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What are some typically for profit companies that could work as a non-profit? (lemmy.world)
submitted 9 months ago by to c/casualconversation@piefed.social
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I realized a while ago that in my whole career I've never worked for a for-profit corporation.

Recently I've been wondering if non-profit corporations could succeed in areas typically dominated by for-profit corporations. I'm in the U.S.

There are certainly plenty of non-profits functioning, employing people, and providing services to the public. Schools, Hospitals, public radio & TV, etc. But what areas are there where non-profits could exist and survive where they don't currently?

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[–] 15 points 9 months ago (5 children)

you can turn any for-profit organization into a non-profit one by reinvesting all profit, instead of paying it out to shareholders.

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  • [–] [S] 2 points 9 months ago (4 children)

    I'm not talking about converting an existing corporation into a non-profit.

    I'm also not talking about just not paying money to shareholders. That's not what I mean by non-profit.

    What I'm talking about is an organization that does not have shareholders and does not accumulate wealth as a central purpose.

    To convert a corporation to a non-profit as I'm thinking of, you'd have to have the corporation buy back all stocks until the corporation effectively owned itself. But even then, unless it also had a mission independent of accumulating wealth, it would exist merely to gather money.

    What I'm talking about is an organization that exists for a purpose other than profit.

    My employer charges for services, but all the funds go towards providing services in one way or another (paying salaries and benefits for employees, paying for equipment, supplies, infrastructure, etc.) There are trustees, but no shareholders expecting a return on their investment.

    Is it possible for an organization like that to be created for making widgets, and if so, what sort of widget manufacturing industry could such an organization be able to compete in?

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  • [–] 8 points 9 months ago* (last edited 9 months ago)

    That is exactly what I mean. Any company that currently turns a profit runs 'economically', i.e. output>input. That shouldn't change when you alter the mission statement. Quite the contrary, if a company doesn't have to hand out its surplus to shareholders, it can instead increase wages, lower prices, or invest to maintain/increase its capabilities.

    You mentioned hospitals, which are mostly private in the US. Turning them non-profit would result in any combination of cheaper treatments, better working conditions for employees and more modern equipment. The primary objective would change from making a profit to helping people.

    And even companies operating at a loss could become non-profit, if some actor (like the government) decides to finance it. (Think of welfare organizations)

    edit: basically I am saying anything can be run as a non-profit. If it has a profit: great, that can be reinvested. No profit? Then you need someone (the state) to carry that non-profit.

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  • [–] 6 points 9 months ago (2 children)

    youre literally describing a non-profit

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  • [–] [S] 1 point 9 months ago (1 child)

    Yes. Exactly. That's what I'm asking about.

    What things can a non-profit be created to do?

    In theory, you could just say everything, but there are some things that just wouldn't have a chance of working.

    For example, I don't think you could create a non-profit automobile manufacturer. The financial requirements to start represent an impossible hurdle.

    However, I think you could create a non-profit whose mission was to just manufacture furniture if you were so inclined.

    What I'm wondering is, how far is it reasonable to take the non-profit concept?

    If I said I wanted to create a non-profit soup kitchen, I don't think anyone would see it as unusual. But what if I said I wanted to create a non-profit to manufacturer toasters*? Is that insane? Would it be doomed to failure?

    It seems to me that the assumption is that to do most things you need a conventional, for-profit company, either privately owned or as a corporation. However, when I see the non-profits that exist, it makes me wonder why everything else has to be for-profit.

    * toasters is just an example. I don't want to manufacturer toasters, or anything else really. I just wanted to ask the question.

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  • [–] 2 points 9 months ago

    I think you were spot on with:

    The financial requirements to start represent an impossible hurdle.

    Financing is what investors do, and most investors are out to make a profit, typically private and in the form of money. Can you find investors interested in other types of profit, like "common good"? Probably. But enough investors with enough capital? High-rank investors want that profit to be more money than they invested, back in their pockets (which I think is fair).

    Now, even if you did manage to gather enough capital to start operating, would you be able to compete with for-profit corporations? It's going to be difficult, especially because bringing down production costs or expanding services to keep up with the industry may require additional investment, and for-profit corporations can sell parts of themselves in exchange for that investment (with the hope that they will increase in value at least that much). But non-profits cannot easily do that, because even if they could sell parts of themselves, sustaining market valuation without paying dividends (now or in the future) just does not happen. They can take collateralized loans, but that might be orders of magnitude below what for-profits can gather in investment rounds.

    A different topic is whether it would be generally positive for all any and all for-profit corporations to be replaced by non-profits. I do not think this is the case, but I would be happy to engage in such a debate.

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