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The fourth sector:
how Ukrainians should work for the benefit of society
Ukraine's social processes are no longer characterized only by three conventional sectors: government, business, and civil society. Nowadays, initiatives have the new sector's characteristics — of the fourth one.
Aider Khalilov
USAID/ENGAGE Senior Program Manager
What are the opportunities and challenges of the fourth sector in Ukraine? How does it differ from public organizations? Check it out in an interview with the USAID/ENGAGE Senior Program Manager Aider Khalilov. USAID/ENGAGE program aims to increase citizen awareness of and engagement in civic actions at the national, regional and local level.







What is the fourth sector?
The new concept is formed on the ground of existing institutions and tells business: "We do not make money putting forward only this goal, but we make money responsibly".
Usually, the interaction between the state, business and civil society is divided into three sectors. Government is a primary sector, business (making money) is a secondary one, and civil society (providing social services and developing communities) is a third one. Now more and more people are talking about a new sector of society — a fourth one. It combines public, business and social sectors functions.

Thus, it goes about the following: business is socially important, socially responsible, it does not lead to the destruction of ties between citizens, littering areas (if we talk about environmental issues), building factories, etc. The business has a clear position that it must coexist with people, nature, and the world to benefit everyone, not just to fulfill their own money needs, Ayder Khalilov says.
The fourth sector is based on social responsibility and business non-toxicity. Its main task is to ask its consumer about a service or product and receive constant feedback to improve these products.
About independence from state and business
There is no existing structure called the fourth sector. There is still no place for the sector that both makes money and engages in social work for its community in the legislation of different countries:

— The fourth sector is a more philosophical and strategic concept. But what is it based on? We live in the economic and legislative realities of the three sectors. That is, there is now a clear division in all countries of the world: there are registered companies that make money; there are registered state bodies, and there are also registered non-government organizations — so, all of them can be registered.
Ayder Khalilov emphasizes that the fourth sector is based on organizations that already operate; that is, it cannot exist separately:

— This is not something that stands alone grabs the biggest piece of the pie. This is a format integrated into existing structures.
The fourth sector features
The fourth sector major feature is not charity, not patronage and not sponsorship. It is a way to make money on principles of sustainability (it is about how we treat our customers). Then the buyer perceives this product from the point of view of social responsibility and business non-toxicity.
Ayder Khalilov gives an example from international practice: it turns out that utilities (those that clean garbage, build roads, cut down trees, and so on) are the fourth sector organizations in the West:

— Because they make money, but by developing the infrastructure and making it more convenient for the people, that is, these organizations treat their community responsibly. And our utilities have not yet grown to that level. Because most of these structures belong to the local governments, and communities are not fully involved in the service formed by these structures. Here is another fourth sector feature — the one who receives a service or product directly impacts this product or service. They are frequently asked: "Did you like it? How would you like us to do that? Can we repair the road here, or should we leave a bike path?" That is, the community forms a policy of providing services or goods of the firm, government agency or public organization. This is a business, but you are asked: "Will I do the right thing if I make money this way?"

To distinguish the fourth sector from the public one, we must remember the main difference:

— Non-profitability is its main feature. Formally, the organization can charge for training, strategic planning, but this amount of money must be fixed and spent strictly on this product, training and so on. That is, the public organization takes only what is needed from the customer, no more. This is a crucial principle: you have no profit, only costs reimbursement. And when we have already started to make a profit, making the community better simultaneously, we become the fourth sector.
The fourth sector main challenges in Ukraine
Organizations can generate income through social entrepreneurship. This is one of the fourth sector formats. When it goes about business, this concept is a bit more difficult because the social component should come first. Ayder Khalilov says it is easier for businesses to make money in any way and just make a sponsorship contribution or establish their own fund, as various oligarchs do, and have this social responsibility. This is not about doing business, but about the profit distribution process:
I can give an example that can be considered the fourth sector in Ukraine. This is the Atlas Weekend, which incorporates the themes of inclusiveness, garbage recycling and civic initiatives into the festival. Citizens who come and pay for a ticket to listen to music also contribute to a social cause. That is, the festival makes money and allows its guests to engage in civic activism.
The West uses a popular approach called "fair trade":

— For example, sugar from Latin America or cocoa beans from Africa are grown by farmers who receive meagre wages. And big companies in Europe and the United States get even richer from this. Now, there is a fourth sector initiative, when these small businesses have merged and registered a brand "Fairtrade International" to sell their goods and help employees: the shops sell the same sugar or cocoa at 1% more expensive prices but this percentage goes to offset costs wages of workers who work there — in Latin America or Africa. This reduces social tensions in these countries. In this concept, they seem to make money, but at the same time, funds get back to the community.
Ayder Khalilov believes Ukrainians' unwillingness for such an approach to be the main challenge of the fourth sector now:

— This approach requires a different vision. That is, such mental willingness is necessary. The second challenge is our state's formal preparation because we do not have such a global approach that would help here. And the infrastructure issue is the third one. That is, how infrastructurally our business and public sector are ready for this today: are specialists, developments and ideas ready? And we don't have enough people, visions and ideas. If these aspects develop, Ukraine will have a promising future.
The fourth sector opportunities
in Ukraine
The USAID/ENGAGE data show that Ukrainians are primarily passive. Approximately 10-12% of people have an active stance. What are the reasons? The social activity requires a lot of motivation and time from a person:

— What can a business or a public sector do in this situation? They can offer a product that a person would buy and realize their own involvement in developing that product. High technologies involvement is not required; it should be a product of a local origin. It can be manufactured in the community itself and distributed to people living there. And when a person sees that this product is created for him/her and with him/her, then he/she purchases it more, promotes it better and is involved even more effectively. In Ukraine, these products may be related to nature management, ecology and infrastructure. That is what people tend to engage and have a vision of the future in this direction. We need to start small to meet our needs.
The fourth sector results
Ayder Khalilov names the primary goal of the fourth sector: for everyone to get everything and enjoy life in their community. The fourth sector needs to switch the view from meeting its own needs to meeting the general ones:
We are all wealthy, have resources, live without toxicity, treat everything so as not to harm our children and grandchildren. That is how everything should be. If you open a store in a village, you should simultaneously develop the community nearby and involve them in making your store and products better. Thus, the community will benefit from your business. This approach can be implemented in our country, but first, we need to work with citizens and businesses to understand what a community is and how to develop it.
Now, COVID-19 affects this. Businesses lose and go bankrupt, so it is not easy to talk about social responsibility in such conditions. But we need to develop it for the future and involve as many people as possible to get feedback on our product or service. We need to work with our mentality.

This material is created with the support of USAID/ENGAGE program.
USAID/ENGAGE program aims to increase citizen awareness of and engagement in civic actions at the national, regional and local level.
If you are interested in cooperation, please contact us:

E-mail: [email protected]
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