Before diving into this piece, a note on what I believe matters most right now:
We need systematic experimentation with the Profit-for-Good model. The basic business math is compelling: most companies operate on 5-15% margins, which means even modest stakeholder advantages—3-5% revenue gains from customer preference, small reductions in employee compensation or customer acquisition costs, earned media generating marketing value without paid spend—can double distributable profits. This isn't speculative theory; it's straightforward margin leverage applied to a novel ownership structure.
What we lack is rigorous measurement. We should be making strategic acquisitions or funding new ventures specifically to test this: measure top-line performance differences, track specific stakeholder behaviors (customer conversion rates, employee retention, supplier terms, earned media value), and identify the contexts where these advantages are strongest. Early experiments de-risk larger capital deployment and reveal optimal conditions for the model. I'm currently finishing a research compilation on these stakeholder advantages and their business implications—work that should be complete in a few weeks and will form the foundation of a book I'm writing on this topic.
If stakeholder preference advantages are real and measurable—and I believe the evidence strongly suggests they are—this could revolutionize how philanthropic resources are deployed. Not by convincing more people to donate, but by redirecting the trillions in profits that already flow through the global economy. My previous article on building evidence and trust and awareness engines shares more about the mechanisms I believe make this possible.
The article below makes the case for why philanthropists should care about this opportunity. Your thoughts and critiques are welcome.
The War Philanthropists Don’t Know They Can Win
Every year, the global economy generates $10 trillion in profits. These profits flow overwhelmingly to people who already have wealth, while the organizations that could eliminate malaria, reverse climate damage, and end factory farming operate on scraps. This isn’t just inefficient. It’s absurd. And it’s fixable, not through revolution or regulation, but through a simple discovery about how markets actually work.
The Discovery That Changes Everything
When people can choose between two identical products at the same price, and one enriches shareholders while the other funds solving real problems, people choose solving problems. Not everyone, not always, but enough to matter. Enough to win market share. Enough to redirect significant profits from private wealth to humanity’s most pressing challenges.
This preference isn’t new. What’s new is realizing that philanthropists can systematically organize it. When you make charitable ownership visible and verifiable at the moment of choice, something remarkable happens: the world takes your side. Customers become allies, choosing you over competitors. Employees become volunteers, accepting lower compensation to be part of something meaningful. Suppliers become partners, offering better terms to support the mission. Media becomes your amplifier, telling your story without being asked. Every stakeholder in the economy would rather help solve problems than enrich strangers, they just need to be able to see the choice.
Why Only Philanthropists Can Access This Alliance
Investors and philanthropists both want to maximize profits. The difference is where those profits go. Investors need them returned to themselves, that’s the fundamental constraint of their model. Philanthropists have already decided to give profits away to create impact. This difference, when made visible, completely changes the competitive dynamics.
Think about what this means. In any market, investors fight for market share against the resistance of every stakeholder. Customers pay grudgingly. Employees demand maximum compensation. Suppliers extract maximum value. Media ignores them unless they pay. They’re swimming upstream, extracting value from every interaction.
Philanthropists can fight with the current. When profits genuinely go to solving problems, and stakeholders can verify this, the resistance becomes reinforcement. The same customers who grudgingly pay investors actively choose philanthropists. The same employees who demand maximum salaries from investors work for less to be part of something meaningful. The business doesn’t just compete; it leads a coalition of everyone who would rather solve problems than concentrate wealth.
How the World Becomes Your Ally
Once you make the charitable promise visible and provable, watch how different stakeholders line up to help you win:
Customers choose you at equal price and quality, sometimes even paying slightly more when they understand the impact. Employees accept lower compensation to do work that matters, giving you a structural cost advantage. Suppliers offer better terms to support a mission they believe in. Media amplifies your story without being paid, providing millions in free marketing. Communities remove friction and open doors, welcoming businesses that contribute rather than extract.
Each advantage alone might be small, a few percentage points here, a slightly better deal there. Together, they compound into systematic outperformance. The business grows faster, generates more profits, and sends them all to solving problems. Year after year.
