In relation to public services, the voluntary sector is the realm of social activity undertaken by non-governmental, not for profit organizations. This sector is also called the third sector (in contrast to the public sector and the private sector), community sector, and nonprofit sector. "Civic sector" or "social sector" are other terms used for the sector, emphasizing its relationship to civil society. Voluntary sector activities are important in many areas of life, including social care, child care, animal welfare, sport and environmental protection.
Terminology A variety of terms is in use to describe the non-governmental, not-for-profit sector, including "voluntary sector", "third sector", "community sector", and "nonprofit sector". In 1965, Richard Cornuelle coined the term "independent sector" and was one of the first scholars to point out the vast impact and unique mechanisms of this sector, but in some contexts, such as social care, this term includes businesses operating for profit. A formal economic theory of the voluntary, nonprofit sector and its role was developed by Burton Weisbrod in the 1970s, and subsequent decade. It distinguishes its incentives and behaviors from that of the private and public sectors of the economy, and recognizes non-profit organizations as suppliers of public goods that are under-supplied by government. This enabled calculation of the value of voluntary labor in the United States, which is a factor now considered in the analysis of efficiency wage. More recent researchers such as Peter Frumkin have also supported the concept of considering "non-profit" and "voluntary" organizations together. Rob Macmillan observed that the nature of this sector is "a hugely contested domain", with issues raised over "whether there is a coherent 'sector' at all, and if so what it should be called".
Significance to society and the economy The presence of a large non-profit sector is sometimes seen as an indicator of a healthy economy in local and national financial measurements. With a growing number of non-profit organizations focused on social services, the environment, education, and other unmet needs throughout society, the nonprofit sector is increasingly central to the health and well-being of society. Peter Drucker suggests that the nonprofit sector provides an excellent outlet for a variety of society's labor and skills. In 1976, Daniel Bell predicted that the third sector would become the predominant sector in society, as the knowledge class overcame the effects of the private sector. The first two decades of the 20th century were characterized by a public zeal for social reform and social justice known as the Progressive Era. The newly founded National Association of Societies for Organizing Charity had immediate influence during that era. Its extensive field work helped organize new societies and strengthen others. Smaller cities became well-organized, with the South and Northwest particular areas of focus. To permit membership of Canadian societies, the association changed its name in 1912 to the American Association of Societies for Organizing Charity. In 1917, it became the American Association for Organizing Charity. These agencies increasingly were providing direct service to individuals and families. Pauperism, child welfare, juvenile justice, sanitation, tuberculosis, and other health issues were emergent problems for new and existing agencies. The American Red Cross fueled a nationwide fervor for social service. Founded in the United States in 1881, it was reorganized in 1905 to focus on military personnel. With this pivotal decision, the business of organizing charities quickly evolved into the business of social work. According to a recent study by Johns Hopkins University, the Netherlands has the largest third sector of 20 countries across Europe. Ireland's non-profit fundraised income formed 0.33% of Irish GDP, less than the UK and US, in 2016. In Sweden, the nonprofit sector is attributed with fostering a nationwide social change towards progressive economic, social and cultural policies, while in Italy the third sector is increasingly viewed as a primary employment source for the entire country. In the United States, approximately 10% of GDP is attributable to the third sector. Donating to private religious organizations remains the most popular American cause, and all religious organizations are entirely privately funded because the government is limited from establishing or prohibiting a religion under the First Amendment.
Sub-sectors Although the voluntary, community, and not-for-personal-profit sectors are frequently taken to compose the "Third Sector", each of these sectors or sub-sectors have quite different characteristics. The community sector is assumed to comprise volunteers (unpaid) while the voluntary sector is considered to employ staff working for a social or community purpose: "hence the phrase 'voluntary and community sector' (VCS) [is used] to encompass the full range". In addition however, the not-for-personal-profit sector is also considered to include social firms (such as cooperatives and mutuals) and more recently governmental institutions (such as Housing Associations) that have been spun off from government, although still operating fundamentally as public service delivery organizations. These other types of institutions may be considered to be quasi-private or quasi-public sectors rather than stemming from direct community benefit motivations. Other sub-divisions within the overall voluntary sector include distinctions as to purpose, such as social care, child care, animal welfare, sport, cultural development and environmental protection; organisations with religious roots; organisations which operate on a national basis such as Mind in England and Wales; and organisations with a solely local presence.
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