Looking to advance businesses with charities in the vast majority shareholder position. Check out my TEDx talk for why I believe Profit for Good businesses could be a profound force for good in the world.
Brad Westđ¸
Karma: 2,422
It only relates to it insofar as someone could view your post (just looking at the title) as implying socialism and EA (at the broadest level, trying to do the most good we can with resources) are at odds. In reality, a lot of critics of EA are addressing the communityâs choice of priorities rather than EA at the broadest level. I would prefer it if such critics embraced the EA framework explicitly and made the case that their cause area or philosophy is actually the most EA, if this is pretty much what they are doing.
Thereâs a lot of conflation between what the EA community is prioritizing at any given point and EA as a philosophy to guide moral behavior. I think this conflation probably does a lot of damage to EAâs ability to proliferate.
I didnât downvote, but the initial title seems to suggest that Effective Altruism and socialism would be at odds. I donât really think that EA and socialism are at odds, nor any ideology per se. If we have different views within EA about what forms of government, etc. are likely to produce flourishing within EA, we would expect EAs who have different political beliefs. To be clear, you made clear in your post that you can be committed to different beliefs and still be EA, but the top level framing I found a bit jarring. Generally, a lot of the arguments that purport to be against EA are arguments against some cause prioritizations or perspectives on how to do the most good, which seem like they might make more sense within the tent of EA.
Thanks, Jason â 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 Thankyouâs ~4â5% donate-able margin or Newmanâs ~5% donations on ~5% net margins does not scream âthese businesses are crushing the for-profit competition.â When I talk about large profit uplifts, Iâm not claiming we already see that in their published numbers; Iâm 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 âweirdâ for normal investors, too âbusinessyâ for most philanthropy). In that world, youâd expect âsurvive and sometimes do well,â not âobvious margin dominance.â
I also think youâre right to flag survivorship and the Paul Newman effect. Newmanâs Own probably got a brand tailwind few founders can replicate, and we donât have good public data on the PFG attempts that fizzled. Thatâs partly why the article opens by saying âthe basic math is compelling, what we lack is rigorous measurement.â Iâm using Thankyou/âNewmanâs as existence proofs (âthis can work at allâ), not as clean evidence that the multiplier is already realized in the wild.
On the Kraft question and capital: I donât think the story has to be âsmall PFG beats the global leader on day one.â The more realistic path I have in mind is stepwise:
First, PFG companies grow with philanthropic and mission-aligned capital in niches where capital requirements are tractable and stakeholder preference is strong (ticketing, insurance distribution, hated-fee services, values-expressive categories, etc.). At that stage, the relevant comparison really is similarly sized âprofit-for-yachtâ firms, not KraftHeinz.
Then, if they show normal or better cash-flow performance, they can access ordinary credit markets. Banks and lenders care about coverage ratios and default risk, not whether residual profits go to a foundation or to a family office. A PFG firm with solid EBITDA and a boring business model can still borrow to expand, even if 100% of distributable profits ultimately go to charity.
Only much later do we get to the level where youâre buying or competing head-to-head with a Kraft-scale incumbent. At that point, youâd likely be using a mix of philanthropic equity, retained earnings, and conventional debt â not trying to fund a $50B play entirely out of grants.
So Iâm not claiming âPFG firms are already out-earning Kraftâ or that we have tidy margin graphs to prove a large edge. Iâm 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, itâs rational for philanthropists to run some careful, sector-specific experiments rather than either assuming PFG canât compete or assuming it already does. If those trials show no advantage once you control for capital and sector, Iâll happily update. Right now, the main thing Iâm arguing against is staying forever in exactly the âanecdata vs intuitionâ uncertainty youâre highlighting.
On another note, it might be worth engaging, potentially on their community forum, to see where your cruxes are regarding vaping as harm reduction and determine whether there are any areas where your perspectives could inform each other or there is common ground.
Thanks for the thoughtful reply â and yes, I do think this is a pretty serious concern for trust and scale.
The core issue, as I see it, is that for the âweâre neutralizing opposing political donationsâ story to really hold, donors should be doing something like:
âThis is money I was otherwise going to use to support the specific zero-sum political cause indicated (or a very close substitute), and Iâm now redirecting it instead.â
One concrete way to reinforce that would be a short pledge at checkout, e.g.:
âI understand that DuelGood only works if donors genuinely redirect money they would otherwise have used to support the indicated political cause (or a very similar one). I pledge that this donation meets that description.â
You could then reserve the strongest âduel/âneutralizationâ framing and stats for donors who sign that pledge, and be transparent about that in the FAQ.