The Proof This Works
Thankyou shows how everyday categories can become engines for impact without asking customers to pay more. An Australian social enterprise owned entirely by its Charitable Trust, Thankyou sells personal care and cleaning essentials and pays audited dividends to the Trust, which funds partners working to end extreme poverty. Since 2008 it has directed more than A$18.57 million to impact, and its clear “all for the end of extreme poverty” pledge helps convert shopper goodwill into real preference by competing on product while making the destination of profits visible and verifiable.
The Good Store, founded by Hank and John Green, operates multiple consumer brands including Awesome Socks Club, Keats & Co, Sun Basin Soap, and EcoGeek while donating all profit to charity. They highlight exactly where funds go, from Partners In Health projects to coral reef restoration, and report more than $10.9 million donated to date. Routine purchases and subscriptions become measurable outcomes that customers, creators, and suppliers want to support. It is not charity instead of competition, it is competition powered by a promise stakeholders prefer.
These aren’t anomalies. They’re early examples of what happens when you give stakeholders what they’ve always wanted: the ability to choose solving problems over enriching strangers without paying extra or sacrificing quality.
The Two Visions of Profit for Good
There are two ways to think about Profit for Good.
The small vision sees it as enhanced corporate giving: convince existing companies to donate more of their profits. This is valuable work that should continue, every additional dollar directed to charity matters. But it’s inherently limited because it works within existing ownership structures, asking companies to voluntarily act against their financial interests. Even in the best cases, this approach captures a few percent of profits.
The big vision operates at a different scale entirely: philanthropists directly own (through charitable foundations, for instance) or fund businesses that compete normally but send 100% of profits to solving problems. No convincing required. No CEO generosity needed. When philanthropists own the business, they don’t have to negotiate for donation, they control the profits directly. They lock them to solving problems, make that commitment visible and verifiable, and let stakeholder preference drive competitive advantage. This isn’t asking for kindness. It’s competing with better ammunition.
Both visions have their place. But only the second can redirect profits at the scale our challenges demand.
How Simple This Actually Is
Visibility. Proof. Parity. That’s the entire playbook.
You fund a business—through acquisition, acceleration of an existing Profit for Good company, or backing a new venture. You change nothing about how it operates. Same products, same prices, same supply chains, same everything. You change only one thing: where profits go. Instead of enriching shareholders, they fund effective charities.
You make this visible and verifiable at every point where stakeholders make decisions, a certification at checkout linking to last month’s donations, a line on job postings about the mission, a note on invoices showing where profits went. Visibility. You provide clear, checkable proof that the promise is real. Proof. You compete at exactly the same price and quality as traditional competitors. Parity.
Then you compete normally. You don’t ask for charity. You don’t charge more. You don’t sacrifice quality. You just compete with one additional dimension that investors can’t match: the destination of profits. And because people prefer that destination when they can see it, you win.
The business reinvests for growth just like any other. The difference is that distributable profits after reinvestment go to solving problems instead of buying yachts. Even small preferences compound into decisive advantages. If 10% more customers choose you at the same price, if employees accept 5% less compensation for meaningful work, if suppliers offer 2% better terms to support your mission, these small tilts add up to systematic outperformance.
The Three Paths to Victory
Start new ventures: Fund entrepreneurs who want to build Profit for Good from day one. They get patient capital, mission alignment, and the competitive advantage of charitable ownership. You get a business designed from inception to maximize both profits and impact.
Accelerate existing Profit for Good businesses: Companies like Humanitix have proven the model works but need capital to scale. Funding their growth multiplies impact faster than starting from scratch, with lower risk since they’ve already demonstrated product-market fit and stakeholder preference.
Acquire traditional businesses: Buy profitable companies and convert them to Profit for Good. Overnight, their profits start funding solutions instead of concentrating wealth, and stakeholder preference helps them grow faster than they did under investor ownership.
Each path leads to the same destination: businesses that win through alliance with a world that prefers solving problems to enriching shareholders.
