Why are nonprofits so popular?
Let's look at other non-robot-led forms of organization
“Non profit.” “Not for profit.”
That’s an organization that exists only for some constructive purpose rather than to make money for its owners.
Sounds good, constructive, altruistic, right?
But there’s still this one challenge: the staff of a nonprofit need to eat and pay their rent.
And for that matter the nonprofit itself needs to pay its rent.
The money to pay those salaries and bills needs to come from somewhere, right? If the nonprofit is lucky, its benefactors are stable and as goodness-minded as the people who carry on its work.
On the other hand, a hungry nonprofit may not be that lucky. The planned sources of funding may run into their own challenges and new sources of funding need to be found. Before long, the nonprofit is going hat in hand to prospective funders who put compromising conditions on their participation.
Wouldn’t it be better to develop a source of revenue that’s generated the pursuit of the organization’s worthwhile mission? For example a group promoting awareness of the need for pesticide-free food could partner with organic farmers who are typically too busy farming to give adequate attention to marketing. “Promoting awareness” and “marketing” are much the same.
Is “profit” synonymous with “greed”?
But then… the organization would become a (shudder) b-u-s-i-n-e-s-s… That invokes that horrible word profit that has come to be synonymous with greed in the minds of many.
Well, if profit does have a close synonym, it’s “sustainability.” Someone somewhere must produce earnings to pay for the worthwhile work of the organization. And to keep the integrity of the organization it’s advisable for the organization itself to produce those earnings. For one thing it means no more begging.
Profit by itself is good. The way it’s pursued ranges widely from bad to good. And the best measure of that is the degree to which identifiable human beings are accountable for the actions of an organization.
Much of the attention given to nonprofits comes from a reaction to excesses of one particularly bad version of capitalism: the public corporation. Ironically, many nonprofits then go on to depend for their tools and platforms on some of the worst public companies – the ones that are part of Silibandia.
(Silibandia is our name for Silicon Valley plus the broadband and media industries plus their allies in the dark web and troll farming industries.)
There’s a close correlation between “public company” and “mercenary attitudes.” Privately held companies have a much better chance of escaping the control of the quarterly earnings robot. But those aren’t the only two choices when it comes to the essential nature of an organization, as evidenced by its charter.
There are lots of ways a group of people can get together and do something constructive – and self-sustainable. Here is one non-lawyer’s view of them, with a very non-authoritative grade range for each.
Grading the forms of organization
Mafias
What can you say about mafias other than they live up to the reputation they’ve earned from movie portrayals. They don’t falsify business records because if they bother with such things, they consist of fiction. They exist to aggregate power by lying to, and stealing from, the weak segment of any population. Incredibly, those weak people crave a masochistic connection to, being victimized by, a narcissistic and brutal tyrant, the capo di tutti capi.
One might think that a brutal tyrant, if human, would bring human accountability to the organization. But the key word here is “human.” Mafias are led by subhumans masquerading as people. Read about the values of Roy Cohn to learn what that means.
Examples: Truth Social, Putin & Company, La Cosa Nostra
Inherent Human Accountability Grade: F
Silibandia Entities
Again, Silibandia is our word for Silicon Valley plus the broadband and media industries plus their allies in the dark web and troll farming industries. Its participants consist of everything from public companies to gangs of digital thugs, but they share one business model: make money and gain power by breaking into peoples’ digital homes, stealing personal information and brokering that information with each other in order to not only sell stuff but to manipulate perceptions.
Inherent Human Accountability Grade Range: F to D
Public Companies
The US government had no idea of the evil they were setting in motion with the Securities Act of 1933 and the creation of the Securities and Exchange Commission.
Public companies are under the control of a robot masquerading as a collection of:
the securities analyst community
(in the USA) the SEC, which about thirty years ago tacitly adopted Milton Friedman’s definition of virtue. That is: the company’s only responsibility is to its stockholders. If you can boost your quarterly earnings by polluting that river or screwing your customers and employees and then get your IR and PR people to skillfully obfuscate (lie) about it, then a big pat on the back (in the form of another hundred thousand options) for you!
the financial advisory community
exorbitantly paid (ie bribed) CxOs, whose lifestyle obligations prevent them from actually acting on their impulses as, you know, human beings.
