Executive summary

Introduction Economic sectors . Public Private Third..

Third sector in bigger picture . Humanitarian and relief work evelopment !dvocacy . "tate#led development and problems . $ationale for %&'s as service delivery substitute to state . Participatory model of development

Experience of more than two decades .. Issue with participatory approach . esigning and implementing developmental programs.. (ack of proper accountability "witching programs and geographical locations

)onclusion

Executive summary
!bout two and half decades back third sector was recogni*ed as the new economic sector and was introduced in the main stream development with enough sovereignty given and substituting state with it in service delivery with high aspirations to deliver efficient service and effective investment. The developmental approach it endorsed was participatory+ considered as intrinsically good thing, aimed at getting the old, inefficient, unspeciali*ed and very costly, state#led development system fixed. !fter two and half decades of experience we reali*e that -ourney we started very long ago has led to a complete fiasco of yet another sector. Today third sector is as much inefficient and costly as the state was and the .uality of service delivered is not any different from state.. Today we are feeding two unsuccessful sectors working for the development, which are no more than big white elephants. This .uestion is how long can this fiasco go on/ Is it time to create yet another sector replacing both state and third sector/ 'r is it time to give yet another chance to the state. If we have to continue with the prevailing system we should get the system fixed immediately by+ having a proper check and balance on the endeavors of the third sector, making the participatory model more realistic and workable, giving program designing in the hands of local indigenous people and restricting the endeavors of certain %&' fixed to certain geographical location or a community. This paper would shed light on the basic differences between the different economic sectors. "econdly, it would take into account various developments that turned up to be the causes of failure of one system and rationale for other one to come into mainstream development. "econd part of the paper would shed light on our experience with new third sector and would critically analy*e the various reasons which led to its failure. The final part of the paper would conclusion. It0s an academic theoretical paper and the research method used is literature review.

Introduction

Economic sectors1 !n overview

)onventionally economics has thought to have two sectors+ public and private, but over time with the nature of global governance changing, it was reali*ed and arguably manufactured to have three sectors instead of the two conventional sectors. The third one is the social sector which is commonly refereed as the 2third economic sector0 or simply the 2third sector0. These three sectors are different to one another in the following way+

Public sector
Public sector refers to the government which is+ bureaucratic or top#to#bottom in nature, driven by policies legislated by the beneficiaries, funds its endeavors through the tax payer0s money, works for the social and economic welfare of its citi*ens as its responsibility, and accountable to the beneficiaries 3tax payer0s4 through legislature, -udiciary and audit.

Private sector
Private sector refers to the corporate business sector which is+ profit oriented, works on the efficiency principle, manages finances through stake holding and partnership, works for clear .uantifiable goals of profit maximi*ation, corporate governance. and accountable to stakeholders and partners through external auditing and

Third sector
Third sector refers to the %&'s or social sector which is+ participatory or bottom up in nature, purely altruistic and welfare oriented, fuels endeavors through donations and corporate philanthropy, works for the social and economic welfare of the targeted community# who they don0t owe responsibility to, hence,

as a favor, and accountability factor is disconnected between the donors and beneficiaries, because, they don0t work for the ones who pay them and don0t charge the one who they work for.

Third sector in bigger picture

"ince %&'s have turned up to be third sector of the economy it is essential to understand their role in the economy, nature and periphery of their endeavors and differentiating factors it has from the other two sectors. To understand that we have review the scholarly definition of the term, here are two most famous ones1 %&'s are groups of individuals organi*ed for myriad of reasons that engage human imagination and aspiration 3)harnovit* 56674 "elf governing, private, not for profit organi*ations that are geared to improving the .uality of life for disadvantaged people 38akil 56674 It0s .uiet clear from above literature that %&'s are voluntary bodies independent of government and working for the welfare of the impoverished people of the society. They are not created by the state and hence not rely upon state for their funding. There role is not to create an opposing force against state within a country but to create bridge over the gulf between poverty and development unaddressed by the state for very long time. "o, the role and the authority of the state in intact but surely has been scaled down when it comes to social sector. These %&'s are of different nature, they are sectoral, religious and sometimes secular. The genesis of all of them is the basic concept of welfare which has existed for very long time in every religion, sect and community. 'ver the years the difference that we see is the transfer of this long prevailing tradition of welfare to professional streamlined enterprise carried out by well trained professionals. 'ne other aspect

