What is the third sector?

In addition to the state and the market, the third sector also makes a decisive contribution to social cohesion in Switzerland. These organizations act on private initiative, assume responsibility and take action where state or economic logic reaches its limits.

In Switzerland, the third sector refers to organizations that cannot be clearly assigned to either the state or the profit-oriented market. It includes NPOs or NGOs such as foundations and associations that combine private initiative with social objectives and thus play a central role between the public and private sectors. In Switzerland, a dense network of civil society organizations has developed that still characterizes the third sector today.

The three-sector model: state, market and civil society

The three-sector model is often used to categorize the third sector. describes how social tasks and services are fundamentally distributed across different institutional logics:

First sector: State
Public bodies such as the federal government, cantons and municipalities. They act in a sovereign capacity and are primarily financed through taxes and levies.

Second sector: Market
Private companies that are profit-oriented and finance their services via prices on the market.

Third sector: NPOs
Organizations that do not primarily pursue commercial goals. They act out of a sense of social responsibility and are based on voluntary commitment, solidarity and trust.

The third sector is located between the first two areas. It attempts to circumvent typical weaknesses of the state (e.g. bureaucracy) and the market (e.g. profit maximization) while combining their strengths such as reliability and social control. This allows NPOs to respond flexibly to the needs of the population that are difficult or impossible for the state to meet.

Third sector or non-profit sector?

In Swiss usage, the terms “third sector” and ” non-profit sector” are often used interchangeably. However, there is no clear, generally applicable definition. According to researchers Salamon and Sokolowski (2016), the third sector is one of the most complex constructs in modern social and political discourse.

Depending on the professional perspective, different emphases are placed on the choice of terms:

– Nonprofit sector: is mainly used in business administration and focuses on organizational forms and management issues.
– Third sector: is more strongly anchored in economics and political science and emphasizes the social role between the state and the market.

When does an organization belong to the third sector?

The so-called structural-operational definition has become established for international comparisons, including in the Johns Hopkins Comparative Nonprofit Sector Project (CNP). According to this, an organization belongs to the third sector if it meets these five criteria:

1. degree of organization: a minimal formal structure is in place.

2. private character: institutional separation from the state.

3. prohibition of profit distribution: profits may be made but not distributed.

4. self-administration: autonomous legal and organizational control.

5. voluntariness: voluntary work, voluntary membership or voluntary funding play a role.

These criteria largely coincide with the usual definition of non-profit organizations in Switzerland. Typical Swiss forms of organization are associations, foundations and cooperatives. In terms of content, the spectrum ranges from sports and cultural associations, social institutions and educational institutions to environmental organizations and international aid organizations.

How big is the third sector in Switzerland?

For a long time, statistics on the third sector were incomplete. It was not until the Comparative Nonprofit Sector Project in 2010 that systematic data on the number of organizations, employment and economic performance was collected for the first time. Although these figures are no longer up to date, they show the structural importance of the sector:

– Around 90,000 non-profit organizations were active in Switzerland.
– Depending on the calculation, the third sector contributed around 4.7% of gross domestic product.
– The sector employed over 180,000 full-time positions.
– In addition, there were around 80,000 full-time positions in voluntary work.

Another special feature of Switzerland is the high density of foundations:

– Canton of Basel-Stadt: 45.1 foundations per 10,000 inhabitants (by far the highest)
– Canton of Glarus: 29.2 foundations
– Canton of Zug: 25.7
– Canton of Graubünden: 25.3
– Canton of Aargau: 7 foundations (the lowest density)

Why is the third sector central to Switzerland?

This data makes it clear that the third sector is a relevant economic factor for Switzerland. The sector is significantly larger than often assumed and would be inconceivable in this form without voluntary work.

The third sector is therefore an expression of an active civil society. It enables participation where people want to take responsibility. It closes gaps in the provision of services and reacts flexibly to new social challenges. In a country that relies heavily on personal responsibility and civic engagement, the third sector is a key pillar of social cohesion.