I like to call this the “purpose-driven voluntary sector,” as distinct from (a) the profit-driven voluntary sector, i.e. the private sector, and (b) the purpose-driven coercive sector, i.e., the public sector.
The most exciting parts of the purpose-driven voluntary sector involve peer production.
Smith also used this terminology in an excellent comment on the nonprofit boom last October:
Some labor economists have distinguished the “intrinsic rewards” (love of the work itself) and the “extrinsic rewards” (money, benefits) from working.
By working for a non-profit, you may sacrifice some extrinsic rewards for some intrinsic rewards. As people get more and more affluent, it makes sense that more and more people will be willing to make that trade-off.
I think of non-profits as the “purpose-driven voluntary sector.” It’s distinct from the pure profit sector, officially dedicated to profits, and the government sector, which is ultimately financed through coercion. If more and more public goods can be provided through the purpose-driven voluntary sector, government can shrink.