The Wall Street Journal and similar publications in the UK, Japan, etc. (you do understand that WSJ covers only publicly traded companies, right? I mean, look closely at the name of the publication.) If you’re a public company CxO, you must pander to the mighty WSJ.
The reason for the existence of registered securities and publicly traded securities in general is to protect the small investor. (Yeah, I know, ain’t that a hoot?)
Inherent Human Accountability Grade Range: F to C-
Labor Unions
A labor union’s job is to show its members that they are fighting the good fight against the big evil adversary, which was an accurate description of the situation at their founding over a hundred years ago. When criticized about anything, they tend to cite examples of their righteousness from that era as though it’s the present.
A teacher’s union represents teachers of course. And who exactly is their adversary? Administrators? Well, actually they’re union members too, and their numbers are going through the roof. So who exactly is the adversary? Parents? Taxpayers? Students??
As a member of the boards of some small incorporated classical music ensembles, I have experienced pronouncements that the organization had agreed to musicians’ union contracts and that board approval was merely a formality. Those musicians’ unions, eager to show their members how they were fighting the good fight against the powerful monolithic immense local classical music cartels, made us pay union members for their parts in music samples that were streamed for free. First result: no free music samples. Second result: European ensembles got all the free streaming traffic and of course the paid traffic that followed. Third result: no streaming money for anyone, including the musicians.
That’ll show those greedy local nonprofit classical music ensemble multibillionaire barons! Please thank us for our service in saving you in this battle, using only our wits, bare hands, and your dues as our weapons. (After a while the folly of their demands became obvious even to the union members, who put pressure on their union management to let us actually develop audiences – after much of the streaming opportunity had slipped away.)
Inherent Human Accountability Grade: D
Nonfiduciary Financial Advisory Firms
A “fiduciary” is defined as simply one who is obligated to act in the best interest of its/her/his clients. Many financial advisory firms choose not adopt the fiduciary designation because they don’t want to be bound by such a requirement(!) I guess this is just a case of caveat emptor, right?
Inherent Human Accountability Grade Range: F to D
Nonpublic C Corporations
In the USA, tax codes categorize corporations in growing number of ways, feeding Congress’s need to create complexity, which in turn generates revenue for CPAs, law firms, and tax filing services and software vendors. The main categorization consists of two groups: “C” corporations and “S” corporations. “S” generally applies to smaller corporations, and lets stockholders take profits and losses on their personal returns. “C” generally designates a larger corporation.
Generally these C companies don’t have to do quite as much deceiving and gouging to make their quarterly numbers, which public companies must do in desperate attempts to keep their stock prices and P/E ratios up and thus to keep the securities litigators at bay.
Inherent Human Accountability Grade Range: C- to B+
Nonprofits
What can we say about nonprofits other than that they depend for their existence on successful pandering to people and institutions with money, typically from dividends enabled by public company earnings. A nonprofit’s sustainability is determined by its groveliness with people who have tax appetites.
Why is it that people like to form nonprofits? There are better ways.
Inherent Human Accountability Grade Range: D to B (depends on their current funding sources)
B Corporations
B Corporations are kind of like fiduciaries in that they are obligated to act in the best interest of all stakeholders, which includes customers, employees, their community, and society in general.
Well, “obligated” may be too strong a word. They promise. Still, it’s a whole lot better than miltonfriedmanism.
Inherent Human Accountability Grade Range: to early to tell
Close Corporations
This charter type is offered by Delaware, which has pretty much a monopoly on chartering and adjudicating US corporations. It’s a significant move away from the robot charter, i.e. the publicly traded corporation. A close corporation is a sustainable, or at least sustainability-seeking, legal entity with human beings in charge but whose liability is limited, as is the idea of a corporation in the first place.
