No, people will not generally pay non-trivial amounts more for companies that ‘do good’.
Some salient counter examples:
Companies that use more humanely raised meat & eggs are not wildly successful (though I’d like them to be).
Alternative proteins are not wildly successful (though I’d like them to be).
Co-op stores generally don’t scale, and folks are more likely to shop at ordinary grocery stores & retailers.
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.
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.
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 $16.5M+ to charity, and achieved “200% annual growth, doubling in size every six months” while expanding to 4 countries (Google Cloud, n.d.). The donations are what remains AFTER aggressive reinvestment in growth.
Your link is to a press release by Google Cloud. It’s not a financial statement and it doesn’t include expenses. Where can I “read the books” for Humanitix?
I agree that verifying “cage-free” eggs is probably harder, but it still doesn’t seem easy.
I don’t understand the relevance of “people will not generally pay non-trivial amounts more for companies that ‘do good’.” Here, Brad’s argument is that the consumer doesn’t have to pay extra for the Profit for Good choice, which is substantively identical other than where the profits go:
When people can choose between two identical products at the same price, and one enriches shareholders while the other funds solving real problems, people choose solving problems.
Fair point. I got confused because the examples highlighted are much more expensive than their natural competitors, and I incorrectly thought that meant the author believed them to match their description.
EX. a ‘thankyou.’ pack of 2 microfiber cloths (plus a glass cloth) is 17.95$ [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.
No, people will not generally pay non-trivial amounts more for companies that ‘do good’.
Some salient counter examples:
Companies that use more humanely raised meat & eggs are not wildly successful (though I’d like them to be).
Alternative proteins are not wildly successful (though I’d like them to be).
Co-op stores generally don’t scale, and folks are more likely to shop at ordinary grocery stores & retailers.
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.
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 $16.5M+ to charity, and achieved “200% annual growth, doubling in size every six months” while expanding to 4 countries (Google Cloud, n.d.). The donations are what remains AFTER aggressive reinvestment in growth.
Reference:
Google Cloud. (n.d.). Humanitix case study. https://cloud.google.com/customers/humanitix
Your link is to a press release by Google Cloud. It’s not a financial statement and it doesn’t include expenses. Where can I “read the books” for Humanitix?
I agree that verifying “cage-free” eggs is probably harder, but it still doesn’t seem easy.
I don’t understand the relevance of “people will not generally pay non-trivial amounts more for companies that ‘do good’.” Here, Brad’s argument is that the consumer doesn’t have to pay extra for the Profit for Good choice, which is substantively identical other than where the profits go:
(emphasis added).
Fair point. I got confused because the examples highlighted are much more expensive than their natural competitors, and I incorrectly thought that meant the author believed them to match their description.
EX. a ‘thankyou.’ pack of 2 microfiber cloths (plus a glass cloth) is 17.95$ [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