The Nonprofit Sector and the Informal Sector: A Theoretical Perspective

How do and why might different nations demarcate socioeconomic activity into distinct societal sectors? In this review and critique of sector theories, we use the case study of nonprofit sectors compared with informal economies to evidence the difficulty of drawing separate conceptual spaces for economic, human, and social-capital-producing activities. Drawing upon international research on the origins and characteristics of both nonprofit (voluntary, third, independent) and informal (underground, black market) sectors, the conceptualizations of spheres of activity that are alternative to market and state are explored. Hypotheses about the preconditions of different third sectors are generated and a basis for further theorizing about sector interdependence and overlap is provided.