Since the crisis of the welfare state, the functions of the philanthropic sector in the welfare state have not been comprehensively and systematically discussed. The welfare pluralists regard the philanthropic sector as a partner of the government, hoping that the government will entrust the philanthropic sector with public service provision to reduce the financial burden of the welfare state and promote the performance of public service provision. However, the neo-liberalists believe that the welfare pluralists'position in the philanthropic sector will compel it to rely on the financing from the government and make it lose its independence. Thus, they think it is better to solve the problem of welfare provision via marketization and let the philanthropic sector play its role beyond the public affairs. By analyzing the debate between welfare pluralism and neo-liberalism, we find that, on one hand, it is difficult for the philanthropic sector to conduct activities relying solely on the private donations. Since the public-private partnership and collaborative governance have been widely accepted among the welfare states, the government has retained a major responsibility for financing welfare, while the philanthropic sector has taken over much of the delivery. On the other hand, owing to the increasingly diversified fund resources, the philanthropic sector is continuously expanding its range of voluntary services. In the areas of the representation of the minority, the satisfaction for citizens' spiritual needs and the provision of vocational skills training, the philanthropic sector has played a vital role that can hardly be replaced by the welfare state. Therefore, in the transition of the welfare state, neither can the welfare pluralists nor the neo-liberalists deny the functions of the philanthropic sector in promoting the performance of public service provision and in complementing the structure of social welfare. Apart from its functions as provider of public and voluntary services, the philanthropic sector is also supposed to serve as a vehicle for people to express their moral visions and as a progressive force for an enlightened and equitable social policy. Since the government is not expected to be its own critics or only source of change, the advocacy role and civic role of the philanthropic sector are clearly essential in democratic societies. In addition, the participation of the philanthropic sector in the public service provision will promote the administrative democracy in the welfare state. It is believed that the future of free and democratic societies is directly linked with the vitality of the philanthropic sector in those societies. With the accelerating pace of economic globalization, the global mobility of goods and production factors has dramatically changed the economic structure of the welfare state, and the myth of full employment has gradually been replaced by structural unemployment. Fortunately, the rise of the modern philanthropic sector, especially the emergence of social enterprise in recent years, has created considerable job opportunities for the unemployed. Furthermore, since the philanthropic sector is more flexible in the decision-making process, it usually takes actions more quickly than the government in providing international aid. Many philanthropic organizations also make efforts in the elimination of discrimination and the spread of democracy in less developed countries. The global financial crisis in 2008 has resulted in the reduction of government financial support and individuals' private donations, and in the meantime the philanthropic sector is stepping up its pace to seek cooperation with the market sector to ease the shortage of funds. Moreover, the ″new frontiers of philanthropy,″ which is characterized by the convergence between for-profit and nonprofit, focuses on social and financial returns and seeks to build self-sustainin systems that bring permanent solutions.