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Shareholder return and the wages of skilled labor/management are very different things! No one is getting rich off a nonprofit merely for putting capital into i

Shareholder return and the wages of skilled labor/management are very different things! No one is getting rich off a nonprofit merely for putting capital into it, is the point. Nonprofits still buy things that are expensive, including the efforts of skilled and effective people.

bar101 6y ago
> efforts of skilled and effective people. This has been a truism for more than 100 years and has been mocked for as long it exists. There are entire "Yes Minister" episodes about "we use the usual formula: comparison with wages of industry leaders" (they use chairmen of BP and IBM for comic effect). Also highly recommended is the episode where Sir Arnold leaves the civil service and looks for a suitable successor who will put jobs his way ... sorry, ask him to undertake the jobs. Excerpt: Sir Arnold: Also, I would like to be chairman of the Anglo-Caribbean Association, which would give me an opportunity ... Sir Humphrey: ... to be of service. Sir Arnold: Precisely, especially during the winter months.
bradleyjg 6y ago
How do you understand law firm partnerships in this wages vs capital model?
- closeparen 6y ago
  That’s a good question. I think it’s one of the few ways to convert labor to (meaningful) capital, comparable to being a founder or early employee. The CEO of a nonprofit may be a well paid associate, but he is still just an associate. The kind of excess revenue that would flow to a partner’s profit sharing check has to be reinvested in the mission instead of disbursed to somebody in cash just because.
  - bradleyjg 6y ago
    Does it? I know hospital system CEO’s get performance pay. Maybe if the numbers were sufficiently egregious and a newspaper (if a local one still exists) decided to do an expose the attorney general would intervene but I think in general some of these non profits are better modeled as perpetual partnerships run for the benefit of partners than they are as mission driven organizations.
    - closeparen 6y ago
      Performance with respect to what goals?
      - bradleyjg 6y ago
        Profit or close proxies for profit.

bar101 6y ago

> efforts of skilled and effective people. This has been a truism for more than 100 years and has been mocked for as long it exists. There are entire "Yes Minister" episodes about "we use the usual formula: comparison with wages of industry leaders" (they use chairmen of BP and IBM for comic effect). Also highly recommended is the episode where Sir Arnold leaves the civil service and looks for a suitable successor who will put jobs his way ... sorry, ask him to undertake the jobs. Excerpt: Sir Arnold: Also, I would like to be chairman of the Anglo-Caribbean Association, which would give me an opportunity ... Sir Humphrey: ... to be of service. Sir Arnold: Precisely, especially during the winter months.

bradleyjg 6y ago

How do you understand law firm partnerships in this wages vs capital model?

closeparen 6y ago
That’s a good question. I think it’s one of the few ways to convert labor to (meaningful) capital, comparable to being a founder or early employee. The CEO of a nonprofit may be a well paid associate, but he is still just an associate. The kind of excess revenue that would flow to a partner’s profit sharing check has to be reinvested in the mission instead of disbursed to somebody in cash just because.
- bradleyjg 6y ago
  Does it? I know hospital system CEO’s get performance pay. Maybe if the numbers were sufficiently egregious and a newspaper (if a local one still exists) decided to do an expose the attorney general would intervene but I think in general some of these non profits are better modeled as perpetual partnerships run for the benefit of partners than they are as mission driven organizations.
  - closeparen 6y ago
    Performance with respect to what goals?
    - bradleyjg 6y ago
      Profit or close proxies for profit.