The nature of benefits and their financing

Chapter 3 made a general distinction between public and private benefits produced by social purpose organizations. This chapter further differentiates within and between these broad categories in order to account for the myriad combinations of SPO finance. In brief, it is argued that the better that an SPO understands the nature of the benefits it provides, the more successful it can be in generating the necessary economic resources to support its operations and achieve its mission. Traditional microeconomic theory focuses on markets and is concerned primarily with “private goods.†Public goods come into play in this theory to describe conditions of “market failure†where, without some form of modification through public policy or alternative mechanisms of resource allocation, markets will not by themselves allocate resources efficiently. A wide variety of mechanisms, including subsidies, regulation, taxes, direct government provision, or the engagement of alternative quasi-public organizations, may then be considered to correct market failures.