of this sector is the si*e and the level of authority of the %&'s in the sector. 9or example, there are International %&'s or commonly known as I%&'s. I%&'s are the largest known ones and are donors, who design a developmental program with certain ob-ectives and mission for a targeted community and replicate it. :% agencies, :"!I , E), ;I)!, and !:"!I are common examples of I%&'s. The next categories comes is the %&'s, these are the big ones within a country or sometimes a region. They are the intermediaries between the communities and the I%&'s. They have to come up with certain vision and mission statements portraying the same ob-ective as of the I%&'s to avail the funding. %&'s once avail the funding are in contract with the donors to replicate the developmental program designed by them for which they are funded. The last category come is the &ross $oot 'rgani*ations. These are the partner groups, who are actually the indigenous people who have more information about the community than anyone else. 'ne of the most difficult issues to face in community intervention is the stumbling block created by the some indigenous population who are not co*y with the existing system being intervened. <ringing them in policy making and collaboration withy them helps them be empowered and this issue can be minimi*ed. !ll the %&'s, whatever their nature might be, today working in the following areas+

Humanitarian and relief work

The lack of proper infrastructure for providing emergency relief in the times of any natural or man made catastrophes in many developing countries, like even in Pakistan, is the insignia that state has not been fully capable of delivering the services it was created to provide. These catastrophes are as old as the history of the humanity and yet have been overlooked by the state. The third sector has been trying for fulfill this void and do*ens of %&'s are working in many disaster prone countries of "outh !sia, "outh East !sia, !frica and (atin !merica. There emergency relief work ranges from $= providing early evacuation of victims and providing basic life needs. on disasters to

evelopment

The other area where most of these %&'s working are is the mainstream development. The state led development now has been devolved and there are many %&'s working as contractor for state to provide the services to the people on behalf of the government for being more efficient than government. 'ne of the finest examples is the developmental work funded by state through tax payer0s money carried out by the %ational $ural "upport Program 3%$"P4 in around >? districts of Pakistan. !part from that there is a huge chunk of money coming from international donors like :"!I , ;I)! and :% agencies, which too is used to fund certain developmental programs designed by the respective funding organi*ation and implemented by contractor called as the &ross $oot %&'s or the partner groups.

!dvocacy
'ver the years the new area where %&'s have been prominently working is the advocacy. The concept of advocacy is to create 2pressure groups0, working independently they would advocate policy makers certain social and economic issue that are either overlooked by the policy makers in order to serve the interest of certain class or such issues are do not come into the consideration for lack of information. !dvocacy groups are focused groups who are highly speciali*ed in certain field, for example human right, and do through research to get to the bottom of the issue and advocate policy makers with certain policy prescriptions to uproot it. @ith the advocacy intervention of third sector the system of policy making has evolved differently. Today policy making status .uo comprises not only political representatives of the people and bureaucrats but also the professional from reputed advocacy groups.

