Rising of the Giant...India's third sector

Third sector refers to organizations that are neither public sector nor private sector. It includes voluntary and community organizations (both registered charities and other organizations such as associations, self-help groups and community groups), social enterprises, mutual and co-operatives. They are not Government and are value driven – which means they are motivated by the desire to achieve social goals. Most importantly they reinvest any surpluses generated in the pursuit of their social goals. While mainly the sector was driven by grant and donation dependent Non-Governmental organizations (NGOs) , the last two decades have seen the emergence of the Social Enterprise – a for profit entity, working towards social goals, not dependent on grants but running a professional business model which is sustainable and durable, the profits of which are reinvested into the business to attain those social goals.

While traditionally, the third sector has been viewed as non-governmental, group focused on social developmental and being non-revenue generating, today the view of this sector is fast changing. Britain, In 2016, had 70,000 social, contributing nearly US $ 30 Bn. to the economy and employing 1 Mn. people.

In India, while the Social Enterprise is finding favor, the sector primarily consists of 3.5 Mn NGOs, some functional and some not, who are working in the rural areas and remote locations for multiple causes and still grant dependent. After the 2013 CSR Act, there seems to be a spurt in numbers, as well as consultants who look to create a Bridge between the third sector and the corporate sector, where realistically speaking, there does exist a chasm in common understanding. Yet year on year large chunks of CSR funds do not actually get deployed.

With this background, and not disassociating the social enterprise from the third sector organization classification, the fact is that it is an important yet often misunderstood segment of the economy. By it’s very nature, it has the potential to generate economic value in a number of ways – as an employer, as a part of the supply chain, as a community aggregator to address social issues and other quantifiable issues like health, education, elder care etc. All these are directly linked to the development of the economy, either directly or through the development of local village level economies.

That was the quantitative part. On the non-quantitative side world over, millions of people choose to bring about social change and to solve the problems through the third sector. Thus, qualitative social changes can also be driven by this sector in a big way.

Unfortunately, the role of the third sector in the Indian economy is largely unrecognized. India is on the cusp and has the potential to replicate the success and contribution of this sector in the British economy. But we need to recognize the character of this sector and therefore the role and contribution it can give. Recognize that  

A.   For Government and society - It’s a Giant machinery to catalyze social change

B.   For Businesses - It can become the modern marketers dream supply chain -  It is the last mile connect to one of the world’s largest markets, till now a challenge most marketers have not been able to overcome

C.  For all – a fulfillment channel towards an environment friendly life.

If we take all three together, this giant can become one huge, self-sustaining pillar of growth. Quantitatively and qualitatively.

A working example of this is where –

ü Government and society use it to catalyze change, thereby fulfilling social goals (though this is partially being done there is a huge headroom left)

ü Business uses it as a supply channel into the so far unreachable local markets, thereby creating revenues for sustenance both at the macro and micro level, PLUS increase usage of environment friendly products internally as well as for gifting.

ü We all increase usage of the environment friendly products produced out of this channel which will grow the social concept as well as sustain the poorest of the poor who are largely the producers.

Note: The Corporate Gifting industry alone seems to have crossed the US$ 3 Bn mark. Imagine even if 50% of these gifts were environment friendly / recycled and recyclable products – we are talking of a whopping US$ 150 Bn. revenue which will go a long way in growing the concept and sustaining the producers!

India is on the cusp. There are more than enough organizations working in the third sector; there is a trend towards social enterprises; people, especially the younger generations, are socially conscious. If only Government and Corporate leaders alike could act on these three principles, we can see a surge in economic growth, positive social change as well as employment and livelihood.

My appeal to Government and Corporate leaders alike is please act on these three principles and see the surge in economic growth, positive social change as well as employment and livelihood. In addition to attainment and growth of your own business goals.