Analogs in the non-profit world of for-profit ideas

Several ideas from the for-profit world have ported over to the non-profit world. This page discusses such analogs.

It’s not clear how useful it is to consider these analogs individually or as a whole, but here are some points in favor1:

  • Treating these analogs systematically will give greater coherence to people learning about these ideas for the first time.
  • Assuming that some of the analogs of for-profit ideas turn out to be useful, looking at the for-profit world more systematically might turn up some “blind spots” in our thinking about the non-profit world.
  • Inasmuch as the ability to make money reflects social value, it is useful to look to the for-profit world for better ways to do good.

External links

There have been discussions of the broader for-profit vs non-profit distinction (without establishing an analog):

  • Why Non-Profits?
  • Altruism and profit
  • Should altruists pay for profitable things?
  • Marginal Charity
  • It might be worth noting that GiveWell seems to pay attention to Y Combinator (even emulating Y Combinator’s “Requests for Startups”).
  • “Virtuous Capital: What Foundations Can Learn from Venture Capitalists”

  • Stefan Schubert:

    So, one thing, it’s often been pointed out that there are clear analogies between effective altruism and profit-seeking companies. So, in market economies, companies try to maximize effectiveness, whereas charities typically don’t do that. But EA tries to apply this sort of effectiveness mindset to charities. Therefore, I think we can borrow many insights which economists have made from the market economy and sort of use them to understand our own activities.

    And one of them is Schumpeter’s idea of creative destruction. How in capitalist societies, someone might have invested a lot in acquiring a certain skill, and then you have a new technology, and that skill is not really useful anymore. And when capitalism developed, many people were complaining about that. There are all these craftsmen who have these skills, and now they’re not useful anymore. And they were sort of romanticizing this.

    And similarly, I think in EA, you should expect a lot of creative destruction. Especially now, we’re still at the beginning. We’re finding new ways of doing good, and new dimensions along which you can do good better. So, we should then expect that we need to throw out old ways of doing things. I worry a bit that we’re not doing that fast enough.

    I mean, of course, one difference that you have, still, is that in a market economy, you get very clear feedback. If no one wants to buy your product, you go bankrupt. Whereas in EA, someone might not have much of an impact, but it’s not as visible. So you might go on doing things in the old way.

  1. The first two of these are essentially listed in Diego Caleiro’s “Introducing Moral Economics”, which does something similar: “The idea is to create the concept of a field of knowledge which associates these in a cluster, and understand the mechanics and logic that makes them related in concept space, as well as provides a vocabulary and perspective which allows us to discover other ideas which belong to the same cluster.”