The holidays are always a joyful season for me, given I have five grandchildren. They are a true blessing in life. This year though, the holiday season will be a little bittersweet. The end of this year will also see a wonderful and well known professor retire from Moravian University (“Moravian” or “the University”). Dr. James West is an economist who also writes some very good poetry and I daresay, is a dear colleague of mine on the faculty of the School of Business and Economics. He has been a mainstay of the faculty at Moravian since 1989 and will be leaving the classroom at the end of this semester for a sabbatical semester and then onto retirement.
One of Dr. West’s articles is named Attaining Prosperity: A 9 “P” Economic Model. Jim has successfully used this model to teach budding new economics majors at Moravian. He postulates Prosperity is the result of four microeconomic P’s (Production, Property, Prices and Profits) and four macroeconomic P’s (Public Sector, Private Sector, Philosophy, and Philanthropy). Combined, these eight factors result in the final P: Prosperity.
As this is a blog about Not For Profit (“NFP”) management, I want to focus on the philanthropic factor. This is often omitted in a discussion of economic prosperity. Jim makes it an explicit part of a sound economy. Philanthropy is derived from the Greek work philanthropos, which means humanely or kindly, terms many do not connect to a capitalist society. Jim states the philanthropic sector of the economy “…depends on the voluntary support of individuals, largely in the private sector, to support a myriad of humanitarian activities, in education, health, the arts, and many more quality of life components essential to the society’s definition of prosperity”.
This is certainly a valuable insight. One recent report states NFP organizations contribute on average 5.7% of the U.S. GDP in recent years. It also claimed the NFP sector contributed $1.4 trillion dollars to the economy in the second quarter of 2022 alone (1). This number is certainly dwarfed by both the public and private sectors, but nevertheless stands as a significant contribution to American economic life. Of course, the quality of life issues generated by the NFP sector are not so easy to quantify. Who can deny a symphony orchestra playing a piece by Beethoven doesn’t improve our quality of life? The orchestra is largely supported by donations and subscriptions. That is the economic part of the equation. The utility (to use an economic term) generated by listening to the music largely goes unmeasured. In short, beyond the quantitative measures (the impact on GDP) there are the qualitative aspects as well, enhancing human enjoyment and existence.
He further points out, “ A society that promotes honesty and trustworthiness will support stable institutions in the private, public, and philanthropic sectors”. These values will provide a solid economic structure for society. I would like to expound on this insight. They are in fact critical to economic growth, but we always have to be concerned with the moral dimensions of the underlying Philosophy as well. For instance, my profession (accounting) has always emphasized the importance of “giving back” to the community. This can be done by donating your time, talent, or treasure. We need to always keep that in our mind when we talk about what makes a strong economy, and to even more forcefully argue for greater participation by all in the NFP sector. The “9 P” argument provides another reason why everyone’s participation is necessary: it is part of a strong economy. NFP directors, managers, and employees can all be proud of their cumulative efforts and their contribution to our economy.
So, in closing, let me wish all of you a wonderful holiday season, a happy New year, and a well deserved retirement to my friend! May you have a healthy, and dare I say, prosperous New Year!