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?
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.
I think you were spot on with:
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.