BARRIERS - Policy recommendations to remove barriers for third sector development

In April 2016 third sector stakeholders from 10 European countries discussed barriers for third sector development with focus on governance, access to finances, and human resources. TSI developed policy recommendations for each topic, aware that the three dimensions are interrelated. Governance is closely linked to the embeddeness and legitimacy of TSOs and hence deeply affects funding and financing, which in turn have an impact on staff and volunteer recruitment.

Several recommendations addressing either managers of TSOs or politicians emerged from the discussion. We are inviting your feedback!

Please share how your work is affected by some of the limitations outlined by TSI stakeholders, reflected in our recommendations. How is your organisation trying to cope with new challenges? Do you agree or disagree with the policy recommendations and what would you like to tell policy makers at local, national or EU level?


1. Bring the sector back on the EU-agenda

Europe has developed into an exclusively market driven project. There is almost no space left for TSOs unless they contribute to employability and the social economy. Europe has to re-consider its priorities. Its current neo-liberal agenda has paved the way for populist parties nurturing xenophobia. TSOs and the third sector have to get back into the picture as a vital element of Europe´s cultural heritage and diversity. The sector´s long history of contributing to welfare and well-being of Europeans as well as its significant input to democratisation and active citizenship has to be highlighted and acknowledged. Brussels should take the sector on board for the future development of the European Union.

Policy recommendation: The European Commission should consider creating a Third Sector Department in the Commission. Representatives of TSOs should be invited to contribute to the design of political programmes, and to help making them applicable for TSOs. Furthermore, the EU should invest into the common weal by working on legal stipulations for TSOs that work all over Europe. What we need are European legal frameworks for:

  • voluntary associations
  • foundations
  • social enterprises

Human Resources

2. Create “ERASMUS” for third sector at EU level

Highlighting the role of the third sector in education and recognizing the skills of volunteers in form of special certificates or diplomas following the model of ERASMUS could foster knowledge exchange and skill transfer by encouraging people working in the third sector to work temporarily abroad.

Policy recommendation: Consider introducing a European exchange programme for third sector staff and volunteers, thus raising acknowledgement of the third sector workforce.


3. Highlight the role of the third sector in education

Integrating the role and function of the third sector in national school curricula would foster a deeper understanding of the sector not only in terms of service provision, active citizenship and democratization but also in terms of employment and career opportunities.

Policy recommendation: Review educational programmes how the third sector could be integrated with a focus on third sector contributions to society and on career choices.


4. Develop national policies on volunteering

Societies rely on volunteers in care, community building, leisure and many other areas of daily life. TSI research shows a trend that people no longer commit to volunteering for one organisation, but ‘switch causes’. At the same time, the public sector must sometimes rely on volunteers, i.e. in the refugee crisis. A system of public recognition, including resources to coordinate and train volunteers, and a greater commitment of public and private sectors to foster volunteering, could not only increase the number of hours but also the impact of volunteering.

Policy recommendation: Governments should consider introducing certificates and diplomas to recognize the skills of third sector volunteers, similar to professional internships. They should also acknowledge that the recruitment, basic training and management of volunteers require financial resources. By introducing more flexible work-times they could foster volunteering during education and work-life. To this end it might be helpful to initiate a public debate to clarify the boundaries between paid and voluntary work, supported by research.

Funding and Financing

5. Structural funds needed

TSOs are not a proxy of for-profit enterprises. They add value to our societies and community life. Therefore, they cannot exclusively live on project money. TSOs are in need of long-term structural public funding which is an investment into sustainable third sector development. However, this also applies to foundations and companies, which are particularly reluctant towards structural funding of TSOs.

Policy Recommendation: Public and private sectors have to re-evaluate role and function of the third sector throughout Europe.


6. New modes of public procurement

The practice of public procurement in most European countries does not take the specificity of third sector into account. “Buying social” fails if contracts are too large for third sector organisations or if the third sector workforce cannot work competetively due to special needs of the work force or types of work arrangements. Thus, without social clauses in public procurement as recommended by the EU, third sector organisations are at a disadvantage when tendering for public contracts.

Policy Recommendation: Re-evaluate the modes of public procurement in order to strengthen the participation of TSOs:

  • Introduce so-called “social clauses” that will ease competition between TSOs and for-profits.
  • Don´t be short-sighted; instead re-introduce long-term contracts between the public sector and TSOs.
  • Reassess size and scope of contracts. In many cases public procurement is only feasible for the very big. Smaller scale contracts are needed that are manageable for smaller TSOs.
  • Make public money available from the very start of a project. Smaller TSOs are not able to pre-finance any project related costs.
  • Re-introduce grants as the core mode of public funding for TSOs.
  • Make funding arrangements public in order to enhance transparency of financial flows to the sector.

7. EU-funding in the spotlight

There is no business like EU-business. EU-procurement and funding procedures are far too complicated for TSOs. The EU directive on public procurement needs to be adapted to public interest organizations. In addition, the EU directive on VAT needs to be altered. A more favourable tax framework has to be introduced (reducing VAT to TSOs and introducing tax reimbursement). Also, EU structural funds have to be revised. Smaller TSOs are not in a position to apply for EU-money. Moreover, the policies of matching funds have to be changed. It should be made possible to use specific third sector resources, e.g. voluntary work, as equivalent.

Policy Recommendation: Simplify application and project funding requirement at the EU level to allow for a better development of TSOs throughout Europe!

8. New modes of financing and access to capital markets

TSOs need time and assistance for both experimenting with new funding opportunities and improving their access to capital markets. The spectrum of new modes of financing ranges from private donations, crowd-funding, philanthro-capitalism to social loans, ethical banks and investments, and sharing of capital among organizations. There is a need to promote a start-up culture within the sector. TSOs could act more enterprise-oriented. At the same time, the social investment industry has to be restructured with the goal of decreasing the cost of capital for TSOs.

Policy Recommendation: Develop new and alternative modes of financing with the aim of making TSOs fit for the future!