Where to Start Winning
Some battles are easier than others. Start where stakeholder preference is strongest and most immediately visible. Ticketing and payment processing, where everyone resents the fees and would rather they fund charity. Insurance distribution, where trust deficits make mission-driven alternatives attractive. Consumer goods in categories where brand choice is public and values-expressive. Professional services where talent competition determines success and meaning attracts the best people.
The playbook never changes: fund the business, lock profits to high-impact charities, make it visible at decision points, compete normally. The world does the rest. As awareness grows that profits fund solutions, preference strengthens. As preference strengthens, market share shifts. As market share shifts, traditional competitors face a choice: sell to philanthropists now while they’re strong, or lose share and sell later from weakness.
The Scale of What’s Possible
The global economy generates roughly $10 trillion in profits annually. Capturing even 5% of market share through Profit for Good businesses would mean $500 billion every year directed to humanity’s most effective interventions. Not once. Every year. Growing with the economy.
This isn’t a fantasy, it’s achievable because of competitive advantage. Traditional investors need extraordinary execution or innovation to capture 5% of any market. Philanthropists have stakeholder preference on their side. When customers, employees, suppliers, and communities all lean your way, taking market share becomes systematically easier. The same competitive dynamics that make it hard for traditional businesses to gain share make it easier for Profit for Good businesses to win.
The beauty is that these are existing profits being redirected, not new profits that need to be created. And because stakeholder preference reduces the cost of competition, through lower customer acquisition costs, lower employee compensation requirements, better supplier terms, the cost of capturing these profits is lower than traditional market competition. Eventually, as these businesses prove their stability and profitability, they can access traditional debt financing, making the model self-sustaining without requiring continuous philanthropic capital infusion.
Even 1% of global profits, $100 billion annually, would transform the landscape of human welfare. That’s enough to fund every GiveWell top charity at maximum capacity, accelerate clean energy transition by a decade, and end the worst factory farming practices, year after year, with room to grow.
The Call to Arms
You’ve been taught that business and charity are separate worlds. That markets are for investors and donations are for philanthropists. This division is artificial and it’s costing humanity trillions in misdirected profits.
Every business you don’t fund is one that investors will. Every entrepreneur you don’t back will take traditional venture capital. Every market you don’t enter is one where profits will concentrate wealth instead of solving problems. Every day you delay, the world remains stuck in the absurd position of working to enrich strangers instead of solving its own challenges.
Pick a path. Fund a new venture where founders want to build Profit for Good from the start. Accelerate an existing Profit for Good business that’s proven the model works. Or acquire a traditional business and convert it. Run it exactly as an investor would. Compete exactly as an investor would. But lock the profits to effective charities and make that fact visible and verifiable everywhere stakeholders choose.
Then watch what happens. Watch customers choose you. Watch talent join you. Watch suppliers support you. Watch media amplify you. Watch the business grow faster than it would under investor ownership. Watch the profits—all of them—flow to solving real problems instead of creating new ones.
This isn’t a new game. It’s the same game investors have been playing, except you have an advantage they can’t access: the world wants you to win. Every stakeholder in the economy would rather support businesses that solve problems than businesses that concentrate wealth. They just need to be able to see the difference and trust it’s real.
The weapon is stakeholder preference. The alliance is everyone who would rather solve than extract. The victory is an economy where profits fix problems instead of creating them.
Visibility. Proof. Parity.
Same game. Better weapons. The world on your side.
Your move.
Hi, thanks for this post. Quite inspiring.
Given that is hard to choose good investments a priori, I imagine building a portfolio of PFG businesses would be a sound approach.
Which I would like to compare to putting the money in an index fund and withdraw a certain amount for philantropic purposes.
I would love to have an estimation of the edge due to PFG driving consumer preferences, media attention, and better deals over the baseline of just putting the money in an index fund.
Do we have an estimation? Some data to cook it, and probably as you say, test it?
Great question - this is exactly the comparison serious philanthropists should be making.