"tate#led development and problems

The fundamental rationale for the existence of state is the welfare of the people it is governing+ in fact the social contract theory given by ;ohn (ocke suggests a social contract among the members of society or a community for the sole purposes of creating a -ust society by agreeing upon having a fundamental

governing organi*ation who they called a state. This governing organi*ation was suppose to offer services like security of people0s life and their private properties, creating a -ust society by placing everyone e.ual before law and providing minimum standards for living and helping out the impoverished and marginali*ed group among the society. In return the beneficiaries would pay for these services in the form of taxes and hence a pure economic relation of give and take develops between the two. :ntil 567? state was the champion of everything happening within a country. It possessed the decision power over investment, ownership and distribution of means of productions, providing security and welfare to its sub-ect in best possible way it can. "o, in the era before around 567? state was a huge player and huge stakeholder in how the society looked like. The overwhelmed involvement of state in socio#economic life of the masses had resulted it being very huge concentration of power possessing the authority to control or at least have a say in almost all spheres of life. These unprecedented features were genealogical in nature as the yielding factor for democratic states formed in the south after @@#II, is the imperialist colonial governing system in north. The public sector was highly bureaucratic and also very corrupt. It had very high organi*ational overheads for it being over#employed. There were certain social issues and some geographical areas which remained totally unattended even after more than three decades of experimenting public sector with the welfare it was suppose to deliver. In a nutshell, public sector had turned up very expensive in delivering services, it lacked speciali*ation and inefficient. The global political scenario and political and economical thinking paradigm was altering and so was the nature of governance. "tate had to scaled down and be substituted with a system more efficient and economical.

$ationale for %&'s as service delivery substitute to state

There are two school of thoughts on how did %&'s come into mainstream development. The first one is the idea of public sector0s failure in delivering the re.uired amount welfare to the people and making

itself competent enough to cope with the emerging social issues in the constantly changing global political and economic scenario during the cold war. It is natural to reinvent the wheel or at least get it fixed whenever it is necessary and %&'s were the best way of going about it. "o, third sector was an efficient, speciali*ed and competitive market based substitute to the state. The second school of thought is .uiet political in nature instead of being economic. It asserts the idea of balancing state authority and legitimacy with non#state market based actors, in order to pursue the doctrine of %eo#(iberal world order. <y the end of 567?s and mid of 56A?s communism was taking its last breaths as the competitive order against the western %eo#(iberal. <efore 567? even the champions of %eo#liberal were helping their allies getting state stronger in order to stay in the game. <ut, with the fall of <erlin wall bipolar world came to an end, hence, neo#liberals pursued their ideology and dictated it to every country in the globe. There can not surely be one black and white answer to this .uestion upon which everyone can agree. The important thing to know is fact that %&'s had and still have a persuasive appeal to all the economic paradigms. To the liberals they are power balancing actor to state and help in preventing business interest against the abuses of the public sector. 9or %eo liberals they are part of private sector as a spinoff privati*ation policy and augmenting their role in non profit actions. 9or leftist it was a substitute to the newly created status#.uo by capitalism and hence offered a chance to be capitali*ed on to bring about a change in the societal norms without being part of the global order. Third sector was a non bureaucratic and organic approach with new norms and values like+ empowerment of people by putting last first, people centered approach to development, challenging power structure thus culture, norms and economics and finally a social capital for bring about the sense of social activism. !sa result of that they had entered the development mainstream and hence part of status .uo. The ma-or areas they stared working are advocacy to influence public policy, social mobili*ation and collective action, monitoring public services, welfare and philanthropy and most importantly service delivery contractors.

Participatory model of development

Participatory approach is the defining attribute of third sector and distinctive feature from the previous top#to#bottom approach pursued by state. Participatory model of development can be defined in most simple form as the 2involvement of the beneficiaries in the decision making and supply and management of facilities, resources and services.0 The notion of participatory model is to involve communities in the process of development and capitali*e on the believed concept that the indigenous people know about their problems and solution to them more than anybody else. It is a complete chain process, starts with the involvement of community in 2information sharing0 leading to the next level of 2participation in decision making0, which further goes into 2collaboration0 and then finally yields 2empowerment0. Information sharing Participation Collaboration Empowerment

