Learning to Give, Philanthropy education resources that teach giving and civic engagement


Definition of Want vs. Need

By Lorren Clark

Graduate Student, Grand Valley State University


Definition

According the Merriam-Webster Dictionary, a " want " is defined as having a strong desire for something. The word " need " is defined as lack of the means of subsistence. In every arena of life, the two concepts are opposing elements (Merriam-Webster Online).

The principle behind these two basic opposing eliminates is dualism . "Dualism is any theory or system of thought that recognizes two and only two independent and mutually irreducible principles or substances, which are sometimes complementary and sometimes in conflict" (Choudhury 1994).

For the purpose of this paper, the role for-profit and not-for-profits play in delivering the "wants" and "needs" of the United States population will be addressed from an economic theory perspective. " Economics is a social science that deals with the production, distribution, consumption of goods and services and their management" (Thefreedictionary.com).

Within the United Sates there are three main economic sectors comprised of the public sector , which includes the government, the for-profit sector , which is mostly private organizations, and the not-for-profit sector . The not-for-profit sector is also called the third sector, nonprofit sector, independent sector or voluntary sector. The term not-for-profit will be used for the purposes of this paper.

The public sector often fills the "needs" of society by providing such things as roads, schools and public assistance or welfare. The funds providing these services arrive largely in the form of taxes.

The for-profit sector generally addresses the "wants" of society by producing and distributing goods and services to a portion of the population based on demand. Demand is the ability and desire to purchase goods and services. If there is a high demand, the for-profit sector will supply those wants (Thefreedictionary.com). Some examples of what the population demands from this sector include luxury cars, expensive restaurants, physical cosmetic alterations, insurance, marketing and advertising, accounting and finance.

The main goal of the for-profit sector is to make a profit. By supplying the demands of those that can afford to "want," this sector will always remain a vital part of the economy. The profits from for-profits organizations can be spent as the organization sees fit. This is normally accomplished by releasing dividends to the companies' stockholders. Dividends are that part of the earnings of a corporation distributed to its shareholders (Thefreedictionary.com).

The not-for-profit sector is mostly responsible for the "needs" of the society. The title of the sector can be misleading in some respects. Although titled the not-for-profit sector, organizations holding this tax-exempt status can and should strive to make a profit. However, because not-for-profits receive huge tax breaks excluded from for-profit organizations, not-for-profits are required to reinvest all profits into the organization to further accomplish the mission. Not-for-profits are mission driven organizations. In this aspect, they vary little from mission-based for-profits. Yet, the missions of the not-for profits are usually socially and humanistically based whereas for-profit missions are driven by finance and commerce. This is the primary reason not-for-profits are more responsible for the "needs" of the population.

Some examples of a "need" include basic medical service, educational programs, funding for daycare, assistance in obtaining food, shelter, clothing, transportation, heat and job training. The not-for-profit sector deals with the production, distribution and consumption of goods and services needed by a population. Often the demand for these services far exceeds the supply. Unlike the private sector, the not-for-profit sector has difficulty in obtaining supplies of needed goods and services.

The dualism of the for-profit and not-for-profit sectors is evident in respect to production and consumption of goods as well as services supply and demand. The two sectors are certainly independent and mutually irreducible and. more often than not, conflict with one another. However, another component of dualism and economic theory is the concept that two opposing elements can also complement each other. The distinct lines between money, power and business are blurring and the two sectors are increasingly found at economic intersections. In recent years the two sectors have been forced to work together to supply both the "wants" and the "needs" of the entire population.


Historic Roots

The most prevalent historic example of the sectors' collaboration practices is the Welfare Reform Act of 1996. The Welfare Reform Act of 1996 (H.R. 3734, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) was effective October 1, 1996. This new bill made it mandatory for all three sectors to work together and supply the demands of the welfare population. This new bill cut funding of several previously federally-funded programs. Some of these programs included Aid to Families with Dependent Children, primary cash aid, a job-readiness program for welfare recipients and a program for emergency assistance to families.

The federal government gave states block grants to replace these programs by providing allocated funds to local governments to finance a broad range of services (Children's Defense Fund 1996).

As part of the Act, each state had to offer a welfare program to its residents, however, mandatory uniformity across the states was not a requirement. Each state had the authority to determine how, when and who would administer its welfare services to the recipients. There were several choices offered to the states as outlined in the law. The states could administer the programs at the state level. They could also choose to outsource the administration to the for-profit sector, such as for-profit business and other private entities. They could opt to outsource the programs to not-for-profit establishments, such as religious or social organizations. As a final alternative, each state could implement a combination of each option. Despite the choice, the Welfare Reform Act of 1996 created a massive amount of competition between the two sectors (Children's Defense Fund 1996).

