The third sector refers to organized, collective action in the economic, social and political space outside households, markets and governments. The idea of a third sector should not be confused with the economic concept of the tertiary or service sector of which it is only one part. All third sector services are part of the tertiary sector, as are public services and market-based, or commercial services.
The Constellation of 'Sector' Notions
Although the idea of a sector as a cluster of related ideas and activities distinguishable from markets, governments and households is widely accepted today, further agreement on what to call that cluster and include within it continues to provoke widespread discussion among scholars, students and authorities. Other closely related terms include civil society, voluntary sector, nonprofit sector, independent sector, social sector, non-governmental sector, informal sector, charitable sector, mission-based sector and more.
The phrase Third Sector is used across a wide body of opinions, perspectives, political, research and theoretical traditions today. However, what people actually mean by the phrase varies widely. The term and a penumbra of related concepts are recent developments, although they have been in the making for several decades. The actual concept emerged gradually from an interdisciplinary and international community of researchers, theorists and practitioners. It was heavily shaped by larger public events as diverse as the post-war rise and critique of the welfare state in Great Britain, the Cold War and the subsequent collapse of the Soviet empire together with the re-emergence of independent civil society in central and eastern Europe and in Latin America, at a time of globalization and general trends away from government and toward privatization in the British government of Margaret Thatcher and the U.S. government of Ronald Reagan.
In its essence, the concept of a ‘sector’ is economic in origin, referring in general to categories of firms producing similar, or identical, products (e.g., the manufacturing sector, the services sector, etc.). However, in recent years it has become a multi-disciplinary concept with implications of networks, communities, clusters or categories of organizations. The concept of a third sector currently occupies a multi-disciplinary domain of a dozen or more academic disciplines, spanning sciences, basic and applied social sciences and professions, nonprofit practitioners, foundation executives and others.