This paper shows the drafting of the new law for the Brazilian third sector. It discusses legal issues, conceptual and managerial innovations, and political deadlocks, and links the legal framework whith the States reform. The Law 9.790/99, that labelled non-profit organisations as Public Interest, Civil Society Organisations (OS-CIP) and set forth the Co-operation Terms(Termos de Parceria), resulted in a number of changes as compared to the previous legal framework regarding classification process (less burdensome, faster, and more accessible); the institutional scope (acknowledgement of organisations with social action areas without legal contemplation); the access to public fundig (more flexible and with greater public control); and the demands for transparent management by entities and more efficient management by governments. The new classification is aimed at identifying public-purpose organisations and simplifying administrative procedures to get the appropriate title, wereas the logic of the aprioristic bureaucratic control is replaced with the notion of rights and responsibilities of civil society organisations. Futhermore, there is an attempt to modernize co-operation among governments and civil society organisations, based of efficacy and efficiency of projects and more adequate accountable mechaninsms, in order to ensure a proper and effective use of State resources. The co-operation Term porposes the inclusion of social management in a new context of public management in new context of public management. Hence, there is a combination between managers autonomous decision-making regarding flexible laws and regulations, and social control. We can conclude that some ropics and guidelines in the agenda of social policies reform are included in the drafting of the new law, that underscores the search of new ways of linking with civil society and the introduction of new ways of management, both for the State in rulling societies and granting titles, and the third sector organisations. The creation of the common welfare by civil society organisations involves challenges both for the third sector (improvement of management capacity and implementation of projects, transparency and social control) and the State. These challenges include management of socieeties focussed on manent revision of the legal and administrative etablishement that hinders control based on results, hampers further tax incentives and creates contradictions between laws and procedures of the two legal systems; and the creation of cooperation relations, such as negotiation capacity among actors and articulation of State and civil society institutions network