Usually, the concepts of competition and collaboration are opposing elements of dualism and tend to be in direct conflict with one another. However, as it relates to serving the "wants" and the "needs" of the welfare population in every state, the above two terms are on the other continuum of the dualism spectrum. They compliment each other. As stated earlier, the for-profit sector tends to serve the "wants" and the not-for-profit sector often serves the "needs" of the population.

In the case of welfare reform, each state decided its respective method of welfare services administration. The territory of the past was no longer staked. Consequently, each economic sector was in competition with the other to establish a new niche. Some type of collaboration was needed in order for each sector to benefit from the new demands. One or both of these sectors would be called upon to supply both "needs" and "wants." The for-profit sector was an expert on the business of supplying the "wants;" however, social responsibility was the area of expertise for the not-for-profit sector. Both combined brewed a dichotomy of skills. The key to each of the sector's livelihood was to learn the other's specialty. Despite who was chosen to provide the services, both sectors needed each other to accomplish an ultimate goal. This goal includes meeting the economic "wants" and "needs" of a targeted population.

Economic theory is nothing more than a theory of transactions. It is the theory of supplying goods and services. A key term in economic theory is the game theory. Game theory explains competition in terms of gains and losses among opposing players (Game Theory Society). In the preceding example, both sectors are opposing players in the game. For each player's best interest, game theory strategy suggests collaboration to lessen both sides' losses and increase the gains. Inevitably, there will be a winner and a loser in the game and also between the sectors. Darwin's principle of survival of the fittest applies to all animals, people and entities. However, with the appropriate business tactics, the loser will still be in business to serve the "wants" and "needs" of different populations. Welfare reform reinforced the concept of competition between the sectors, but is also introduced the benefits of collaboration.


Importance

The Economic theory of the "wants" and "needs" of society are very important to both the for-profit and not-for-profit sector. Without the for-profit sector, not only many "wants" but also several "needs" would not be met. The for-profit sector generates several million dollars a year in taxes alone for the economy. Without the funds from this sector, many not-for-profits would not be available to serve the "needs" of society.

The irony of the two sectors' importance is that each need the other to succeed in their missions. The not-for-profit sector serves a population that generally cannot afford the goods and services produced by for-profits. Many for-profit companies support the not-for-profit companies by the manufacture and distribution of these goods and services through grants, in-kind contributions or other donations. In turn, the for-profit organizations can use these contributions as tax write-offs on business taxes. Both sectors are constantly trying to find their niche in the economy. The mission of one is complimentary to the mission of another. However, the law of competition in the field of economic "wants" and "needs" continues to diversify the sectors while further exposing their importance to each other.


Ties to the Philanthropic Sector

Economic theory and the philanthropic sector have one main commonality. They both involve the exchange of funds. Economic theory involves production and consumption of good and services. These goods and services are usually supplied with the intent of receiving something of equal or greater value in return for consideration.

Philanthropy is shaped in many forms including community philanthropy, cultural philanthropy, social philanthropy, corporate philanthropy and venture philanthropy. Every type of philanthropy values the voluntary promotion of human welfare. Every type addresses some "wants" as well as "needs" in the population. However, venture philanthropy is more closely related to the economic theory of a "want" and "need."

Venture Philanthropy applies the business concepts of the for-profit sector to non-profit organizations. Venture philanthropy incorporates strategic planning, long-term investments and some marketing into its business plan. One of the goals of venture philanthropy is to maximize the profit margin of the not for profit organizations in order to financially support not only a population's "needs," but also offer the population "wants" as well. This is an extremely innovative form of philanthropy only recently being utilized by not-for-profits . In an economy filled with so much competition, each sector will need to be cross-trained in serving both the "wants" and the "needs" of the entire population. Venture philanthropy offers both sectors the opportunity to make extra cash in the same way, but dispense the cash according to the mission of each organization

(PBS Think Tank).


Key Related Ideas

The following definitions have related concepts of needs. Each word stresses the urgency and frustration of having a need. In economic theory and for the purposes of this paper, need is defined as a lack of the means of subsistence.

Dearth is an acute insufficiency.

Deficiency is the state of needing something that is absent or unavailable.

Shortage is the property of being or having something less than expected or required.

Economic Consumption is the utilization of economic goods to satisfy needs.

Lack is the state of needing something that is absent or unavailable.

Supply is an amount of something available for use.

Requisiteness is the state of being absolutely required.

Stringency is a state occasioned by scarcity of money and a shortage of credit.

The following definitions have related concepts of wants. In economic theory and for the purpose of this paper, a want is a strong desire.