This model of development accounting to the pundits would result in creating sense of ownership among the communities for the enterprises and ultimately would be in a position to run them on their own. The previous experiences of unprofessional attitude of welfare were soothing as over the time they had created dependencies instead helping them standing one day on their feet and be integrated with the society and live as useful member of it. This empowerment can not happen over night. The long lasting local setup of complex web of households, kinship, sectoral and religious differences and social order are stagnant in their nature and once intervened are highly expected to show resistance. The best way to deal with it is, as prescribed by the gurus of participatory development, is to do a through situational analysis of the community before intervention. This would help us understand the power hierarchy to deal with, the positive aspects to be capitali*ed on and the stumbling blocks to be taken seriously. Information sharing refers to the nature of the intervention you are expecting to have, they should know about the organi*ation funding it and the people they would be often encounter with. Participation refers to involvement of their opinions and suggestions in the process instead of dictating them what you like to

do for them. )ollaboration is the most important part of this whole process. It refers to the contribution of the community in completing certain pro-ect+ they can contribute by volunteering with unskilled laboring, instead of hiring a skill labor from outside a skilled member of the community would be hired and any other such contribution depending on the situation and the nature of the developmental pro-ect. This is the first step towards a mobili*ed and empowered community having a sense of ownership and working on their own for their own good. @hen the community members reali*e their potential and determined to change their life style and take decision to start endeavors on their own, would be the day they are empowered.

Experience of more than two decades

!s discussed earlier that, third sector was introduced in the mainstream development with very high expectations to ensure greater efficiency, effectiveness of the investments and empower communities to run self sustainable enterprises. :nfortunately that has not happened. That well celebrated sector of the economy has turned up ineffective+ with very high organi*ational overheads, widespread corruption due to lack of accountability factor and extremely over employed with inefficient and unskilled workers. In a nutshell today instead of one we are feeding two white elephants+ the state and third sector. @e would critically analy*e the factors that led to failure of yet another sector+

Issue with participatory approach

Participatory model conceives community as the combination of rational human beings who possess the will and skills to bring about changes in the pattern of their life provided that they are facilitated. 'n the contrary community is a complex web of household, kinship and tribes, and who have certain norms and values, practiced unchallenged for centuries. Therefore, expecting them to come to consensus by giving up all the difference they have among each other is irrational and hence least likely to happen. This concept of participation with mutual consensus can work very well in an egalitarian society+ where there exists no difference whatsoever among the members of a community. <ut the bottom line is that we

aren0t living in a society like that, we are living in an alternative world, where if aspire to bring about changes we have to set policies which are likely to yield results without challenging the bases of the societies. "econdly, participatory model is a mean based approach instead of being end or result based. It highly emphasi*es on getting the techni.ues developmental process fixed, by substituting the state top#to#bottom approach with participation and taking communities as social capital instead of a mere beneficiaries and many more like those. There is nothing wrong with the system getting fixed but the fact is that for two and more decades we have been trying hard to get the system fixed but neither we have been successful in that department and neither we have delivered the services that we were hired to for. Bay be this is the time to embrace the fact that abrupt changes brought to them system are creating more problems than it solves, let the system be evolved rather than revolving it without keeping in mind the spinoffs that we might face during the course. %ext issue is the concept that participation is intrinsically a good thing. The deriving force of the whole third sector is the participation of the communities in the development discourse. Participation is more of a faith for the practitioners of development and they have blind faith on it. <ut, the fact that we have accept is that they don0t really know their problems, had they been able so they would not be in the present conditions. Involvement many in the discourse creates more problem than it solves.

esigning and implementing developmental programs

'ne of the ma-or factors that led to the failure of efficient delivering of service to the beneficiaries is the way developmental programs are carried out. It0s very uneconomical process and results in being very large amount of funding used to finance very high organi*ational overheads. 9or example, there is this large I%&'+ :nited "tates !gency for International evelopment or :"!I , intending to help the poor

children of third world countries get education. "ince it is an organi*ation which is developed country based and has very little information and understanding of the issue and social structure of the society they are going to help out. The best way of going about this thing for them is to utili*e their experience of