Iâd really love to see DuelGood work â turning political deadlock into bednets is a very compelling vision.
My apologies for not having followed the links in your post in the first place.
I think this criticism could apply if we were suggesting moving funds from the âdonationsâ bucket of oneâs financial decisions to oneâs âsavingsâ bucket. Less so if we are suggesting moving funds from the âpersonal consumptionâ bucket to âsavingsâ bucket.
I think maybe a brief video explaining the zero-sum nature of a lot of political giving, and a brief explanation of a better path forward might be helpful.
One concern I have is how this might be pretty gameable to not reflect someoneâs counterfactual donation decisions.
For instance, say that I am going to donate anyway to GiveWellâs Top Charities Fund, but I also have other political preferences (say promoting second amendment rights in the United States). Now, instead of just donating directly to GiveWellâs Top Charities Fund, I can use DuelGood to donate to GiveWell, while neutralizing the donations to a gun safety organization.
This possibility, that your DuelGood contribution may not actually be neutralizing spending by the opposing cause, seems like it could prompt some serious concern (even if, in fact, people were being honest and using it for counterfactual donations).
EDIT: This sort of setup where two people agree not to fund causes where they oppose each other seems like it would work very well if the two people trust each other. How can DuelGood create this degree of trust in a scalable way between strangers?
EDIT2: second amendment is the right to bear arms, not first!
I havenât looked into this topic much, but I know reducing the harm from cigarette smoking is one of the priorities of the School for Moral Ambition. Perhaps they would be interested in substitution of cigarette smoking for vaping as part of the approach?
https://ââwww.moralambition.org/ââ
I definitely agree that looking for tweaks that could save money without reducing luxury or convenience is a great idea and think that resources to help EAs make such decisions quickly and easily would be great. I donât think it is all that people mean typically when they think about living frugally, so maybe a different framing would make sense.
I think another issue with frugality is the risk of burnout (if the savings is coming out of the EAâs personal consumption bucket). Making substantial inroads into consumption that makes their lives easier or more enjoyable may make staying on the path more difficult in the long run.
Great questionâthis is exactly the comparison serious philanthropists should be making.
The theoretical edge is substantial:
Index fund approach: $100M invested â ~7-10% returns â $7-10M annual charitable giving, capital preserved.
PFG portfolio approach (if stakeholder advantages are real): $100M deployed â 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?
Iâve been compiling empirical evidence on PFG stakeholder advantagesâmeasurable 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.
Iâve summarized the key evidence here. This is part of a larger research compilation Iâm finishing.
On the âtoo good to be trueâ 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 hereâs 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 donât get a 7% improvement in profitsâyou 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 isnât speculativeâitâs 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:
Downside: If stakeholder advantages donât materialize, you still own operating businesses with normal market returnsâcapital isnât consumed like grants
Upside: If advantages do materialize, youâve demonstrated a model that can attract much larger capital deployment
Learning value: Even âfailuresâ generate valuable data about which contexts/âcategories work best
Portfolio approach: Testing across multiple sectors (ticketing, consumer goods, professional services) diversifies risk while identifying where advantages are strongest
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 returnsâproving the degree to which PFG advantages are real would inform how billions in philanthropic capital get deployed.
Youâre overcomplicating this. Yes, executives could inflate compensationâbut thatâs true of any corporation. The difference is that verifying PFG is categorically simpler than verifying operational ethics claims.
To verify âcage-freeâ 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. Itâs the difference between âaudit the supply chainâ and âread the books.â
On Humanitix: The company received ~$2-3M in one-time grants in 2018, has since donated $16.5M+ to charity, and achieved â200% annual growth, doubling in size every six monthsâ 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://ââcloud.google.com/ââcustomers/ââhumanitix
Thanks JDLCâreally appreciate the thoughtful engagement. Let me address each point:
On industry analysis: Youâre right that this deserves more systematic treatment. Iâm 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 strongestâticketing/âpayments (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. Youâre right that the model requires control over profit distribution, which public company fiduciary duties to shareholders make difficult. However:
While foundation ownership is one path, there are other structural optionsâcharitable benefit corporations with enforceable commitments, or even 90%+ charitable ownership with a minority public stake for liquidity and valuation purposes.
