Etherington told the NCVO's autumn conference in Manchester last week that the sector needed to adopt a more radical approach.
"For the past 10 years or so, we have focused on our relationship with government," he said. "While that has substantially improved, it has all too often been driven by others defining what we are and what they want from us. There can be a risk that we are viewed as an agent of government policy, not valued for our wider contribution to society."
He said the sector should assert the civil society values of solidarity, independence and diversity. "We should not be defined by what we are not: not-for-profit, non-governmental. We should define ourselves positively, as part of civil society."
Etherington said the NCVO was launching a new independence checklist that would give practical guidelines on how organisations could promote their ability to act independently.
He said the recession and the run-up to the next election could be "a window of opportunity to shape the agenda" if the sector set out the issues it thought were important and what role it wanted to play in solving them.
Meanwhile, James Purnell, Secretary of State for Work and Pensions, told the conference that more information had recently been posted on his department's website about the ‘right to bid' scheme, under which any organisation will be able to propose innovative ways of better delivering services.
"This mechanism will provide an additional opportunity for smaller and specialist organisations to put ideas directly to us," he said. "And because we are looking for proposals that can be tested as discreet pilots in particular areas, there will be scope for smaller voluntary organisations to make a big impact."