children education and design a program accordingly. 9or this purpose a highly educated person is hired as a consultant who would design this program and then recipient country based %&'s speciali*ed in the respective field, would be hired as contractor to implement it. "ince these %&'s themselves do not fully have information about every community they have to serve, so, they hire local based organi*ation which they call partner groups. 9irst of al this process is very long and a lot of stakeholders are involved in it. There are so many %&'s, both big and small, are involved which makes the process very complex and increases the cost of delivery of a service. "econdly the people who designed program are foreigner and have no idea what so ever about the beneficiaries, hence, the programs are least likely to produce results. In development economics it is called as the 2false paradigm model0+ which refers to the development recipes dictated by developed countries to underdeveloped countries who they do not know anything about.

$eplication at wide scale

'ne of the other factors responsible for the fiasco is the notion that all the developmental programs designed by the I%&'s are based on success stories of certain very successful enterprises carried out in some part of the world. These I%&'s use it as model enterprise and replicate it at wide scale in many developing world. This is not a rational decision. <ecause, every country has its own social and economic issues and, hence, should be dealt with in different ways. ! program successful in one country may not be successful in other country or a program successful in one part of country may not be successful in other part of the same country. 'ne of the best examples of such unsuccessful attempt is the wide scale replication of !khtar Hameed Chan0s 'rangi Pilot Pro-ect. !sian evelopment <ank and @orld <ank tried to replicate it many

countries and also within country in the city of 9aisalabad, but unfortunately didn0t work out.

(ack of proper accountability

"ince state has no right to control and .uestion over the endeavors of the third sector it cannot make them accountable. This creates a void of accountability which is providing a window of opportunity for many people to capitali*e on it. It is very difficult to have check and balance on %&'s, because, there is no organi*ation that exists with the legal right to have check and balance on them. In Pakistan we have a registering body which too is an %&'# Pakistan )entre for Philanthropy, responsible for the registration of the %&'s, but it does not posses the authority too. The situation in many other developing and underdeveloped countries is far worse than Pakistan who are seeking help from Pakistan to help them in building a setup to register %&'s. "witching programs and geographical locations !nother ma-or issue to be noticed is that unlike state0s districts and tehsil management groups, these %&'s are not based in any geographical location. !fter working for few years in a community they can switch their endeavors to other geographical locations. There stay at a particular area depends upon how long foreign funding is available for that area. "tate has to stay in a tehsil or a district for the basic reason that it owes them as they are paying taxes but in case of third sector as discussed earlier it is favor not responsibility. This switching from one area to another yields un#sustainability in the development process.

)onclusion
!bout two and half decades back third sector was recogni*ed as the new economic sector and was introduced in the main stream development with enough sovereignty given and substituting state with it in service delivery with high aspirations to deliver efficient service and effective investment. The developmental approach it endorsed was participatory+ considered as intrinsically good thing, aimed at getting the old, inefficient, unspeciali*ed and very costly, state#led development system fixed. !fter two and half decades of experience we reali*e that -ourney we started very long ago has led to a complete fiasco of yet another sector. Today third sector is as much inefficient and costly as the state was

and the .uality of service delivered is not any different from state. !fter pondering and thorough research we have diagnosed certain shortcomings within the system that we think led to the failure of the system. They can be summari*ed as follow+ participatory model as unrealistic and mean based model not end based, uneconomical system of implementing developmental program, irrational replication of developmental programs, lack of accountability and finally %&'s switching geographical locations. @hatever the causes might be the fact is that today we are feeding two unsuccessful sectors working for the development, which are no more than big white elephants. This .uestion is how long can this fiasco go on/ Is it time to create yet another sector replacing both state and third sector/ 'r is it time to give yet another chance to the state. If we have to continue with the prevailing system we should get the system fixed immediately by+ having a proper check and balance on the endeavors of the third sector, making the participatory model more realistic and workable, giving program designing in the hands of local indigenous people and restricting the endeavors of certain %&' fixed to certain geographical location or a community.