Third sector

• Charities

  • Set up to raise money to benefit others.
  • Not owned by one individual.
  • Set by a trust, which is controlled by a board of trustees.
• Advantages of Charities

  • Exempt from paying taxes, such as VAT and corporation tax.
  • Low wage costs as volunteers work for free.
  • Private companies are often willing to donate and sponsor charities for good PR.
• Disadvantages of Charities

  • It can be difficult for them to compete with large marketing budgets of private sector organisations.
  • They rely heavily on volunteers who may leave for paid work elsewhere
• Voluntary organisation

  • Aim to provide a service to their members and the local community
  • Examples includes local sports club (e.g golf clubs or youth football teams)
  • Finance is raised through membership subscriptions and fees.
  • Controlled and run by an elected committee and helped by volunteers.
• Social enterprises

  • Organisations that aim to make a profit to benefit a specific group or cause.
  • E.g The Big issue aims to help the homeless in the UK.
  • They operate like private sector businesses as they can be owned by sole trader, partners or shareholders, can be controlled by directors or managers.
  • However, they use their profits to benefit a social, environmental or cultural cause and not solely the business owners
• Advantages of social enterprises

  • Social aims can endear to a social enterprise to customers.
  • Good quality employees who believe in the social "mission" are attracted to the business.
  • They are likely to receive government grants due to their positive impact to society.
  • 'Asset lock' means that if the enterprise closes down, the sale of any assets and any profits remaining will be used to benefit the cause.
• Democratic enterprise

  • Aim is to generate profit not necessarily maximise profits
  • Decision making and profits are shared among members democratically.
  • Popular with governments trying to encourage enterprise and increase wealth in the economy, but which also want their citizen to share in this prosperity.
• Co-operatives

  • A type of democratic enterprise
  • Aims to provide a quality service for the benefit of it's members and customers
  • Invite their customers and employees to become members, who then share ownership, decision-making profits
  • In this way, customers can can influence the business they use and employees can have a say in how their organisation is run
• Third sector objectives

  • To provide a quality service
  • To raise awareness of a cause
  • To raise funds for a cause
  • To maximise donations
  • To recruit more volunteers
  • To grow
  • To survive