The term social sector refers to that part of social and economic activity done for the purpose of benefiting society and which is funded, in part or whole, through charitable gifts. Other common terms relating to those organizations in this sector are nonprofit, not-for-profit, philanthropic sector, mission-based sector, non-governmental organizations, and tax-exempt organizations. Since not all charitable giving goes to entities that have official tax-exempt status bestowed by a governmental entity, the term "tax exempt" is not as inclusive in its definition, as are the other terms.
Businesses are not included in the social sector, but organizations that promote business development, or career development, or other aspects of business activity may be in the non-profit sector. The social sector typically does not include governmental entities, although governments do often encourage social sector activities through the granting of incentives. Well-known examples of these entities include international organizations such as the Red Cross, Chambers of Commerce, and not-for-profit hospitals. Although businesses are not directly included, much capital flows from businesses to this sector through corporate giving. Businesses seek the social goodwill expressed in the charitable sector through making donations.
The charitable sector engages in a tremendous variety of activities and provides an extensive array of services to individuals and communities. A small sample of activities within the nonprofit sector include personal services to individuals such as provision of basic life necessities; training and education; sporting events; housing programs; and, wildlife preservation. Many hobbies are also represented in this sector.
Some charitable activities do involve the collection of fees, as social sector entities may charge for services. A well-known example is not-for-profit health care providers. Religious organizations are a major part of the social sector as well. These are also referred to as faith-based organizations, since the purpose of religious organizations is to promote adherence to moral standards, and a set of beliefs involving spiritual matters.
When taken in total, the amount of investment in the nonprofit sector, in both economic resources and man-hours, is considered difficult, if not impossible, to measure. Most agree that overall, it has a significant social economic impact around the world. Working in the social sector is challenging for many, because salaries are generally lower than comparable positions in industry or government. Another potential pitfall is “compassion fatigue.” This describes the phenomenon in which charitable workers suffer emotional distress, and even physical exhaustion, because they attempt to ameliorate human suffering using limited resources.