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.
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.
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.
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.