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Absolutely on point. My argument is simply that, as you put it, making more than you spend is a necessary element for any organization to exist and grow. In t

Absolutely on point. My argument is simply that, as you put it, making more than you spend is a necessary element for any organization to exist and grow. In the case of a conventional business everyone calls this profit. Somehow, magically, in the case of "nonprofits" we don't. The term "nonprofit" is a misnomer that might be the reason for this distinction, at least in the US. The term implies the idea of zero profit, which could not be farther from the truth. You are right to highlight churches. I remember the first time I went to Texas on a sales call at one of the mega churches. The only way I can describe it was a campus with several buildings the size of a Home Depot and more. You do not do something like that without profit. People might want to bury their heads in the sand and pretend that it isn't, because we legally call them "nonprofits". All we are doing is lying to ourselves. They make a ton of money. And we don't tax them. I am sure there are churches and religious organizations who do a lot of great value for their communities. I also know there are tons who are there for "management" to live the life of the rich and famous. Not to go too far, my wife's mother worked for a church for a while. The head pastor owned several luxury cars, went on amazing trips to expensive resorts all over the world --all paid by the church-- and more. Profit. Note I am not saying profit is inherently bad. We would not have most of the things we enjoy in modern life without profitable business pursuits. From clothing to medicine and everything in between, without profit, it would not exist. Can it be abused and misused? Of course. That is true for almost anything that is part of the human experience. We abuse food, power, the environment, other people, position, etc. All good things until they are abused, including profit.

regularfry 5y ago
Your definition of "profit" doesn't seem to match anyone else's. If an organisation spends what revenue it has on its own operations, that is not profit. You might not agree with the way that money is spent, but that does not change the technical definition of a well-understood and widely agreed accounting term.
- robomartin 5y ago
  Rather than repeat myself, I'll refer to a comment I just posted and then ask you a couple of questions: https://news.ycombinator.com/item?id=29404841 https://news.ycombinator.com/item?id=29404841 Do you think the Vatican is profitable? Do you think that a nonprofit that pays their CEO 36% --yes THIRTY SIX PERCENT-- of revenue is profitable? Do you think that the American Petroleum Institute, which pays their CEO $11MM in salary (4.5% of revenue on $238MM in receipts) exists with a real non-profit objective despite what their balance sheet might say? You see, we get lost in this legal "nonprofit" classification and fail to understand that a lot of these organizations exist for the profit (the enrichment) of either the individuals running them, associated commercial enterprises (oil companies) or both. If we refer to them as "X4132 organizations" (made-up name) we would have no emotional attachment or a mental model to go against what they actually do. When people hear "nonprofit" they think something like "feed the X" scrappy entities with idealistic workers and managers all eating ramen noodles to conserve every dime for their worthy cause. That is FAR from reality. Very far. And that's why I tend to call it "profit". Yes, sure, this does not fit the technical definition of profit, but it is hard to argue that a CEO taking 5%, 10%, 30%, 40% of revenue isn't actually the profit element of the organization. I give the example of the lavish cars and trips for the pastor and management paid for by the church my mother in law used to work for. That's profit. We might classify it some other way, but it isn't charity.
  - regularfry 5y ago
    > Do you think the Vatican is profitable? No idea. I'd have to take a look at their accounts. > Do you think that a nonprofit that pays their CEO 36% --yes THIRTY SIX PERCENT-- of revenue is profitable? No idea. I'd have to take a look at their accounts. > Do you think that the American Petroleum Institute, which pays their CEO $11MM in salary (4.5% of revenue on $238MM in receipts) exists with a real non-profit objective despite what their balance sheet might say? No idea. I'd have to take a look at their accounts. > Yes, sure, this does not fit the technical definition of profit, It is the opposite of profit. It is what you structure if you want to reduce your profit so you don't get taxed. > I give the example of the lavish cars and trips for the pastor and management paid for by the church my mother in law used to work for. That's profit. No, it isn't. It might be embezzlement, from the sounds of it. I get the point that you are trying to make, but doing so by redefining common terms and hoping anyone is going to take it seriously strikes me as remarkably unlikely to succeed. The word you are looking for is not "profit", it is "enrichment", as you say here. They are not the same. Words matter.

regularfry 5y ago

Your definition of "profit" doesn't seem to match anyone else's. If an organisation spends what revenue it has on its own operations, that is not profit. You might not agree with the way that money is spent, but that does not change the technical definition of a well-understood and widely agreed accounting term.

robomartin 5y ago
Rather than repeat myself, I'll refer to a comment I just posted and then ask you a couple of questions: https://news.ycombinator.com/item?id=29404841 https://news.ycombinator.com/item?id=29404841 Do you think the Vatican is profitable? Do you think that a nonprofit that pays their CEO 36% --yes THIRTY SIX PERCENT-- of revenue is profitable? Do you think that the American Petroleum Institute, which pays their CEO $11MM in salary (4.5% of revenue on $238MM in receipts) exists with a real non-profit objective despite what their balance sheet might say? You see, we get lost in this legal "nonprofit" classification and fail to understand that a lot of these organizations exist for the profit (the enrichment) of either the individuals running them, associated commercial enterprises (oil companies) or both. If we refer to them as "X4132 organizations" (made-up name) we would have no emotional attachment or a mental model to go against what they actually do. When people hear "nonprofit" they think something like "feed the X" scrappy entities with idealistic workers and managers all eating ramen noodles to conserve every dime for their worthy cause. That is FAR from reality. Very far. And that's why I tend to call it "profit". Yes, sure, this does not fit the technical definition of profit, but it is hard to argue that a CEO taking 5%, 10%, 30%, 40% of revenue isn't actually the profit element of the organization. I give the example of the lavish cars and trips for the pastor and management paid for by the church my mother in law used to work for. That's profit. We might classify it some other way, but it isn't charity.
- regularfry 5y ago
  > Do you think the Vatican is profitable? No idea. I'd have to take a look at their accounts. > Do you think that a nonprofit that pays their CEO 36% --yes THIRTY SIX PERCENT-- of revenue is profitable? No idea. I'd have to take a look at their accounts. > Do you think that the American Petroleum Institute, which pays their CEO $11MM in salary (4.5% of revenue on $238MM in receipts) exists with a real non-profit objective despite what their balance sheet might say? No idea. I'd have to take a look at their accounts. > Yes, sure, this does not fit the technical definition of profit, It is the opposite of profit. It is what you structure if you want to reduce your profit so you don't get taxed. > I give the example of the lavish cars and trips for the pastor and management paid for by the church my mother in law used to work for. That's profit. No, it isn't. It might be embezzlement, from the sounds of it. I get the point that you are trying to make, but doing so by redefining common terms and hoping anyone is going to take it seriously strikes me as remarkably unlikely to succeed. The word you are looking for is not "profit", it is "enrichment", as you say here. They are not the same. Words matter.