Demand is the ability and desire to purchase goods and services.

Desire is the feeling that accompanies an unsatisfied state.

Expectation is regarding something as probable or likely.

Indispensable is something that is essential.

Hunger is having a craving, appetite or great desire for something.

Longing is a strong or persistent desire.


Important People Related to the Topic

  • Karl Marx (1818-1883) Marx was a German political philosopher and revolutionist. He wrote about capitalism and the class struggles between the ruling class and the oppressed working class. Capitalism is an "economic system characterized by the following: private property ownership exists; individuals and companies are allowed to compete for their own economic gain; and free market forces, such a system, is based on the premise of separating the state and business activities" (Tuten 2003). These characteristics can be seen in the for-profit sector. This sector supplies the wants of society based on the demand. In this concept, the suppliers generally compete rather than collaborate, which is the total opposite of the not-for-profit sector (Encarta).

  • Max Weber (1864-1920) Weber was a German economist and social historian. Weber's main thesis stated that economic theory was not the only influence on historical events. He argued other factors must be considered when analyzing a person or event such as religion and ethics. The reality of the situation cannot be evaluated unless other basic elements are analyzed. This concept is called pluralism (Hyperdictionary.com). Weber was also a proponent of positivist sociology which emphasized observable facts and excluded speculation (Encyclopedia of Marxism). Some of Weber's underlying principles are seen in today's not-for-profit sector. Many not-for-profits believe not only looking at the person, but also the elements that affect the person's situation. They supply the immediate need and strive to supply the entire need of the person. Often, this is difficult for one organization to solely accomplish; therefore, collaboration is required with other organizations (usually other not-for-profits). Finally, not-for-profits strive to remain objective and base their conclusions on observable facts. Speculation and judgment on how a person came to need assistance from the not-for-profit has the potential of jeopardizing the mission of the organization; the mission of supplying "needs" to a targeted population.


Related Nonprofit Organizations

There are several not-for-profit organizations that address both the economic "wants" and the "needs" of the population.

  • The Center on Budget and Policy Priorities is one of the nation's premier policy organizations working at the federal and state levels on fiscal policy and public programs affecting low- and moderate-income families and individuals ( http://www.cbpp.org ).

  • The Department of Human Services is Michigan's public assistance, child and family welfare agency. The DHS directs the operations of public assistance and service programs through a network of over 100 county family independence agencies in every county in Michigan (http://www.michigan.gov/dhs).

  • The Foundation for Economic Education, Inc is "committed to enriching people's understanding of the economic and ethical advantages of free markets " ( http://www.fee.org/ ).

  • The National Center on Nonprofit Enterprise helps nonprofit organizations make wise economic decisions to efficiently and effectively pursue their social missions ( http://www.nationalcne.org ).

  • The United Way of America seeks to improve people's lives by mobilizing the caring power of communities ( http://unitedway.org ).

  • The WALL STREET WITHOUT WALLS program brings finance professionals and Wall Street executives together with community development organizations to assist them with their specific financing needs ( http://www.wallstreetwithoutwalls.com ).


Related Web Sites

Committee Encouraging Corporate Philanthropy (CECP)  at http://cecp.co/ is an online forum for business CEOs and Chairpersons solely focused on corporate philanthropy. The site offers access to programs and publications featuring topics on corporate giving standards and opportunities to collaborate with other national and international corporate philanthropic organizations.

National Network for Collaboration at http://www.uvm.edu/extension/community/nnco/ provides links to resources that feature environments that foster collaboration and lead to citizen problem solving to improve the lives of children, youth and families.

Social Investment Forum at http://www.socialinvest.org offers comprehensive information, contacts and resources on socially responsible investing. The resources include areas linked to investments, news and media and research on various community investment opportunities.

Social Venture Partners International at http://www.svpi.org features information on the SVP model, news articles and research on innovative strategies to address complex community issues and links to resources that assist organizations to build long-term capacity.

Venture Philanthropy Partners at http://www.venturephilanthropypartners.org, serves as a source of information on the organization's partnership structure, its mission and the organizations it funds. It also delineates the investment criteria used to select and fund high-potential community-based organizations that are serving the core developmental, learning, and educational needs of children from low-income families in the National Capital Region.


Bibliography and Internet Sources

Child Defense Fund. "Welfare Reform: CDC Summarizes Conferences Bill." (1996).  http://www.libertynet.org/edcivic/welfcdf.html.

Think Tank (PBS). "Think Tank Specials -The Giving Boom: How The New Philanthropy Will Change America." Accessed 5 December 2003. http://www.pbs.org/thinktank/givingboom_special.html.