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What Is a Social Sector?

By Jan Fletcher
Updated May 16, 2024
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The term social sector refers to that part of social and economic activity done for the purpose of benefiting society and which is funded, in part or whole, through charitable gifts. Other common terms relating to those organizations in this sector are nonprofit, not-for-profit, philanthropic sector, mission-based sector, non-governmental organizations, and tax-exempt organizations. Since not all charitable giving goes to entities that have official tax-exempt status bestowed by a governmental entity, the term "tax exempt" is not as inclusive in its definition, as are the other terms.

Businesses are not included in the social sector, but organizations that promote business development, or career development, or other aspects of business activity may be in the non-profit sector. The social sector typically does not include governmental entities, although governments do often encourage social sector activities through the granting of incentives. Well-known examples of these entities include international organizations such as the Red Cross, Chambers of Commerce, and not-for-profit hospitals. Although businesses are not directly included, much capital flows from businesses to this sector through corporate giving. Businesses seek the social goodwill expressed in the charitable sector through making donations.

The charitable sector engages in a tremendous variety of activities and provides an extensive array of services to individuals and communities. A small sample of activities within the nonprofit sector include personal services to individuals such as provision of basic life necessities; training and education; sporting events; housing programs; and, wildlife preservation. Many hobbies are also represented in this sector.

Some charitable activities do involve the collection of fees, as social sector entities may charge for services. A well-known example is not-for-profit health care providers. Religious organizations are a major part of the social sector as well. These are also referred to as faith-based organizations, since the purpose of religious organizations is to promote adherence to moral standards, and a set of beliefs involving spiritual matters.

When taken in total, the amount of investment in the nonprofit sector, in both economic resources and man-hours, is considered difficult, if not impossible, to measure. Most agree that overall, it has a significant social economic impact around the world. Working in the social sector is challenging for many, because salaries are generally lower than comparable positions in industry or government. Another potential pitfall is “compassion fatigue.” This describes the phenomenon in which charitable workers suffer emotional distress, and even physical exhaustion, because they attempt to ameliorate human suffering using limited resources.

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Discussion Comments
By pleonasm — On Jun 17, 2013

To be honest, it annoys me that a lot of religious groups get put under this blanket, even though they don't do anything to contribute to society.

I'm not talking about the ones that actually help people in a concrete way, by trying to get rid of poverty or contributing to hospices or whatever. I'm talking about the ones that consider themselves charities, but all they do is try to preach to people and get them to join their particular church.

To me, that's a business endeavor and shouldn't be considered to be in the social service sector. Whatever spin they want to put on it, they aren't helping people, they are trying to get them to open their wallets for their own gain.

By umbra21 — On Jun 17, 2013

@indigomoth - If everyone thought they could maybe they would actually do it. In my experience it seems like people lose heart and drop their ideals too quickly. Most of the people I've met in social sector jobs are quite cynical and don't even attempt to change the status quo.

But then, I also think it depends on who you're talking to. It's actually a huge and diverse group of entities, particularly when you factor in the religious groups and the environmental groups.

By indigomoth — On Jun 16, 2013
That last bit makes me sad, because I know some people who have suffered from that.

I actually think the problem ultimately is that they think they'll be able to do more than is actually possible. Almost everyone I know who has entered work in the social sector does so with some kind of idealism and the thought that they will be able to change things.

There's nothing wrong with that, of course and they will change things. The thing is, they will change things for individuals, but almost certainly won't change the system. And trying to change the system, taking all your worth from that instead of from the handful of people you can help, is what burns workers out.

I mean, it's not that you can't work toward social sector development, but no one is actually going to be able to change the whole world overnight.

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