ABSTRACT
Over seventy percent of the members of the American Economics Association work for educational, research, international agency and other nonprofit institutions. Private nonprofit institutions fall outside the market and outside of the public sector. They are sometimes called the Third Sector, the Social Sector, or the Civil Society. The civil society provides goods and services outside of government and yet it is not driven by profit-seeking incentives. Unlike government, a nonprofit has no power of compulsory taxation but must raise its funds on a voluntary basis. Peter Drucker argues that the Social Sector provides a sphere where people can act as citizens and create a community for them. The nonprofits of civil society are the instruments through which people act when they give a higher priority to other drives than the economic. The nonprofit sector is based on voluntarism, charity, the ideal of service to the community, religious impulses.
