The firms would not be looking for (much) investment on behalf of typical shareholders. So your numbered points are immaterial⌠PFGs are 90%+ charitable equity.
Your characterization is a bit off⌠These Profit for Good Companies are not ânonprofit. â They exist to make profit, but for a specific kind of shareholder.
Youâre right⌠Currently PFGs cannot get adequate investment because this isnât on the menu for philanthropists as means to multiply their donations. But if philanthropic money could be multiplied by leveraging consumer (and other economic actorâs) discrimination in favor of charities, there would be ample incentive to invest⌠Philanthropists want to multiply the funds that are available and leveraging the good will of economic participants gives them that opportunity⌠If people can buy your laundry detergent for the same cost and help fight malaria, they will. The fact that we are not trying to give them this power is foolishness.
Anyone would rather buy in a way that benefits charities rather than traditional shareholders, and equity being held by a particular kind of entity does not necessarily increase costs or otherwise compromise a product.
Youâre right, capitalizing PFGs would compete with direct donations and âmore broad investment.â In these competing cases, youâre leaving money on the table because youâre failing to leverage the good will of consumers and other economic actors.
The bottom line is that PFGs, if capitalized, have all the advantages normal firms do, plus an extra advantage in that economic participants value their success more than competitors. The only thing keeping such firms from thriving and offering a huge multiplier opportunity is that we havenât created an environment of public awareness of the opportunity (which is what my nonprofit is trying to do).
The problem is âif capitalizedâ. Even with widespread awareness, they could still be at a disadvantage for raising capital and scaling, because the pool theyâre targeting (philanthropic capital) is much much smaller.
Yep. Acquiring capital without selfish profit motive is a key challenge.
However, if there is an environment in which PFGs enjoy a large advantage and this is clear to the relevant parties, there should be no problem raising funds through philanthropists and debt.
You can frame it as
F(C) = F(K) +P
F(C) is a firm capitalized mostly by charitable equity
F(K) is an identical firm capitalized by private equity
P is the monetary value of positive discrimination in favor of charities
If we have an environment in which P is high enough (I think this could be true in a lot of lower differentiation products), a PFG could probably be capitalized wholly by debt...
If PFGs offer a high enough value proposition (and this is clear to the relevant parties), the financing issues will work themselves out.
Thus, the question is, are the costs of creating the environment weâre looking for worth it? I think with the amount of money on the table, it is definitely worth determining what P values are possible in different contexts because money in the hands of effective charities is such high impact.
The firms would not be looking for (much) investment on behalf of typical shareholders. So your numbered points are immaterial⌠PFGs are 90%+ charitable equity.
Your characterization is a bit off⌠These Profit for Good Companies are not ânonprofit. â They exist to make profit, but for a specific kind of shareholder.
Youâre right⌠Currently PFGs cannot get adequate investment because this isnât on the menu for philanthropists as means to multiply their donations. But if philanthropic money could be multiplied by leveraging consumer (and other economic actorâs) discrimination in favor of charities, there would be ample incentive to invest⌠Philanthropists want to multiply the funds that are available and leveraging the good will of economic participants gives them that opportunity⌠If people can buy your laundry detergent for the same cost and help fight malaria, they will. The fact that we are not trying to give them this power is foolishness.
Anyone would rather buy in a way that benefits charities rather than traditional shareholders, and equity being held by a particular kind of entity does not necessarily increase costs or otherwise compromise a product.
Youâre right, capitalizing PFGs would compete with direct donations and âmore broad investment.â In these competing cases, youâre leaving money on the table because youâre failing to leverage the good will of consumers and other economic actors.
The bottom line is that PFGs, if capitalized, have all the advantages normal firms do, plus an extra advantage in that economic participants value their success more than competitors. The only thing keeping such firms from thriving and offering a huge multiplier opportunity is that we havenât created an environment of public awareness of the opportunity (which is what my nonprofit is trying to do).
The problem is âif capitalizedâ. Even with widespread awareness, they could still be at a disadvantage for raising capital and scaling, because the pool theyâre targeting (philanthropic capital) is much much smaller.
Yep. Acquiring capital without selfish profit motive is a key challenge.
However, if there is an environment in which PFGs enjoy a large advantage and this is clear to the relevant parties, there should be no problem raising funds through philanthropists and debt.
You can frame it as
F(C) = F(K) +P
F(C) is a firm capitalized mostly by charitable equity
F(K) is an identical firm capitalized by private equity
P is the monetary value of positive discrimination in favor of charities
If we have an environment in which P is high enough (I think this could be true in a lot of lower differentiation products), a PFG could probably be capitalized wholly by debt...
If PFGs offer a high enough value proposition (and this is clear to the relevant parties), the financing issues will work themselves out.
Thus, the question is, are the costs of creating the environment weâre looking for worth it? I think with the amount of money on the table, it is definitely worth determining what P values are possible in different contexts because money in the hands of effective charities is such high impact.