Your intuition that public ownership has competitive advantages may be overstated. Many companies go public primarily for liquidity and capital access, not operational advantages. Plenty of highly successful companies (Patagonia, Mars, Chick-fil-A, Cargill) remain private at massive scale.
The path to competing with public companies is to prove the model works first at smaller scale with available capital, then use that evidence to attract larger capital pools (both philanthropic and debt-based) for acquisitions, higher-capital startups, or even taking public companies private. Each stage requires more capital but provides more evidence to justify it.
The $10 trillion figure is global profits across all businesses. Even capturing a fraction through private PFG companies represents transformative philanthropic capitalâand 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. Youâre right that if PFG systematically advantages popular-but-less-effective causes over high-impact work, we risk building a large system that doesnât solve the problems that matter most.
But I think the dynamics are more favorable than this concern suggests:
The current baseline is âenrich shareholders.â Right now, stakeholders choosing any product or service are implicitly choosing to enrich investors. In that context, even causes that arenât the most popularâlike ending extreme poverty through evidence-based interventionsâstill represent a massive improvement over the status quo. People may have warm feelings toward local pet shelters, but âprofits end extreme povertyâ vs. âprofits buy yachtsâ is still a compelling choice.
You can separate competitive domain from funding domain. A ticketing platform doesnât need to be about factory farming to fund factory farming abolition. Humanitix competes in event ticketing while funding global health. Newmanâs 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 âProfit for Goodâ meansârigorous, 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. Iâm not arguing we should optimize purely for popularityâwe 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 pandemicâthese are causes people care about when they understand them, even if theyâre 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 âeffective and appealingâ 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 stakeholderâan 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.
Youâre absolutely right that people wonât 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 purchaseâthe same psychological barrier that limits charitable giving. Thatâs why these models struggle to scale beyond niche markets. People simply donât want to sacrifice value for virtue.
But Profit for Good doesnât 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 âGood Through Activityââthey change operations in ways that increase costs or reduce performance. PFG does good through ownership structureâwho receives the profits after the business is already profitable. Thereâs no operational reason for higher costs or lower quality.
The examples you cite arenât evidence of a virtue taxâtheyâre evidence of other market realities. Thankyouâs microfiber cloths are expensive compared to Amazon primarily because they lack Amazonâs massive economies of scale and likely position as premium/âsustainable products (independent of PFG). The Good Storeâs coffee bundle is specialty coffee priced comparably to other specialty coffee bundlesâthatâs premium positioning, not a virtue tax. Newmanâs Own demonstrates this well: itâs a premium product priced comparably to other premium products in its category. The PFG structure doesnât 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 strongestâticketing, payment processing, insurance distribution, consumer goods categories with strong values expression. Prove the model works by demonstrating higher profitability from stakeholder advantages. Once thatâs 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 strugglesâcage-free vs. free-range vs. pasture-raised involves complex operational standards that even motivated consumers canât evaluate. But PFG isnât about how you raise chickens or how you make products. Itâs about ownership structure and where profits goâsomething you can verify through public legal documents (foundation ownership) and audited financial statements showing profit distributions. Itâs binary and checkable: either the business is owned by a charitable structure and distributes profits accordingly, or it isnât. Much clearer than trying to decode what âcage-freeâ 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. Thatâs what PFG should look like at scale.
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/âencouraged 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.
The War PhilanÂthropists Donât Know They Can Win
The problem with doing this is that once BOAS takes off, the normal for-profit shareholders would have to be bought out for him to âgo non-profitâ. And the cost to buy them out would far exceed the startup costs. This is why investors often like funding businesses at the ground floor rather than buying shares of businesses that have already captured immense market share.
I also donât like characterizing businesses like BOAS as ânonprofitâ. They are trying to make an obscene profit, like other businesses, but for charities rather than private investors.
I donât know if a good text on this exists, but I think a strong book on using counterfactual thinking would be great for EAs. Might be a great book for someone to consider writing specifically from an EA perspective.
I just asked Claude about good books about counterfactual thinking and I think I might listen to the audiobook of âThinking in Betsâ by Annie Duke, to see whether I would recommend it to EAs.