This page is part of our successful commissioning toolkit.

What are third sector organisations?

‘Third sector organisations’ is a term used to describe the range of organisations that are neither public sector nor private sector. It includes voluntary and community organisations (both registered charities and other organisations such as associations, self-help groups and community groups), social enterprises, mutuals and co-operatives.

Third sector organisations (TSOs) generally:

  • are independent of government. This is also an important part of the history and culture of the sector;
  • are ‘value-driven’. This means they are motivated by the desire to achieve social goals (for example, improving public welfare, the environment or economic well-being) rather than the desire to distribute profit; and
  • reinvest any surpluses generated in the pursuit of their goals. For this reason TSOs are sometimes called ‘not-for-profit organisations’. A better term is ‘not-for-personal-profit’. In many cases, TSOs need to make surpluses (or ‘profits’) to be financially sustainable.

TSOs can take a number of legal forms. Many are simple associations of people with shared values and objectives. Many have company status but with a not-for-personal-profit approach. Very many have charitable status or are community interest companies, industrial and provident societies or co-operatives.

In October 2010, the Government published its strategy to support charities, voluntary groups and social enterprise. It is committed to ensuring that charities, social enterprises and cooperatives have a much greater role in the runninng of public services. [Note]

Benefits that third sector organisations can give commissioners

Public services can gain a lot from working with third sector organisations. The benefits vary across policy and geographical areas. But some of the common themes are TSOs’:

  • Understanding of the needs of service users and communities that the public sector needs to address;
  • Closeness to the people that the public sector wants to reach;
  • Ability to deliver outcomes that the public sector finds it hard to deliver on its own;
  • Innovation in developing solutions; and
  • Performance in delivering services.

TSOs also speak out for people and their needs to the public sector and to wider society. Such activity may be based on a local, drop-in advice service for people with unmanageable debt, right through to a charity’s national communications campaign (on child cruelty, for example). Such work dovetails with TSOs’ services to the public.


Note: HM Government, ‘Building a Stronger Civil Society’, October 2010.

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