The theoretical edge is substantial:
Index fund approach: $100M invested → ~7-10% returns → $7-10M annual charitable giving, capital preserved.
PFG portfolio approach (if stakeholder advantages are real): $100M deployed → businesses generating $15-28M annually to charity based on margin improvements from stakeholder advantages, capital preserved as operating business equity.
Where do these numbers come from?
I've been compiling empirical evidence on PFG stakeholder advantages - measurable preference across all stakeholder groups at price parity. For a typical 10% margin business, documented advantages (consumer preference 5-20%, employee wage discounts 4-7%, turnover reduction 50-60%, earned media worth millions) compound to 50-180% profit increases.
I've summarized the key evidence here. This is part of a larger research compilation I'm finishing.
On the "too good to be true" concern:
The results sound extraordinary, but they follow from compounding modest, effects through margin leverage. Each individual advantage is small: consumers show 5-10% preference at price parity, employees accept 4-7% wage discounts, turnover drops by half. None of these are implausible.
But here's the key: most businesses operate on 10-20% margins (revenue minus costs). When you apply a 5% revenue increase and 2% cost reduction to a business with 10% margins, you don't get a 7% improvement in profits - you get a 70% improvement, because those changes flow entirely to the bottom line. This margin leverage is why modest stakeholder advantages translate to dramatic profit improvements. The math isn't speculative - it's what happens when several small, documented effects compound through thin margins.
That said, this absolutely requires rigorous validation through early-stage trials.
Why early experiments are relatively low risk:
Unlike typical venture investments, PFG experiments have asymmetric upside:
A few well-designed experiments deploying $5-10M could demonstrate whether advantages actually materialize in practice, quantify them precisely, and build the proof-of-concept that unlocks major philanthropic capital. Perhaps most importantly, the information value from rigorous experimentation could exceed any direct financial returns - proving the degree to which PFG advantages are real would inform how billions in philanthropic capital get deployed.
[epistemic status: tentative, as I did not pay attention very well in my one-credit accounting class ~20 years ago]
Regarding your summary of the evidence, I'm not sure how much weight to give the lived experiences of PfG / PfG-adjacent companies. I pulled data for two of them, and I didn't see evidence of large improvements in margins relative to what I would expect from comparable profit-for-yacht businesses. Although presumably businesses could improve, these are also among the current best-in-class PfG companies -- and survivorship bias means that we're not likely to analyze attempts that didn't work out well (or at all).
Thankyou's financials are difficult to discern -- most numbers of interest are redacted in the report I pulled from the Australian charity regulator. A 2019 news report reflects donations of about $700K AUD (about half of its profit) on revenues of about $31MM. I confess that I don't know a whole lot about the "fast-moving consumer goods" category . . . but profits equal to about 4.5% and donate-able profits of about half that doesn't immediately strike me as having a massive advantage to similarly situated private-profit competitors. I did not see sales numbers for the Good Store, so don't have any comparison to make there.
To check another PFG company: Newman's Own was reported in 2017 to have donated close to $30M a year on sales of over $600M/year, so ~5%. A glance at KraftHeinz's balance sheet -- obviously they sell much more than salad dressing! -- suggests net income after taxes of about 10% of net sales (p. 60 of this link). Although donate-able profits and net income after taxes aren't the same thing, the numbers here don't give me the impression that Newman's Own -- which has been around for decades -- is crushing it compared to its competitors in the field. (Also I think one should consider what Newman's Own would look like without the free strong endorsement by Paul Newman. I think failure to make that adjustment would oversell PfG's contribution to the enterprise's success.)
To be sure, KraftHeinz's numbers reflect the advantage of its size. But the large companies that currently lead in the market come to the table with that advantage, and their access to capital would be much better even if all of EA (or even all of US philanthropy) became sold on PfG. They can (and presumably would) use those advantages in an attempt to drive off any PfG firm they deemed to be too threatening. So comparing PfG margins to the margins of industry-leading megafirms, rather than similarly-sized and capitalized profit-for-yacht firms, seems appropriate here.
