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Third Sector Organisations (TSOs)

Updated: Aug 29, 2023

According to the United Kingdom’s National Audit Office ‘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.


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.


Benefits from Third Sector Organisations


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.


Reference

National Audit Office (n.d.). What are third sector organisations and their benefits for commissioners? https://www.nao.org.uk/successful-commissioning/introduction/what-are-civil-society-organisations-and-their-benefits-for-commissioners/ (Accessed 4 November 2021).

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