. 32-35
  5. ↑ International Business Publications, 2011, p.14


Third sector — recommended articles
Advantages of cooperatives — Etatism — Innovative systems — Charitable foundation — Activity center — Affinity group — World Packaging Organisation — Business tourism — Community development corporation

References

Author: Natalia Woźniczka

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