Meaning and Purpose

What is the Third Sector essentially? This matter can be discussed objectively legally as well as subjectively. Legally the Third Sector is simply a category of corporations registered under the Corporations Authority of the Ministry of Justice. Associations are report to the Registrar of Associations unit, while Public Benefit Companies report to the Registrar of Companies unit and also to the Registrar of Companies. This is the Third Sector objectively.

The Third Sector is also known as the social sector, the civil sector, or the nonprofit sector, implying a subjective interpretation of the Third Sector as those organizations involved in social impact, social values, community-based or ideologically-oriented as opposed to businesses which are profit-oriented or government institutions which are not a function of the social stratum or social values. Some interpret social sector as social welfare, although welfare counts for only a fraction of all nonprofit organizations. Here we are dealing with subjective interpretation, as well as professional identity, so for example a social welfare nonprofit and a national museum or a hospital or university are all technically nonprofit organizations, yet the museum would not associate itself as a social organization, but rather a national cultural institution, and the hospital would identify with the medical field, company or nonprofit, and the university with the academic field, so these are all Third Sector technically, but not social sector per se.

The nomenclature in itself shows us that the identity of the Third Sector is in the making. Added to that may be in the negative description of ‘nonprofit sector’, in other words, what it is not, as if it lacks purpose in and of itself. The title ‘Third’ is also a meaningless title, if interpreted simply as that which follows the second sector, which is named the Private or Business sector, which follows the first sector, which is named the Public or Government sector.

However, ‘Third’ may be interpreted not as a digital sequence but rather as bipartisan, or unaffiliated, or agency, or mediator. If we attribute such meaning to the Third Sector, as a positive description, then it serves an important purpose, which businesses and government institutions cannot fulfill. The Third Sector is then a category of organizations that are independent of political interests and economic conquest, and thus, by orientation, can advocate for the interests of the public, the community, the people, especially when these interests are at odds with those of business corporations and government.

The Third Sector is often perceived essentially as an arm of the government, as outsourced services, in order to bring in additional funds from donations, as well as donated time and energy of volunteers who find various activities meaningful and worth their time without financial benefit, but also because nonprofit organizations are ideally closer to the field, to the needs of the people, and to changes, while the government tends to be bureaucratic, slow, impartial and inefficient. Outsourced services by the government are not exclusive to nonprofit organizations though, and besides government daughter companies, bids are usually issued to businesses.

To further extend the thought of the Third Sector as outsourced government services, for more efficient and effective execution of policy, we should view the systematic circumstances that allow for innovation and good new ideas and practices. Government is structurally conservative with use of funds and innovation. It is not set up to take risks and has to document and be accountable for every expense and liable to political and bureaucratic criticism that extinguishes entrepreneurship. The Third Sector however, is structurally able to support risks as a medium for social innovation, where independent people and projects may experiment with new creative practices and sometimes ‘waste’ funds of donors who are aware of the risk involved and support experimentation. Thus, the Third Sector is meaningful and purposeful, as a field of social innovation, while successful projects will grow into worthy organizations with cutting-edge practices sponsored by the government issued public funds.

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