Thanks, Jason — this is exactly the kind of scrutiny I think the idea needs.
On your core point: I basically agree with your descriptive read. Looking at Thankyou’s ~4–5% donate-able margin or Newman’s ~5% donations on ~5% net margins does not scream “these businesses are crushing the for-profit competition.” When I talk about large profit uplifts, I’m not claiming we already see that in their published numbers; I’m saying the mechanism (thin margins + modest stakeholder advantages) could plausibly generate big differences if we ever set this up deliberately and at scale. What we actually have today are a handful of pioneers operating under lousy conditions: low category awareness, no shared certification, and a chronic capital misfit (too “weird” for normal investors, too “businessy” for most philanthropy). In that world, you’d expect “survive and sometimes do well,” not “obvious margin dominance.”
I also think you’re right to flag survivorship and the Paul Newman effect. Newman’s Own probably got a brand tailwind few founders can replicate, and we don’t have good public data on the PFG attempts that fizzled. That’s partly why the article opens by saying “the basic math is compelling, what we lack is rigorous measurement.” I’m using Thankyou/Newman’s as existence proofs (“this can work at all”), not as clean evidence that the multiplier is already realized in the wild.
On the Kraft question and capital: I don’t think the story has to be “small PFG beats the global leader on day one.” The more realistic path I have in mind is stepwise:
So I’m not claiming “PFG firms are already out-earning Kraft” or that we have tidy margin graphs to prove a large edge. I’m claiming: (a) we have decent evidence that stakeholder preferences exist at parity and can matter; (b) the margin arithmetic makes it at least plausible that, in the right contexts, this could translate into big differences in distributable profits; and (c) given that, it’s rational for philanthropists to run some careful, sector-specific experiments rather than either assuming PFG can’t compete or assuming it already does. If those trials show no advantage once you control for capital and sector, I’ll happily update. Right now, the main thing I’m arguing against is staying forever in exactly the “anecdata vs intuition” uncertainty you’re highlighting.
Hi Brad, really good post, appreciate it! I've got one positive, one question, and one challenge.
Positive: The analysis of which industries are more amenable to Profit for Good seems interesting. It would be great to see more about which are industries are likely best/worst, and especially why (which you have partly done here).
Question: Does this model apply to publicly held companies, or could it be adapted for them? I imagine a large portion of the $100Tn you mentioned is from publicly traded companies. I also assume there's a competitive advantage to public ownership, (but I only think this because lots of the largest companies seem to do it). However, the model you propose seems to require private/foundation ownership.
Challenge: Even if Profit for Good is advantageous in general, it doesn’t mean that the most impactful Profit for Good is advantageous. For example, the most successful companies might focus on causes the public already cares about, like cancer research (which is probably less impactful than, say, GiveWell). This is especially relevant for causes like ending factory farming. Many interventions raise meat prices (intentionally or unintentionally), which might deter customers, and in the worst case could result in a comparative disadvantage.
Would like to hear your thoughts or pushbacks
Thanks JDLC - really appreciate the thoughtful engagement. Let me address each point:
On industry analysis: You're right that this deserves more systematic treatment. I'm finishing a research compilation that goes deeper on sector selection, looking at factors like: whether stakeholders have meaningful choice points, whether the PFG commitment can be made visible at those decisions, the strength of stakeholder preferences in that sector, and competitive dynamics. Some of the best opportunities are where stakeholder preference is strongest - ticketing/payments (where everyone resents fees), talent-intensive sectors (where meaning attracts better employees), and values-expressive consumer categories. Happy to share more once that work is complete.
On public companies: Great question. You're right that the model requires control over profit distribution, which public company fiduciary duties to shareholders make difficult. However:
The $10 trillion figure is global profits across all businesses. Even capturing a fraction through private PFG companies represents transformative philanthropic capital - and if the model works as well as I think it does, the capital will eventually emerge to compete at larger scale.
On the impact alignment challenge: This is the most sophisticated objection and deserves careful thought. You're right that if PFG systematically advantages popular-but-less-effective causes over high-impact work, we risk building a large system that doesn't solve the problems that matter most.
