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I highly recommend almost anything written by George Stigler. Don B. posted this quote the other day:

… is from page 14 of George Stigler‘s entertaining 1988 autobiography, Memoirs of An Unregulated Economist:

A large number of successful businessmen have gone on to high administrative posts in the national government, and many – I think most – have been less than distinguished successes in that new environment.  They are surrounded and overpowered by informed and entrenched subordinates, they must deal with legislators who can be relentless in their demands, and almost everything in their agency that should be changed is untouchable.

At the risk of sounding overly preachy, if I were to have my students take one piece of life advice from me as they are about to embark upon their real lives, it is that they, at some point in their lives, engage in a profit seeking activity in a profit seeking way, along with all of the accoutrements. This can of course mean just working somewhere in the for-profit sector, but even better it would involve you trying to find, motivate and manage a staff of people, meet the payroll, source your inputs, and meet deadlines for clients. While it is certainly possible to run a non-profit like a business, the incentives at work in that sector are just so far removed from what they are in the competitive for-profit sector where constant feedback, adjustment, and adaptation are the norm.

And while Stigler’s point above was made about the government and its bureaucracy, the very same point can be applied to almost any non-profit. I have worked full time for a few different ones, and volunteer a great deal of time at another, and should you be inclined to see opportunity for improvement, streamlining, and so on, you might as well stick it in a can and toss it to the bottom of the sea. You will be seen as “too inexperienced,” idealistic, pushy, etc. And why not? When there are not profits at the bottom line and instead the satisfaction of a creeping and sprawling “mission” instead, there are few objective criteria that folks can agree upon as a common denominator for evaluating changes and operational successes and failures. You do not want to be labeled as non-collegial, non-loyal, and so on. Should you end up at a non-profit because you are drawn to its ideology and mission, and you see a need for change, go start your own. Or figure out a way that the mission can be met in a profit-seeking way.

On a related note, I think all non-profits should be abolished. I also believe, deeply, that more social good can and will (and has been) be done by you engaging in profit-seeking businesses in profit-seeking ways. Another of the great failings of economists and indeed the modern university system is in not forcefully enough demonstrating this point. The starting point should be to recognize the good, and to look for ways to improve it when it “needs” improving. Again we are not saying that profit seeking activities can and do operate in a cultural or institutional vacuum, but if you were to list 10 historical “things” that have made the world better for the masses of people, or 10 future “things” that can make the world better, you would be hard-pressed to find the work of a non-profit lurking in the explanatory shadows. Much of the work at a non-profit is not merely mission driven, but consumption driven. The boards of directors and employees of the non-profits are really the stakeholders and the organizations are run to their satisfaction, not (merely) the satisfaction of their customers or clients. There is nothing at all wrong with this by the way, it would nonetheless be nice if this were more socially understood.

3 Responses to “It’s Virtually All Non-profits”

  1. Scott says:

    This will get me disinvited to the next dinner party serving local vegan non GMO dinner party: non-profits suck. The main purpose of a non profit is to become eligible for state grants. This creates a dependency on the state, increasing the power of those Dolling out the freebies. I’ve said before that non-profit is the only way to go in New York state, but that’s becuase if you don’t join em they’ll ruin you with regulations.

    I’ve been running a farmers market for two years. This past week I heard theought the grapevine that the village will be assuming control of my business and coverting it to a non-profit. At least they offered me a spot on the advisory committee. God bless America.

  2. jb says:

    A friend of mind suggested that all non-profits should have a sun-set clauses, so their non profit status would expire unless they fail to raise money at approximately the same rate as their expenditures.

    I like that idea. Thoughts?

  3. Dan says:

    I’ve had a few nonprofit experiences, and have found two things common to each: 1. Everybody seems to work really hard, but nothing really gets done, and 2. It’s remarkably difficult to get stuff started. So many people seem to have veto power over your project, and you spend a lot of time just trying assemble a coalition to give you support.

    I think that there are some causes and ideas that work best in a nonprofit context (especially ideas that require quite a few years to get established), but I agree that finding good ones to work at are really rare.

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