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Comment by guylhem | Hacker News Reader

Why exactly is profit / commerce considered a bad thing - especially here?

Is it an ideologic war waged by charities?

I could believe such feelings to be popular in Europe, but in the US - some deep ideological changes (of the business-unfriendly kind) must be happening :-(

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I haven't found this mythical EU/US difference in overall attitudes, either in history or the present, except on specific issues. Europeans generally have higher taxes and better social-welfare systems, but not particularly different attitudes besides that. Both pro-business market-oriented views and skeptical-of-business populist views have long been common in both places. Heck, many American founding fathers fought in the French Revolution, and some (like Thomas Paine) wrote some of the more famous "left-wing" documents left by that revolution. And Denmark has some of today's more successful multinational businesses (Maersk, Lego, Carlsberg), which are quite popular domestically. Yet somehow Europeans generally assume that Americans are all Randians, and Americans assume that Europeans are all Marxists.

It's a matter of degree, with plenty of "outliers" on both sides, of course, but it is there.

There's a pretty obvious conflict between nonprofit fundraising and profit-making. It's quite difficult to make the case that profit-making would be beneficial in the long run, even if true.

I'm not sure that's true. Most charities spend large amounts of money to put these events on. They pay for advertising, for software development, for consumables, for staff.

None of these things come for free, and the people providing them are doing so to make money.

> Why exactly is profit / commerce considered a bad thing - especially here?

Maybe because donating to a cause is not considered commerce?

Because people don't like the idea of other people pocketing their donations.

A similar feeling happens when hospitals put their cafés out to tender and the WRVS[1] who had been running the café lose the bid, and a commercial firm wins.

(http://news.bbc.co.uk/1/hi/england/cornwall/6200817.stm)

This article is baffling - it was written in 2012 but talks about financial pressure in the NHS - and the need to run health care like a business - as something new. (http://www.thisisstaffordshire.co.uk/bow-WRVS-girls/story-16...)

And even the WRVS is not immune to this. (http://www.bbc.co.uk/news/uk-wales-north-west-wales-14540603)

[1] WRVS - Woman's Royal Volunteer Service.

Perhaps because if it's profit, then it's not going to the cause you're supposedly trying to help.

It can be hard to mix for-profit and non-profit activities.

If everyone on a joint project is in a for-profit mode, competing within the limits of reputation, ethics, and the law to advance their own interests, then people generally figure the dynamic tension balances out. Everyone gets what they need or deserve, or the participants will move along. And, if someone manages to make out with a bit more, well, good for them, everyone was trying for the same.

If the joint project has non-profit characteristics, or some participants are maximizing a cause rather than their own financial interests, then every bit of profit can become suspect. How much is the right amount? Couldn't that be ceded to the cause? At some level there's a 1-for-1 tradeoff of profits-vs-monies-raised. People understand and tolerate that sort of zero-sum division-of-surplus competition in the for-profit realm, but that same dynamic can be toxic to the motivations of those donating effort for a cause/community. ("I donated my time and money so that company X could have a another record quarter?!?")

Those considering a for-profit startup to service non-profit causes/entities should keep this in mind: there may be a rather low cap on how profitable you can become before partners start to suspect your motives and margins.

The problem can be somewhat avoided if there's a large competitive market for the services with understood prevailing rates. In such a case, each side can take a more arm's-length/take-it-or-leave-it attitude towards the other, trusting the market prices as roughly 'fair'. (The non-profit doesn't mind paying a provider with competitive rates; the for-profit provider could easily serve other for-profit or non-profit buyers with the same capacity.) This didn't seem to be the case for Palotta Teamworks' fundraising projects: each party seemed completely dependent on the other, making the entire profit-margin-vs-program-revenue pie-splitting open to review and mutual suspicion.

Why exactly is profit / commerce considered a bad thing - especially here?

I think it's because a lot of the people who work in nonprofits and public agencies are at best ambivalent about profit and commerce, and at worse openly hostile to them, and such feelings are based primarily on emotions. So asking "Why?" in a way designed to elicit logical / intellectual reasons is unlikely to yield a lot of productive opinions (Jonathan Haidt discusses the role of non-logical emotions in cognition in his book The Righteous Mind, which is completely brilliant and ought to be read by everyone[1]).

Incidentally, my family's consulting firm provides grant writing services for nonprofits and public agencies (see http://blog.seliger.com if you're curious), and we face a lot of the profit / commerce ambivalence too. I even wrote about the issue in a post about the grant funding system and the role specialization and gains from trade play: http://blog.seliger.com/2012/03/25/why-fund-organizations-th... . A lot of people feel like nonprofits and public agencies are not supposed to be like other businesses, even though, in reality, they are a lot like other businesses except, obviously for the profit drive.

So, like other businesses, a lot of nonprofits buy goods and services they can't productively make or do themselves. We use the analogy of a plumber: most nonprofits do not have one on staff, and, when their toilets clog, they hire someone to do the job. That's fairly straightforward. But many do feel that grant applications are something like a college admissions essay, in which hiring a consultant is somehow cheating. [2] We obviously don't think so, but, nonetheless, a lot of people have that feeling and don't really think grant writing is like plumbing. But nonprofit and public agencies who submit better proposals tend to get funded more often than those who don't, so to some extent those feelings get weeded out by the "market," which still exists.

We've also argued before that there's no reason why a nonprofit grant writing agency can't exist, but in practice none do, and, if they did, the demand for their services would far outstrip supply, because grant writing is very boring, difficult, and tedious—a troika that makes for a great business, but doesn't give people the good feelings they might get from, say, doling out soup at a soup kitchen, or providing pro-bono legal work.[3]

Notes: [1] http://www.amazon.com/Righteous-Mind-Divided-Politics-Religi...

[2] Actually, hiring an admissions essay person starts to make sense when one thinks about how much might be on the line, but that's another issue.

[3] EDIT: Found the post that discusses these issues: http://blog.seliger.com/2008/08/08/tilting-at-windmills-why-... .

I would think that a nonprofit reasonably considers grant writing a core competence or at least well closer to a core competence than, say, plumbing.

Maybe. Many nonprofits are good at delivering human services, and less good at writing proposals, and the skills do not necessarily co-occur. Sufficiently large nonprofits will usually have a grant writer on staff, but smaller ones may not, and a really good grant writer will probably cost at least $70,000 per year in salary, and probably much more, which helps explain why relatively few small- to mid-sized organizations have one.

This is a specific instance of a more generalizable question about whether one should hire a consultant, learn a skill, hire an employee, or not have it performed, and we've written about that issue too: http://blog.seliger.com/2009/09/12/consultants-employees-and , which recurs in the business world.

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