Following on from "Impact by Default" I wanted to reflect on how we structure our business.
Wanting to do good and choosing a foundation to do it are two different things.
One is admirable. The other will severely limit your ability to make any real impact at scale.
You can't issue shares in a foundation. You can't give investors equity.
You can't raise the kind of capital that lets you go from helping 100 people to helping 100,000.
The structure that feels more ethical is actually the ceiling and constraints.
Look at orgs like Oxfam. How much of every euro donated actually reaches the cause and isn't simply spent on fundraising for more donations? The number is horrific. When fundraising becomes your core business, you've lost the plot.
Most people who choose a foundation do so because money feels evil. But that's not an allergy to money, or profit. It's an allergy to greed. And those are not the same thing.
Extraction is a choice. Profit can be reinvested into the mission.
Until we have better options, run a proper business entity: a BV, an Ltd or LLC, whatever fits your country. Then choose what you do with the profits. Pay your people well. Reinvest the rest. The legal structure doesn't make you good or bad. Your intention (and action) does.
People think a foundation tells the story by itself. "We are a foundation therefore we are good". But in reality, asking for donations is harder than selling a product or service that people already need. It's an incredible opportunity to make your story come alive.
The companies most allergic to profit are often the ones least able to make prolonged impact. No margin means no reinvestment. No reinvestment means no growth. No growth means the mission stays small forever. Noble enough for sure, but it doesn’t have to be that way.
Note: This post started as a Twitter/X Thread and is also available on LinkedIn
Wanting to do good and choosing a foundation to do it are two different things.
One is admirable. The other will severely limit your ability to make any real impact at scale.
You can't issue shares in a foundation. You can't give investors equity.
You can't raise the kind of capital that lets you go from helping 100 people to helping 100,000.
The structure that feels more ethical is actually the ceiling and constraints.
Look at orgs like Oxfam. How much of every euro donated actually reaches the cause and isn't simply spent on fundraising for more donations? The number is horrific. When fundraising becomes your core business, you've lost the plot.
Most people who choose a foundation do so because money feels evil. But that's not an allergy to money, or profit. It's an allergy to greed. And those are not the same thing.
Extraction is a choice. Profit can be reinvested into the mission.
Until we have better options, run a proper business entity: a BV, an Ltd or LLC, whatever fits your country. Then choose what you do with the profits. Pay your people well. Reinvest the rest. The legal structure doesn't make you good or bad. Your intention (and action) does.
People think a foundation tells the story by itself. "We are a foundation therefore we are good". But in reality, asking for donations is harder than selling a product or service that people already need. It's an incredible opportunity to make your story come alive.
The companies most allergic to profit are often the ones least able to make prolonged impact. No margin means no reinvestment. No reinvestment means no growth. No growth means the mission stays small forever. Noble enough for sure, but it doesn’t have to be that way.
Note: This post started as a Twitter/X Thread and is also available on LinkedIn