4 ms·

This is one of the reasons why non-profit companies are flawed. There are no incentives in place for monetary gain. Non-profits are good at raising awareness,

by baran 17y ago

This is one of the reasons why non-profit companies are flawed. There are no incentives in place for monetary gain. Non-profits are good at raising awareness, not being a sustainable entity. If someone wants to make a difference and change world (especially developing countries), I believe there has to be financial incentives : social entrepreneurship.

billswift 17y ago
If you can't make money doing something, is there any good evidence that it is worth doing at all? Leaving aside goods with "free" competition from the gov't (schools, roads, libraries, etc). EDIT: Also leaving aside things you do for your more direct benefit, like growing your own food or contributing to open source projects you use.
- cwan 17y ago
  There are cases where charity in its more pure forms are important - I do think from time to time that individuals need help as a result of an event that may be no fault of their own. I personally try to be compassionate - but I don't think we should shame/force people to be charitable - and even in implementation, local not-for-profits tend to be far more efficient than government at assessing needs and addressing them. When it comes to foreign relief/charities, it's a really tough call. On one hand, oppressive governments are incentivized to actively show their people at their worst so that they can get more money and in turn collect graft (e.g. Saddam Hussein and baby incubators), but on the other what are the rest of us supposed to do? Let these people die? We play right into the hands of their governments when we don't. Following natural disasters, war/strife, I also personally feel a strong need to help. In these scenarios, there can be no room for sustainable profit because they tend to be unique/unusual events.
  - billswift 17y ago
    I have nothing against helping in emergencies, but Ayn Rand had a good essay on that - emergencies are situations outside of normal operations and the response to an emergency should be working to end the emergency situation.
- fhars 17y ago
  Did you really ask "is there any value in leading a moral life if it doesn't pay off financially?" Non-profits do not actually aim at financial gain (duh!), so measuring their success in monetary term is an error of categories. Of course it is difficult to assess success of an endeavour like that, and Aaron is right in raising awarness for these difficulties, but forcing an inappropriate kind of measurement (did your non-profit make enough profit?) on them doesn't help solving this problem. The correct question to ask are "what are our goals?" "How do we go about reaching our goals?" "Did our past activities in fact further our goals?" and so on. "how much more money did we raise and distribute" may factor in the analysis, but on its own it is pretty meaningless.
  - cwan 17y ago
    In the world of development, it is often quite easy to get cynical over the multitudes of people who make rather significant amounts essentially tax free working abroad. Even in some local charities, we have to be careful about this notion that because their mission seems pure that they are in fact pure. Sometimes (and I'm afraid more often than even I suspect) instead of generating profits what would be "profits" instead accrue to what I'll call local empire building - managers building their own little fiefdoms of employees who report to them. Generally there's not as much pressure to stop it if the organization is reasonably well funded. Alternatively, they pay themselves more to soak up any potential profit so they can perversely call themselves not for profit. Otherwise I agree - choosing metrics is not an easy task to be taken likely. Profitability/+cash flow are however far easier metrics to measure and manage.
  - billswift 17y ago
    There are many reasons to do things other than money, but when you are dealing with people that you don't personally or directly know the fact that they are willing to pay for your services is basically the only real signal you have as to whether you are benefiting them. And if you are not making more doing this (for a combination of monetary and non-monetary benefits) than you could something else, then you need to switch to a better use of your time. Of course, the contributors benefit from donating money, etc by signalling effects and warm fuzzies, but that doesn't mean the recipients are benefiting nearly as much as the contributors are spending.
- Eliezer 17y ago
  For the love of Cthulhu! Repeat after me: Profit is not determined by how much value you create, it is determined by how much of that value you can capture. Some value isn't easily captured and that's a perfectly legitimate reason for nonprofits to exist.
  - billswift 17y ago
    I didn't say you should try to make as much profit as you can, but if you are not able to make anything, what evidence is there that you are benefiting anyone or even doing more harm than good? On the other hand, I've been following OB and LW since they started so I can easily see why you want to believe in the goodness of non-profits.
    - Eliezer 17y ago
      > On the other hand, I've been following OB and LW since they started ...and you didn't pay for it, and we don't run ads. Do you feel that we benefited you, and did more good than harm?
      - billswift 17y ago
        On the economics of charities and their inferiority to markets, see Robin Hanson's post on OB a few days ago, http://www.overcomingbias.com/2009/09/lost-charity.html http://www.overcomingbias.com/2009/09/lost-charity.html

by baran 17y ago

billswift 17y ago

If you can't make money doing something, is there any good evidence that it is worth doing at all? Leaving aside goods with "free" competition from the gov't (schools, roads, libraries, etc). EDIT: Also leaving aside things you do for your more direct benefit, like growing your own food or contributing to open source projects you use.