This would be a good place to introduce the good side of incorporation. Overlooked by the famous eponymous play is the fact that the modern corporation was invented by Alexander Hamilton, inspired by entities such as the British East India Company. The idea is that personal liability inhibits individual initiative in forming business – things can and will go wrong, and an entrepreneur does not want to put his or her family at financial risk.
By including certain specific words and phrases such as “Inc.” or “Incorporated” in the name of the corporation, it is advertising to suppliers, customers, and the public that should things go wrong they can’t sue the incorporators, officers, or board members unless gross or intentional malfeasance can be proved. It’s really a good system, as long as people understand that that’s how it works. Unfortunately, people often don’t understand it.
Inherent Human Accountability Grade Range: C to A
Guilds
Guilds are what unions should be. A guild is not adversarial. A guild doesn’t fight an enemy. Instead, it represents a profession and sets its standards, including the rates that its members should charge for their services. Guilds are a good way to accomplish what many labor unions should be setting out to accomplish.
Inherent Human Accountability Grade Range: B to A
LLC, SARL and the like
See Close Corporation.
Partnerships
A partnership is an entity where one or more general partners assumes personal liability for the activities of the whole business. Partnerships such as big accounting firms have found ways to shield partners from much of what was intended with the partnership designation, so the form spans a wide range on this spectrum.
Inherent Human Accountability Grade Range: C- to A
Growers’ Cooperatives
A growers’ cooperative is a corporation (or other legal formation) whose members grow a certain category of product or produce. Historically that has meant that members are farmers.
In the digital age, however, many non-physical objects can be grown by creators such as coders, web developers, graphic designers, animators, game designers and developers, database creators, etc., etc.
Inherent Human Accountability Grade Range: B to A
Sole Proprietorships
No limitation of liability here. Mary’s Bathroom Remodeling, with no “Inc.” at the end, means that if you have a problem getting paid for your grout and tile supplies, go see Mary. She may have a separate bank account for the business, but legally that does not matter. Mary is personally on the hook. No finger pointing, you know where the buck stops.
Inherent Human Accountability Grade Range: B to A
Publicly Licensed Professions
Let’s say Mary tires of the hard physical work of remodeling bathrooms and decides to enroll in architecture school. Architecture happens to pay well for those practitioners who get the gigs, and it’s not just the special skill and training that accounts for that. The fact is that anyone can take a set of drawings and build the specified building. However, that building may not be occupied until the architect signs his or her good name on the application for the occupancy permit.
If the architect feels that he or she has not been compensated or otherwise treated as the agreement calls for… well, the building sits empty until the architect is happy.
The other side of the coin is that if the building develops cracks, or if the architect provided a second set of drawings to the buildings commissioner that omits some secret passageways, the architect can lose their license to practice their profession. More than simply liability of sole proprietorship to a limited set of customers and suppliers, the professional license means ongoing liability for everything.
Inherent Human Accountability Grade Range: A
About the Author
In 1981 Wes Kussmaul, working with friends at the MIT Joint Computer Facility, created the world’s first online encyclopedia, implemented using what he calls “the world’s worst business model.” Over the the next year the addition of social features transformed the encyclopedia into the more sustainable Delphi social network, which in 1993 was sold to Rupert Murdoch’s News America Corp.
Wes is the author of four books about bringing accountability with privacy back to social networks. One of those books caught the attention of a group at the ITU, a United Nations agency, while it was building a global PKI-based source of trust that resembled what the book advocated. Wes announced its re-launch as The City of Osmio in a 2008 presentation to the United Nations World Summit on Information Society. Wes is also the creator of Stoanova, an approach to Stoicism as it applies to problem solving.
Wes is the founder of The Authenticity Institute, a provider of a PKI platform to licensed Authenticity Enterprises, which may be seen here. The outcome of the work of those Authenticity Enterprises may be seen at Authentiverse.
Stop making sense!