But I think the dynamics are more favorable than this concern suggests:
The current baseline is "enrich shareholders." Right now, stakeholders choosing any product or service are implicitly choosing to enrich investors. In that context, even causes that aren't the most popular - like ending extreme poverty through evidence-based interventions - still represent a massive improvement over the status quo. People may have warm feelings toward local pet shelters, but "profits end extreme poverty" vs. "profits buy yachts" is still a compelling choice.
You can separate competitive domain from funding domain. A ticketing platform doesn't need to be about factory farming to fund factory farming abolition. Humanitix competes in event ticketing while funding global health. Newman's Own sells pasta sauce and funds diverse causes.
EA should lead to set the standards. If EA builds the first wave of successful PFG companies, we define what "Profit for Good" means - rigorous, evidence-based giving to ending extreme poverty, preventing pandemics, reducing animal suffering. First-mover advantage matters for establishing category norms. The alternative is waiting and letting others define PFG as funding popular but less effective causes.
The goal is effective causes with meaningful public appeal. I'm not arguing we should optimize purely for popularity - we should focus on causes that are both highly effective and have genuine public resonance. Ending extreme poverty, reducing animal suffering in factory farms, preventing the next pandemic - these are causes people care about when they understand them, even if they're not maximally popular. Portfolio approaches (80% global poverty, 20% animal welfare) might also help broaden appeal while maintaining impact focus.
There is a strategic sequencing question worth acknowledging: early PFG successes that prove the model and generate substantial capital may enable later, more ambitious efforts. A PFG company funding global health that captures 10% market share generates more resources and credibility than one funding a more controversial cause that captures 2%. But I think we can find causes in the "effective and appealing" zone rather than having to choose between effectiveness and appeal.
EDIT:
I think actually at current low awareness levels, a bit more serious prolonged levels of stakeholder engagement tend to produce greater advantages. For example, with Humanitix, the relevant stakeholder - an event organizer choosing the platform for tickets- is probably spending more time making this decision than someone choosing a brand of cereal. This is also true with larger contracts like consulting work (see Impact Makers). I anticipate if general awareness and trust of the Profit for Good category increased, you would see a greater effect with lower stakes consumer decisions.
No, people will not generally pay non-trivial amounts more for companies that 'do good'.
Some salient counter examples:
Verifiability is also very hard. For more humane animal products, there are many competing labels. Even as a vegetarian and animal rights supporter, I have only the most rudimentary understanding of what is meant by cage-free vs free-range eggs in practice. You get about 5 words [https://www.lesswrong.com/posts/4ZvJab25tDebB8FGE/you-get-about-five-words]. Any label will get co-opted by industry, and teaching people which labels are real/meaningful is fighting an uphill battle against a superiorly funded adversary.
Status quo bias says that the largest & most successful companies are for-profit, and will stay that way in the near future.
I don't understand the relevance of "people will not generally pay non-trivial amounts more for companies that 'do good'." Here, Brad's argument is that the consumer doesn't have to pay extra for the Profit for Good choice, which is substantively identical other than where the profits go:
(emphasis added).
Fair point. I got confused because the examples highlighted are much more expensive than their natural competitors, and I incorrectly thought that meant the author believed them to match their description.
EX. a 'thankyou.' pack of 2 microfiber cloths (plus a glass cloth) is 17.95$ [1] vs Amazon sells a 12-pack for 7.99$ [2]. Similarly, 'Good.store' sells a coffee kit with 12 ounces of coffee and a mug for 50$ [3].
As far as I can tell no one meets the author's bar of selling identical products at identical prices while solving real problems.
