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Europe’s third sector, that multitude of self-organized, citizen-based initiatives and service organizations in Europe, is a powerful renewable resource for social and economic problem solving in this continent. Yet this sector suffers from a gross lack of recognition and visibility among citizens, policymakers and sector practitioners alike, which robs this sector of legitimacy and policy effectiveness. The aim of this brief book is to remedy this shortcoming by clarifying the composition of this sector, documenting its substantial economic footprint, assessing its impacts and identifying the barriers that stand in the way of the additional contributions it could be making to European progress.

This chapter undertakes the task of clarifying the composition and boundaries of the twilight zone of institutions, activities and behaviors that lie beyond the market, the state and the family and is variously called the “third sector,” “civil society,” or “social economy.” Building on a bottom-up process of consultation, literature review and analysis carried out by a broad team of European analysts, the chapter advances a conceptualization of this sector that embraces both institutional units and individual-action components that embody three underlying attributes: (a) they are private, (b) they are primarily oriented to the public good and (c) they are noncompulsory. These attributes are then translated into an operational definition that is suitable for incorporation into official statistical data gathering and that clearly identifies a broad in-scope array of nonprofit, cooperative, mutual and social-enterprise organizations as well as a parallel band of both organization-based and direct volunteer activity undertaken without pay for persons outside one’s family. The chapter then concludes with a discussion of the progress that has already been made toward institutionalizing this definition into the System of National Accounts, which guides the official assembly of comparable economic statistics in countries throughout the world.

In this chapter, we proceed to the estimation of the size, scale and scope of the third sector in Europe. The European third sector is an enormous economic force, outdistancing most major industries in the scale of its workforce. Taken together, as of 2014, which are the latest data available, the European third sector engages an estimated 28.3 million full-time equivalent (FTE) workers (paid and volunteer) in the 28 EU countries and Norway. The European third sector thus accounts for nearly 13 percent of the European workforce. This is a significant contribution because any industry that accounts for 5 percent of the employment of a country is considered to be a major industry. A second striking characteristic of the European TSE is its engagement of volunteers in addition to paid employees. In fact, over 15 million FTE workers in the civil society sector in Europe are volunteers, which is 55 percent of the workforce.

This chapter addresses the socioeconomic impact of the third sector in Europe. Overall, the available empirical results based on existing data remain inconclusive, mainly due to the poor quality of available data about the third sector and volunteering in Europe. Third sector impact (TSI) means direct or indirect, medium- to long-term consequences of the distinctive features of volunteering or of the third sector organizations (TSOs) on individuals or on the community, ranging from neighborhoods to society in general. Through an exhaustive review of existing empirical research, a series of domains of impact are investigated, including well-being and quality of life, innovation, civic engagement, empowerment, advocacy and community building, and human resource development. To be sure, there is evidence that political engagement increases because of volunteering. In addition, volunteers appear to have better health and a greater sense of well-being than nonvolunteers do, but it seems more likely that persons with these attributes are more likely to volunteer than that volunteering fosters health and wellbeing. Among the unemployed, volunteering improves mental health and well-being, but only when there are generous welfare benefits. Important questions about the impact of the third sector remain, however, and the chapter concludes with a call for a more systematic empirical effort to assess these impacts.

Europe’s third sector is well developed and remarkable in terms of size and scope. However, it is increasingly unclear whether the third sector is able to stick to its roots and to continue to provide an alternative compared to the competing sectors, in particular, to the “market” and the for-profits. This chapter identifies an array of common trends and barriers to third sector organization (TSO) development because of changes to their environment. However, it is important to acknowledge the enormous diversity of the third sector in Europe. Different clusters of countries reflecting different civil society regimes experience diversified development trends. In spite of the variety of developmental trajectories of the sector in Europe, the research presented in this chapter identified key barriers standing in the way of TSOs in almost every surveyed country. The third sector struggles with a scarcity of resources and increasing difficulties to cope with those administrative demands that are most likely a side effect of the introduction of New Public Management (NPM) instruments such as contract management and competitive tendering. Moreover, due to changes in their environment, TSOs are forced to act more and more business-like in terms of, for example, controlling or human resource management. Finally, it has become more difficult for TSOs to be volunteer-based in terms of both their labor force and their governance structures.

Given the tendencies and the changes characterizing the environment of the third sector in Europe, three main scenarios are possible. The first scenario—the return to the golden age—entails that third sector organizations (TSOs) would prioritize the imperative of maintaining their distinctiveness in spite of the financial pressures they are experiencing. The second scenario—the drift or commercialization of the third sector—will result from TSOs prioritizing their survival imperative, at the risk of losing their distinctiveness. The third scenario, the civic economy, supposes TSOs’ ability to adapt without losing their distinctiveness. The prevalence of one of these scenarios depends upon the orientations of future public policies. This chapter puts forth a set of policy recommendations aimed at the healthy development of the European third sector.