“Consider starting a for-profit company instead” by calebp

I speak to many entrepreneurial people trying to do a large amount of good through nonprofit organisations. I think this is often an error for four main reasons.

1. Scalability
2. Capital counterfactuals
3. Standards
4. Learning potential
5. Earning to give potential

These arguments are most applicable to starting high-growth organisations, such as startups.[1]

Scalability

There is a lot of capital available for startups, and established mechanisms exist to continue raising funds if the ROI appears high. It seems extremely difficult to operate a nonprofit with a budget of more than $30M per year (e.g., with approximately 150 people), but this is not particularly unusual for for-profit organisations.

Capital Counterfactuals

I generally believe that value-aligned funders are spending their money reasonably well, while for-profit investors are spending theirs extremely poorly (on altruistic grounds). If you can redirect that funding towards high-altruism value work, you could potentially create a much larger delta [...]

The original text contained 1 footnote which was omitted from this narration.

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First published:
April 21st, 2025

Source:
https://forum.effectivealtruism.org/posts/wKHzfWoNMSQHxosgz/consider-starting-a-for-profit-company-instead

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Narrated by TYPE III AUDIO.