18 ms·

This might be an unpopular opinion, but a nonprofit/charity will never make as big a difference as a true for-profit vehicle that is pointed at the same problem

by temphn 15y ago

This might be an unpopular opinion, but a nonprofit/charity will never make as big a difference as a true for-profit vehicle that is pointed at the same problem. Nonprofits are ultimately financially unustainable; they survive on donations and government grants (tax) rather than direct contributions from customers. As such they usually can't scale to employ many people or make a worldwide impact. There are exceptions in the information age; Wikipedia, Khan Academy, and perhaps over time Document Cloud. But these too are only useful for people who have computers, not people who lack food. In general countries only drag themselves out of poverty through capitalism and industry. India and China had decades of foreign aid before they turned to capitalism; now there are many industries in which they are net exporters.

gnosis 15y ago
"This might be an unpopular opinion, but a nonprofit/charity will never make as big a difference as a true for-profit vehicle that is pointed at the same problem." It's certainly not an unpopular opinion on HN, home to hordes of corporation-loving, free-market worshiping libertarians.
- tomjen3 15y ago
  I have downvoted you because your comment is an unwanted personal attack on this sites users. If you disagree with his, in my opinion correct, assumption then please argue such so that we can all be smarter. Thank you.
  - Khroma 15y ago
    I didn't read it as a personal attack. The OP's post is not that "unpopular" on this site because this website is full of libertarians. pg is one, I believe. Most entrepreneurs of course, support capitalism and free markets. In fact the proposition that "a nonprofit/charity will never make as big a difference as a true for-profit vehicle that is pointed at the same problem" likely resonates with a majority of users, although I can't really provide a figure, this is from my general experience with the site. I don't think that the parent post is supposed to be an attack on the opinion, but pointing out that it's actually popular.
rokhayakebe 15y ago
Agreed.
Tichy 15y ago
Also, the nonprofit is not under evolutionary pressure to actually solve the problem. They are just under pressure to make people believe they are doing a good thing.
- justincormack 15y ago
  Corporations dont tend to rationally shut down when their market goes away either, there are inefficiencies in the corporate model. Charities do change as demand changes though.
  - Tichy 15y ago
    Eventually the corporation will be bankrupt, though. Still, I don't claim that corporations are without fail. It is still necessary to think about "morals" (I don't like morals, because I think they are only necessary if you don't understand what is really going on). Otherwise, why not join the Mafia and make millions selling drugs?
    - daguar 15y ago
      It's a similar failing: there's a gap between the ultimate good provided by a non-profit and its metric for funding (which is why grant-writing is a much more sought-after skill than most programmatic work). For corporations, there's often a gap between financial performance (particularly short-term) and real shareholder/owner value. It's ethically important to see not just private gain (compensation) but also try to honestly assess one's positive impact on the world (though this does not discount, for example, donations to charitable causes, or the contribution to public goods through taxation).
- deleted 15y ago
  [deleted]
TeMPOraL 15y ago
pg has an interesting essay on the subject: http://www.paulgraham.com/good.html http://www.paulgraham.com/good.html
ippisl 15y ago
The green revolution , in agriculture , which saved an estimated billion files , was made by a non-profit. Paul pollack , and his non-profit IDE, got 20 million people out poverty by offering radically affordable irrigation technology and building private markets for such products. There have been new kinds of non-profits that combine a non-profit goal + financial sustainability. They appear to work better in some cases. For those who are interested in sucssesful non-profit business models and organizations, nextbillion.net is a good site.
daguar 15y ago
"a nonprofit/charity will never make as big a difference as a true for-profit vehicle that is pointed at the same problem." Different domains of problems: a NFP (not for profit) org may not be as _efficient_ as a FP org pursuing the same goal, but you are ignoring that many goals will never be pursued by a profit-seeking entity. Provision of many "social goods" like shelter for the homeless, health care for poor children, or help for people with severe disabilities (components of the "safety net") will simply never yield a profit margin by virtue of the nature of the underlying problem. This is precisely because if we want to provide such services for people who lack the _ability_ to pay for it, there will be no demand for it. So, instead, NFPs make a value proposition to _philanthropists_ who want to provide the goods there is no market incentive to provide. In the public sector corollary, politicians make value propositions to voters, and whichever programs they like (through the mucky, revealed-preference process we call democracy), and the social goods demanded via that process are then implemented through public financing (spreading costs among everyone). It is the underlying problem -- not the organization type -- that governs whether a venture can be profitable, or even sustainable.

