Sorry if this isn’t a correct place to ask this question. I don’t understand how non-profit organization exist in capitalism because how do they sustain themselves? How do they pay their workers if they aren’t generating any profit? Isn’t it just volunteering?
Profit is what is left after everyone has been paid for their work. Non-profits just don’t send any money to idle shareholders, every penny is used for wages and overheads.
That said, not all non-profits are really non-profits. Acadamy schools in the UK, for example, often pay their board of directors massive sums and contract with firms they’re connected to. So it can be a scam but plenty are genuine.
Damn. So, we’ve been lied to all these time that business owners need profits to sustain their business. How did they even hide this basic knowledge from a large percentage of the population?
decades or centuries of
- propaganda about the nature of capitalism and how the “risks” taken by capitalists (which are negligible compared to the risks taken by workers – at worst, a capitalist will become unable to continue to exploit others and be “demoted” to a worker) entitle them to keep the surplus value, and
- lies about alternative economic systems and the countries in which they are/were implemented in order to promote the idea that, despite its “flaws” (by design), capitalism is less terrible than the alternatives
Technically, what’s needed to sustain the business is cash flow; enough cash at the end of the pay period to compensate your employees and vendors.
A lot of R&D businesses and startups don’t make any profit, but they continue operations through loans, in the hopes they discover their niche.
It’s not really a lie, because in capitalism, profit is mandatory for your business to be sustainable. Non-profits still have to make a gross profit when it’s all said and done. It’s just that they don’t retain a net profit.
Also R&D
A lot of non-profits function as a tax avoidance scheme. They’re set up to do, say, some local or international social service as a charity, get donations, and the donors can write these donations off their taxable income. There are also non-profits that produce something and share all proceeds among the workers, but my perception is that those are far less common than the charitable type.
A lot of wealthy people start up their own non-profits as well, so they can “donate” to their own non-profit, write off the donation, and still control where the money is spent.
In any case the workers do typically earn money, but it’s often less than they’d get doing a similar job for the state or a For-profit company.
NGOs are simply businesses that aren’t allowed to give away their profits (revenue in excess of expenses) to people who dont labour for the organization (eg investor dividends)
A nonprofit pays workers before calculating profit. Salary is a business expense that’s deducted from revenue.
Any profit left over needs to be reinvested into the company.
They’re also used as the new jobs placement program for failsons. Some dipshit’s son previously would be made like VP of advertising as a cushy role for his daddy’s company. That stuff happens less these days, so instead they will just put them in charge of some over bloated nonprofit where they can get the same salary and benefits but without the operational criticism that comes with external investors
I know some people who run them, and basically most decent non-profits run on (tax deductible) donations, grants, volunteers, and overworked staff. The rest are mostly just tax avoidance or outright malicious. For example, the Bill and Melinda Gates foundation is mostly just a way for Gates to promote neoliberalism and IP law, while getting function control over the whole pharmaceutical industry (Source: the Qanon Anonymous podcast episode 255). Either way they are by no means anti-capitalist. The best ones just promote capital valorization by providing for people’s needs that are not provided by paychecks. The worst are also tools of the bourgeoisie.
This for sure. I’ve worked for a non-profit, and it was an awful experience. Everyone I know who has worked for one shares a similar experience.
We think it has something to do with the toxic way funding is applied for through the government, and the necessarily low wages/over work.
I have been considering opening a co-op with the purpose of providing stable employment and the tools/ space for workers to be politically active. But it would have to be for-profit given the toxicity and restrictions placed on non-profits.
Profit is the money left over after paying your employees and other expenses.
Non-profit does not necessarily mean they won’t earn a profit, it just means their goal is to not earn a profit.
So if they project that they will receive enough donations to earn a profit, they may choose to use more money to further their charitable activities, give their exec bonuses, advertising, etc.
Sometimes, they will fall short in spending and retain a profit.
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