I hear often that it is more effective to spend money in the for-profit market than go to some particularly ineffective non-profits. After some searching, there doesn’t seem to be any known reference value for this, despite how much I hear it.
Particularly, I am asking about the counterfactual value of a small amount of money, especially on the scale of the whole economy. There’s clearly a lot of value to having the economy, but a marginal addition seems proportionally much less.
It could be possible that this is never true, if money flows back into the for-profit economy at the same rate, but I doubt this, as a significant amount of money does not flow back into the economy ever.
“Anything worth doing is worth doing for money” -- Gordon Gecko, Wall Street. Also many non-profit directors and paid employees.
IMO, there is more similarity than difference between for-profit and non-profit corporate structures. There are fairly significant tax differences, and much different takeover and board-selection mechanisms. There is a pretty significant difference in how they describe their mission. But there’s a strong similarity in the constraint that they can’t spend more than they receive, and that they need to pay people for most of their difficult or thought-requiring work. At the whole-economy level, both styles have their place, and it’s probably reasonable that non-profit is a tiny fraction of the whole thing. Adam Smith wasn’t wrong.
At a personal decision level, this doesn’t generalize very well. It’ll depend on WHICH non-profits you’re comparing to WHICH for-profit orgs, for WHICH goals/values you’re considering in terms of “effective”. For many things you want to do, there just aren’t many choices in multiple realms of how to spend your time and money.
If there ARE effective for-profit and non-profit options for some of your goals, I tend to put more trust in the market discipline of for-profit structures—if they stop being effective, they get replaced. Non-profits, especially those funded by long-term donations and endowments, have more leeway to be ineffective while still continuing on. There I am generalizing again. Don’t worry about that for personal decisions—look into the actual specifics of what you want to do and how different organizations do it.
[Question] How valuable is money-in-market?
I hear often that it is more effective to spend money in the for-profit market than go to some particularly ineffective non-profits. After some searching, there doesn’t seem to be any known reference value for this, despite how much I hear it.
Particularly, I am asking about the counterfactual value of a small amount of money, especially on the scale of the whole economy. There’s clearly a lot of value to having the economy, but a marginal addition seems proportionally much less.
It could be possible that this is never true, if money flows back into the for-profit economy at the same rate, but I doubt this, as a significant amount of money does not flow back into the economy ever.
“Anything worth doing is worth doing for money”
-- Gordon Gecko, Wall Street. Also many non-profit directors and paid employees.
IMO, there is more similarity than difference between for-profit and non-profit corporate structures. There are fairly significant tax differences, and much different takeover and board-selection mechanisms. There is a pretty significant difference in how they describe their mission. But there’s a strong similarity in the constraint that they can’t spend more than they receive, and that they need to pay people for most of their difficult or thought-requiring work. At the whole-economy level, both styles have their place, and it’s probably reasonable that non-profit is a tiny fraction of the whole thing. Adam Smith wasn’t wrong.
At a personal decision level, this doesn’t generalize very well. It’ll depend on WHICH non-profits you’re comparing to WHICH for-profit orgs, for WHICH goals/values you’re considering in terms of “effective”. For many things you want to do, there just aren’t many choices in multiple realms of how to spend your time and money.
If there ARE effective for-profit and non-profit options for some of your goals, I tend to put more trust in the market discipline of for-profit structures—if they stop being effective, they get replaced. Non-profits, especially those funded by long-term donations and endowments, have more leeway to be ineffective while still continuing on. There I am generalizing again. Don’t worry about that for personal decisions—look into the actual specifics of what you want to do and how different organizations do it.