“Third Sector” A Term Whose Time has Passed – and, Here’s Why

It’s time to say ‘Good Bye’ to an old term. It’s time for “Third Sector” to leave our lexicon.

You see, for many years, charities and nonprofit organizations were identified as part of the ‘Third Sector.’  The term implied an understanding that government and for-profit organizations were part of the First and Second Sectors, respectively. Seems innocent enough. Historically, it may even have begun as a self-identifying term. But, alas, the ‘third sector’ has also come to imply a bit more than what may have been once intended. Or, actually, less.

Much like Orson Scott Card’s fictional character, Andrew “Ender” Wiggin, felt the impact of being identified as a ‘third’ in a society filled with mostly just two-child households, being third in just about anything carries inescapable even if inadvertent baggage.

In positioning charitable and other nonprofit organizations within the ‘third sector’ the potential – perhaps even, the real – impact on perception – and, in particular, public policy – is that this so-called ‘third sector’ may be seen generally and by decision-makers as not on par with the other two sectors of the economy. Perhaps as something less significant within our nation’s – and the world’s – economy.  Yet, the economic impact of this sector – in terms of employment and percent of GDP is consequential.

Research conducted both in the United States and Great Britain over the past 15 years consistently reveals the growing economic impact of this sector. For example, The Johns Hopkins Center for Civil Society reported in 2013 that 7.4 percent of the world’s workforce was employed in charitable and other nonprofit organizations. In the United States, the workforce includes 10.2 percent employed in this sector. At least 6.6 percent of our nation’s GDP is derived from charitable and other nonprofit organizations – making it one of the top contributors to our national economy. Total annual revenue in this sector is fast approaching two trillion dollars.

These metrics of economic impact are not often considered when thinking about charitable and nonprofit organizations. Indeed, these organizations have historically been appreciated for their good deeds but undervalued for their economic impact. From this reality come great challenges, especially when it comes to such things as impacting national – and even state-level – public policy.

It may seem like a small thing to do in trying to make a big change, but words have meaning and words are change-drivers in the world of perception. Simply, it is time to drop “Third Sector.”   In our national and global economy, there are three co-equal sectors.  The public sector, the private sector, and the voluntary sector.  Indeed, words have impact. Perception often follows from seemingly innocuous things like labels and brands.  The Voluntary Sector, one of three co-equal economic sectors – let’s do it… now!


About ted sudol

Ted Sudol brings a cross-disciplinary perspective to his work in philanthropy & fundraising. Currently Managing Director at CARTER, a professional firm dedicated to advancing philanthropy worldwide, he has nearly four decades as a fundraiser, lawyer, executive, communicator and consultant in the voluntary, public and private sectors. From local to global, his work with educational, healthcare, arts & cultural, and community organizations ranges from designing new ventures, campaign readiness plans, and complex gift strategies for high net worth families to rebuilding and repositioning projects. His specialty is bringing together diverse parties in innovative collaborations. He devises simple approaches for complex matters to achieve successful outcomes. A graduate of Georgetown and Temple Law School, he currently serves on the board for AFP Shenandoah Valley Chapter, the AFP International Education Advisory Council, and the Virginia FundRaising Institute's Planning Committee. He has been a long-time board member for Big Brothers Big Sisters of Harrisonburg & Rockingham County, Virginia.
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