In a lecture on the future of civil society last week, Etherington argued that delivery by the sector was part of a market-oriented approach to public services.
"We need to be clear about the limits of marketisation as a means of distributing public goods," he said. "If reform is driven by the need to secure short-term economic gains, then the winners will be those providers that put the bottom line first. That is not what our sector is for.
"We also need to be clear about how far it is appropriate for us to take on the mantle of the state, particularly in relation to coercive functions. There is a world of difference between empowering someone and having power over them."
In his lecture at the Cass Business School, Etherington said the sector was growing and vibrant, but faced challenges such as the Government's "heavy-handed" approach to terrorism and the voluntary sector.
He added that the Compact should be strengthened. He said: "Is it time to consider the possibility of giving the commissioner formal legal powers to make adjudication stick? Or to identify appropriate sanctions for those that don't apply?"