[1] https://thankyou.co/collections/cleaning-tools/products/microfibre-cloths-3pk
[2]https://www.amazon.com/Microfiber-Cleaning-Towels-Assorted-Yellow/dp/B098D79MQB/ref=sr_1_2_sspa?dib=eyJ2IjoiMSJ9.Uuyh4_VJcHdo5GS9oyjYoqhkQV4bx8B9ubn7bn49wZ0PPkZqCdSf-lei8XMFfMlEgSntrqK6MxGT_M8mTfLkws9OACyFY1vgAXfjP6ouTzRUNGk9FV_JABD40PxK9ZJ4osLmjbwf3vd9et5VHJeLXcJ0Lu1D0Lv4CCFavjDCHuc5-SwC1Cid7WJvQHVW9HjSJSbR67z4iR0wNkYu2pL9Q2sxho8kHKHCOyXYRlRywOwpaer86jQavMWNnMNXEamdU5V7GevNQlpwtqoTHRN9rzjfqTvNAQoT0HtgQxUJdpY.9ou4bL3nGy_-oU2u-zBFYHCxwYFXQIb0UC2R_kArVeA&dib_tag=se&hvadid=570596319494&hvdev=c&hvexpln=0&hvlocphy=9031923&hvnetw=g&hvocijid=11735289936918653588--&hvqmt=e&hvrand=11735289936918653588&hvtargid=aud-2443232233122%3Akwd-357431965329&hydadcr=8100_13493226&keywords=microfiber%2Bcloths%2Bamazon&mcid=9515a202da2d3465a66d8470c3bdd6b9&qid=1762833283&sr=8-2-spons&sp_csd=d2lkZ2V0TmFtZT1zcF9hdGY&th=1)
[3]https://good.store/products/coffee-bundle
You're absolutely right that people won't pay non-trivial amounts more for ethical products, and I think your examples actually strengthen rather than weaken the case for Profit for Good.
The virtue tax problem is real. Fair trade, alternative proteins, and humanely raised animal products all ask consumers to pay more or accept lower quality for ethical reasons. This requires ongoing consumer altruism at every purchase - the same psychological barrier that limits charitable giving. That's why these models struggle to scale beyond niche markets. People simply don't want to sacrifice value for virtue.
But Profit for Good doesn't have this problem. The critical distinction is how the good is created. Fair trade does good by paying suppliers more. Alternative proteins do good by using different (currently more expensive) production methods. These are what I call "Good Through Activity" - they change operations in ways that increase costs or reduce performance. PFG does good through ownership structure - who receives the profits after the business is already profitable. There's no operational reason for higher costs or lower quality.
The examples you cite aren't evidence of a virtue tax - they're evidence of other market realities. Thankyou's microfiber cloths are expensive compared to Amazon primarily because they lack Amazon's massive economies of scale and likely position as premium/sustainable products (independent of PFG). The Good Store's coffee bundle is specialty coffee priced comparably to other specialty coffee bundles - that's premium positioning, not a virtue tax. Newman's Own demonstrates this well: it's a premium product priced comparably to other premium products in its category. The PFG structure doesn't make it more expensive than its actual competitors.
The right strategy is to compete where you can win with available capital. Start in sectors where capital requirements match what philanthropists can deploy and where stakeholder preference advantages are strongest - ticketing, payment processing, insurance distribution, consumer goods categories with strong values expression. Prove the model works by demonstrating higher profitability from stakeholder advantages. Once that's established, both philanthropists and debt capital providers should have interest in expanding to sectors with higher capital requirements.
On verifiability, PFG is actually much simpler than other ethical standards. Your point about competing labels is exactly why traditional ethical consumption struggles - cage-free vs. free-range vs. pasture-raised involves complex operational standards that even motivated consumers can't evaluate. But PFG isn't about how you raise chickens or how you make products. It's about ownership structure and where profits go - something you can verify through public legal documents (foundation ownership) and audited financial statements showing profit distributions. It's binary and checkable: either the business is owned by a charitable structure and distributes profits accordingly, or it isn't. Much clearer than trying to decode what "cage-free" means in practice.
Humanitix demonstrates this perfectly. An event ticketing platform competing directly with Eventbrite and Ticketmaster, often at lower prices because employees accept reduced compensation to work on something meaningful (giving them lower costs) and because customers actively prefer them when they understand where fees go. The ownership structure is clear and verifiable. No virtue tax. Actually a cost advantage. That's what PFG should look like at scale.
