How have you factored this into your calculations? Surely if the returns are much lower, the total % of the market that could be run like this is much smaller?
What might help you conceptually is not to think of donations and shareholders as a separate thing (i.e. donations are something that limits returns) but rather think of it as business where charities are the shareholders (not conferring any disadvantage moreso than any other shareholder).
The returns are not lower. They are higher, because economic actors have a non-zero preference for charities but they can operationally do what normal businesses can (hence Humanitix’s meteoric rise).
The limiting factor right now is philanthropic capital. And if philanthropists realize they can get more money to charity through this model, then they would be motivated to use it because it offers the opportunity to multiply impact. And then if the evidence base gets stronger, they can use debt (leveraged buyouts) to expand beyond what philanthropic resources would allow.
See my below article on why PFGs should have a competitive advantage.
Stakeholder non-zero preference > business advantage > philanthropic multiplier opportunity
How have you factored this into your calculations? Surely if the returns are much lower, the total % of the market that could be run like this is much smaller?
What might help you conceptually is not to think of donations and shareholders as a separate thing (i.e. donations are something that limits returns) but rather think of it as business where charities are the shareholders (not conferring any disadvantage moreso than any other shareholder).
The returns are not lower. They are higher, because economic actors have a non-zero preference for charities but they can operationally do what normal businesses can (hence Humanitix’s meteoric rise).
The limiting factor right now is philanthropic capital. And if philanthropists realize they can get more money to charity through this model, then they would be motivated to use it because it offers the opportunity to multiply impact. And then if the evidence base gets stronger, they can use debt (leveraged buyouts) to expand beyond what philanthropic resources would allow.
See my below article on why PFGs should have a competitive advantage.
Stakeholder non-zero preference > business advantage > philanthropic multiplier opportunity
https://profit4good.org/from-charity-choice-to-competitive-advantage-the-power-of-profit-for-good/