Why Arhats & Pratyekabuddhas Fall Short of Paramita

From Nagarjuna's Treatise on the Great Perfection of Wisdom
(Dharmamitra Translation)

Question: The arhat and the pratyekabuddha are also able to reach to the other shore. Why is that not referred to as paramita?

Response: The crossing over to the other shore achieved by the arhat and pratyekabuddha when compared to the crossing over to the other shore of the Buddha constitutes a case of the designation being the same whereas the reality is different. They take birth and death to constitute "this shore" and nirvana to constitute "the other shore", but are still unable to cross over to the other shore of dana. How is this the case? They are unable to perform giving of every thing at every time and in every way. In the event that they are able to engage in giving, they still lack the great mind in doing so. Perhaps they may employ a neutral mind in their giving, or perhaps a wholesome mind still abiding in the realm of outflows, or perhaps even a non-outflow mind. However, they still lack the mind of great compassion. They are unable to engage in giving which is done for the sake of all beings.

As for that giving which is performed by the bodhisattva, it is done with the realization that the act of giving is neither produced nor destroyed. It is conducted in a state beyond outflows, is unconditioned and is characterized by being like nirvana. That giving is performed for the sake of all beings. This is what is referred to as dana paramita.

Then again, there are those who say that when one performs giving of every thing of every sort, giving exhaustively of all internal and external resources without seeking any reward as a result, then this kind of giving is referred to as dana paramita.

Moreover, it is because it is inexhaustible that it is referred to as dana paramita. How is this so? One knows that the thing which is given is ultimately empty and characterized by being like nirvana. Because one employs this kind of mind in giving to beings, the retribution accruing from it is inexhaustible and it is therefore referred to as dana paramita. This is analogous to a rishi possessed of the five superknowledges secreting a marvelous jewel in the midst of stone and then, desiring to protect this jewel, grinding up adamant and coating it therewith, thus causing it to be indestructible. The giving performed by the bodhisattva is just like this. He employs a kind of giving which is coated with nirvanic reality-mark wisdom and so causes it to be inexhaustible.

Moreover, the bodhisattva gives for the sake of all beings. Because the number of beings is inexhaustible that giving too is inexhaustible.

Then again the bodhisattva gives for the sake of the Buddha's Dharma. The Dharma of the Buddha is immeasurable and boundless. So too then is that giving immeasurable and boundless. It is for these reasons that, although the arhat and the pratyekabuddha reach to the other shore, it is not referred to as paramita.