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what is inherently better about non-profit running a service?

Functionally, the only difference is they can't pay dividends to shareholders. Non-profit's can (and do!) turn profits into executives bonus's or perks, or bloated organizations, etc.

Why do you feel a non-profit would run a service better?




Non-profits may not run a service better but it does mean they can't be bought (or it's just more complicated to do so). It can be a clear way to signal the intent behind the organisation and restrict what can be done by the company.

In the UK, it's easy to set up a non-profit as a Company Limited by Guarantee, which has no shares. Such companies can still make profits, but they can't necessarily be distributed to Directors. It doesn't prevent them from making profits or spending them any other way.

For a comparison, see past discussions about Post Haven (re: pledges to "never be acquired") [1]. Had they set up as a non-profit from the beginning, the purpose would have been clearer and enshrined in the company's legal structure. Presumably fewer people would have had cause to question the founders' motives.

[1] https://news.ycombinator.com/item?id=5229229

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You also forgot one thing - non-profits also do not have the contractual obligation to have profits or growth, like public companies do. Big difference.

Of course, non-profits are not created equal. There's IKEA and then there's Mozilla or EFF.

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Ah, yes of course. That would actually be the biggest difference (and I completely forgot it). In my example, there are no shareholders so the obligation to maximise value for them doesn't exist.

The IKEA example is interesting as I think the aim of the convoluted legal structures (inc a non-profit somewhere) was to allow one person to have almost total control over the company.

Edit: For anyone interested in the IKEA web of companies, you read the following article: http://www.economist.com/node/6919139?story_id=6919139

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