cwan 17y ago
There are cases where charity in its more pure forms are important - I do think from time to time that individuals need help as a result of an event that may be no fault of their own. I personally try to be compassionate - but I don't think we should shame/force people to be charitable - and even in implementation, local not-for-profits tend to be far more efficient than government at assessing needs and addressing them. When it comes to foreign relief/charities, it's a really tough call. On one hand, oppressive governments are incentivized to actively show their people at their worst so that they can get more money and in turn collect graft (e.g. Saddam Hussein and baby incubators), but on the other what are the rest of us supposed to do? Let these people die? We play right into the hands of their governments when we don't. Following natural disasters, war/strife, I also personally feel a strong need to help. In these scenarios, there can be no room for sustainable profit because they tend to be unique/unusual events.
- billswift 17y ago
  I have nothing against helping in emergencies, but Ayn Rand had a good essay on that - emergencies are situations outside of normal operations and the response to an emergency should be working to end the emergency situation.
fhars 17y ago
Did you really ask "is there any value in leading a moral life if it doesn't pay off financially?" Non-profits do not actually aim at financial gain (duh!), so measuring their success in monetary term is an error of categories. Of course it is difficult to assess success of an endeavour like that, and Aaron is right in raising awarness for these difficulties, but forcing an inappropriate kind of measurement (did your non-profit make enough profit?) on them doesn't help solving this problem. The correct question to ask are "what are our goals?" "How do we go about reaching our goals?" "Did our past activities in fact further our goals?" and so on. "how much more money did we raise and distribute" may factor in the analysis, but on its own it is pretty meaningless.
- cwan 17y ago
  In the world of development, it is often quite easy to get cynical over the multitudes of people who make rather significant amounts essentially tax free working abroad. Even in some local charities, we have to be careful about this notion that because their mission seems pure that they are in fact pure. Sometimes (and I'm afraid more often than even I suspect) instead of generating profits what would be "profits" instead accrue to what I'll call local empire building - managers building their own little fiefdoms of employees who report to them. Generally there's not as much pressure to stop it if the organization is reasonably well funded. Alternatively, they pay themselves more to soak up any potential profit so they can perversely call themselves not for profit. Otherwise I agree - choosing metrics is not an easy task to be taken likely. Profitability/+cash flow are however far easier metrics to measure and manage.
- billswift 17y ago
  There are many reasons to do things other than money, but when you are dealing with people that you don't personally or directly know the fact that they are willing to pay for your services is basically the only real signal you have as to whether you are benefiting them. And if you are not making more doing this (for a combination of monetary and non-monetary benefits) than you could something else, then you need to switch to a better use of your time. Of course, the contributors benefit from donating money, etc by signalling effects and warm fuzzies, but that doesn't mean the recipients are benefiting nearly as much as the contributors are spending.
Eliezer 17y ago
For the love of Cthulhu! Repeat after me: Profit is not determined by how much value you create, it is determined by how much of that value you can capture. Some value isn't easily captured and that's a perfectly legitimate reason for nonprofits to exist.
- billswift 17y ago
  I didn't say you should try to make as much profit as you can, but if you are not able to make anything, what evidence is there that you are benefiting anyone or even doing more harm than good? On the other hand, I've been following OB and LW since they started so I can easily see why you want to believe in the goodness of non-profits.
  - Eliezer 17y ago
    > On the other hand, I've been following OB and LW since they started ...and you didn't pay for it, and we don't run ads. Do you feel that we benefited you, and did more good than harm?
    - billswift 17y ago
      On the economics of charities and their inferiority to markets, see Robin Hanson's post on OB a few days ago, http://www.overcomingbias.com/2009/09/lost-charity.html http://www.overcomingbias.com/2009/09/lost-charity.html