Comment by keybored
6 hours ago
Assuming that non-profits are altruistic seems fallacious. Granted, I don’t know why they are assumed to be by some; it’s just presented as such because it seems obvious, no arguments need to be given.
It’s clearly fallacious to assume that non-profit is altruistic just because, I don’t know, for-profit is assumed as a premise to be about egotistical money hoarding.
I think the assumption about non-profits being altruistic is a reasonable one, because what would otherwise be the justification for giving them tax breaks?
If the reality is different, then maybe there shouldn't be non-profits anymore. In the UK for example, there are no non-profits, there are only charities. And clearly, the expectation of altruism is explicit here.
I think your position seems reasonable, too. Though intuitive, it isn't the reality.
The tax-exempt status is granted for Exempt Purposes, but not as a matter of altruistic intention: https://www.irs.gov/charities-non-profits/charitable-organiz...
For example, ask your favorite LLM search engine: Can you list non-profits/501(c)(3) that are US defense contractors?
Draper Laboratory and Energetics Technology Center are registered 501(c)(3) corporations. Their primary output is weapons research. RAND Corp, whose name you'd likely recognize, is also a DoD contractor and 501(c)(3).
The NRA Foundation and the Heritage Foundation are also registered as 501(c)(3).
> The NRA Foundation and the Heritage Foundation are also registered as 501(c)(3).
Yeah, organizations like think tanks (Heritage Foundation) are supposed to influence policy/public thought/elite thought. That’s obviously not a for-profit enterprise.
It’s a bit hard to wrap my head around this original idea of altruistic non-profits.
Do for-profits become altruistic when corporations get tax breaks? Edit: I’m replying to the “reasonable one” point.
Not sure why this would matter. You know that implication is directional, not symmetric, right?
To be more explicit: Given that for-profits can be given tax-breaks for (hopefully) good reasons, what would be the reason to give non-profits tax-breaks, if not for altruism? After all, as you point out yourself, you can get tax-breaks also as a for-profit, so you don't need non-profits just for that reason.
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There are non-profits in the UK. Some of these structures are over 100 years old at this point.
Expectations are completely irrelevant. Charities steal, in the UK the largest charities are essentially run as private companies except the shareholders are employees. Same thing with government, there was a unit of the government that spun out to a "non-profit" structure, some of the civil servants ended up becoming shareholders, and they now lobby their friends in the civil service to use their services...afaik, the government is still their only major customer and they were at, for example, all the pandemic meetings. Just generally, the UK has a vast network of these organizations that have a significant role in government policy but are totally outside the government (this is also true, actually even more so, in devolved countries...to a large extent, government policy there is formed by unelected private institutions).
There are no real rules here beyond humans act self-interestedly. No structure will contain this. This happens in for-profit companies with shareholders too. Principal-agent problem.
By statute, an organization can only exist as a non-profit in the US if it is "organized and operated exclusively for exempt purposes"[0], and non-profit hospitals specifically must operate for charitable purposes.
It may not be wise to assume non-profits exist within the confines of the law that authorizes their continued existence, but I don't see how it's fallacious.
[0]: https://www.irs.gov/charities-non-profits/charitable-organiz...
The concept of having a 'non-profit' tax category was explicitly to allow for (and even encourage the creation of) altruistic endeavors. That's why we have them. I do believe the original motivations for the non-profit category were sincere in this regard.
However once such a tax category was created, there was really nothing to stop the sociopathic MBA class from using them as just another optimization tool in their tax-minimization arsenal. Another example is non-profit schools where the property is owned by the founders and they charge hugely non-market rents to personally extract revenue from the non-profit.
So in current days we have both genuine altruistic endeavors (they still exist) and the predatory ones abusing the system.