Verifiability remains very difficult even with PFG, where the 'verifiability' is that companies donate all of their profits.
Companies that make money on marginal sales have a large amount of discretion on what they classify as net profit. For example, as the CEO & founder you could increase your own salary. This decreases the net profit, as salaries are part of operating expenses. It doesn't change gross profit (under most definitions), but by the time you're discussing gross vs net profit consumers have already stopped listening. It isn't just binary based on ownership or truthfulness of donating all profits.
Companies also have discretion about what charities to donate to, and it is hard to evaluate how effective a given charity is.
I'm also genuinely confused about whether Humanitix is profitable. This site [1] suggests that in 2021 it had ~3M in revenue, of which ~1.6M was from grants (so 1.4M left for its core services). Its total expenses were listed at 2.1 million, with a little less than 300K in grants, so 1.8M in expenses ignoring grants. 1.4M - 1.8M is a 400K yearly deficit. Businesses are totally allowed to lose money, but I think it weakens the case of Humanitix as a success story. Their more recent yearly reports have all figures redacted [2,3], and so I can't really verify anything about what they donated vs how much they received. I'd be curious if folks could find some unredacted statements that I missed.
[1] https://www.acnc.gov.au/charity/charities/0db4989a-3aaf-e811-a961-000d3ad24182/documents/341f993f-e644-eb11-bb23-000d3ad1f9f4
[2] https://www.acnc.gov.au/charity/charities/0db4989a-3aaf-e811-a961-000d3ad24182/documents/
[3] https://acncpubfilesprodstorage.blob.core.windows.net/public/0db4989a-3aaf-e811-a961-000d3ad24182-e4b9f279-5504-4905-952f-ef0ba115c816-Financial%20Report-b67689aa-6b37-f011-8c4c-00224894978f-Humanitix_Limited_2024_Financial_Redacted.pdf
You're overcomplicating this. Yes, executives could inflate compensation—but that's true of any corporation. The difference is that verifying PFG is categorically simpler than verifying operational ethics claims.
To verify "cage-free" eggs, you need facility inspections, certification audits, and understanding complex operational standards. To verify PFG, you check ownership structure (public corporate records) and financial statements showing profit distributions. It's the difference between "audit the supply chain" and "read the books."
On Humanitix: The company received ~$2-3M in one-time grants in 2018, has since donated $16.5M+ to charity, and achieved "200% annual growth, doubling in size every six months" while expanding to 4 countries (Google Cloud, n.d.). The donations are what remains AFTER aggressive reinvestment in growth.
Reference:
Google Cloud. (n.d.). Humanitix case study. https://cloud.google.com/customers/humanitix
Your link is to a press release by Google Cloud. It's not a financial statement and it doesn't include expenses. Where can I "read the books" for Humanitix?
I agree that verifying "cage-free" eggs is probably harder, but it still doesn't seem easy.
Executive summary: The author argues that philanthropists can redirect a large share of global corporate profits toward solving major problems—such as poverty, climate change, and factory farming—by adopting and scaling the “Profit for Good” business model, in which companies are owned by charitable entities and compete normally while directing 100% of profits to effective causes; the piece urges systematic experimentation and investment to prove and expand this approach.
Key points:
This comment was auto-generated by the EA Forum Team. Feel free to point out issues with this summary by replying to the comment, and contact us if you have feedback.
Two points that I think are important that I would add to summary bot:
7. Good through ownership, not operations- unlike other forms of social enterprise, Profit for Good achieves impact through who owns the business (functionally, charities), not through how it operates, thus does not negatively affect the operations of the business
8. Prudent reinvestment allowed/encouraged by the model- A key misconception is that Profit for Good growth is limited by donations that could be reinvested instead of donated. But when there is a profit-lock to charities, a business can reinvest even 100% of its profits and this reinvestment goes to the benefit of the charity owners. Thus the PFG model allows the same prudent financial choices that normal businesses can do.