by temphn 15y ago

gnosis 15y ago

"This might be an unpopular opinion, but a nonprofit/charity will never make as big a difference as a true for-profit vehicle that is pointed at the same problem." It's certainly not an unpopular opinion on HN, home to hordes of corporation-loving, free-market worshiping libertarians.

tomjen3 15y ago
I have downvoted you because your comment is an unwanted personal attack on this sites users. If you disagree with his, in my opinion correct, assumption then please argue such so that we can all be smarter. Thank you.
- Khroma 15y ago
  I didn't read it as a personal attack. The OP's post is not that "unpopular" on this site because this website is full of libertarians. pg is one, I believe. Most entrepreneurs of course, support capitalism and free markets. In fact the proposition that "a nonprofit/charity will never make as big a difference as a true for-profit vehicle that is pointed at the same problem" likely resonates with a majority of users, although I can't really provide a figure, this is from my general experience with the site. I don't think that the parent post is supposed to be an attack on the opinion, but pointing out that it's actually popular.

rokhayakebe 15y ago

Agreed.

Tichy 15y ago

Also, the nonprofit is not under evolutionary pressure to actually solve the problem. They are just under pressure to make people believe they are doing a good thing.

justincormack 15y ago
Corporations dont tend to rationally shut down when their market goes away either, there are inefficiencies in the corporate model. Charities do change as demand changes though.
- Tichy 15y ago
  Eventually the corporation will be bankrupt, though. Still, I don't claim that corporations are without fail. It is still necessary to think about "morals" (I don't like morals, because I think they are only necessary if you don't understand what is really going on). Otherwise, why not join the Mafia and make millions selling drugs?
  - daguar 15y ago
    It's a similar failing: there's a gap between the ultimate good provided by a non-profit and its metric for funding (which is why grant-writing is a much more sought-after skill than most programmatic work). For corporations, there's often a gap between financial performance (particularly short-term) and real shareholder/owner value. It's ethically important to see not just private gain (compensation) but also try to honestly assess one's positive impact on the world (though this does not discount, for example, donations to charitable causes, or the contribution to public goods through taxation).
deleted 15y ago
[deleted]

TeMPOraL 15y ago

pg has an interesting essay on the subject: http://www.paulgraham.com/good.html http://www.paulgraham.com/good.html

ippisl 15y ago

The green revolution , in agriculture , which saved an estimated billion files , was made by a non-profit. Paul pollack , and his non-profit IDE, got 20 million people out poverty by offering radically affordable irrigation technology and building private markets for such products. There have been new kinds of non-profits that combine a non-profit goal + financial sustainability. They appear to work better in some cases. For those who are interested in sucssesful non-profit business models and organizations, nextbillion.net is a good site.

daguar 15y ago

"a nonprofit/charity will never make as big a difference as a true for-profit vehicle that is pointed at the same problem." Different domains of problems: a NFP (not for profit) org may not be as _efficient_ as a FP org pursuing the same goal, but you are ignoring that many goals will never be pursued by a profit-seeking entity. Provision of many "social goods" like shelter for the homeless, health care for poor children, or help for people with severe disabilities (components of the "safety net") will simply never yield a profit margin by virtue of the nature of the underlying problem. This is precisely because if we want to provide such services for people who lack the _ability_ to pay for it, there will be no demand for it. So, instead, NFPs make a value proposition to _philanthropists_ who want to provide the goods there is no market incentive to provide. In the public sector corollary, politicians make value propositions to voters, and whichever programs they like (through the mucky, revealed-preference process we call democracy), and the social goods demanded via that process are then implemented through public financing (spreading costs among everyone). It is the underlying problem -- not the organization type -- that governs whether a venture can be profitable, or even sustainable.