As Capitalism Is For ALL, Why Have We Restricted Those Who Choose To Do Good?

Imagine A World Transformed by Unrestricting Capitalism for ALL, Including Non-Profits: By 2045, the world had become a beacon of equity and sustainability. This transformation began in 2024 when an article published on 8/13/2024 led to an immediate shift in the mindset. Non-profit sectors were immediately liberated from financial constraints to avert an impending financial crisis, gaining the same freedoms as for-profit entities. By 2030, social enterprises had risen, challenging traditional sectors with their innovative solutions. Global non-profits have been hailed for responsible innovators. Their efforts and the unrestricted access to capital eradicated extreme poverty in various regions, introduced affordable healthcare, and pioneered sustainable agriculture that fed millions. All of that performance made non-profits organizations' stocks soaring in value.

Businesses worldwide adopted the triple bottom line — valuing profit, people, and the planet equally. This shift led to greener cities, universal access to education and healthcare, and a significantly narrowed wealth gap. People enjoyed longer, healthier lives, and global cooperation reached new heights.

The world transitioned from a profit-centric to a collective mission focused on Responsible Value Creation Experiences, aiming to improve human life and protect the world.

The Paradox of Capitalism and Social Good

On the morning of July 21, 2024, I woke up with a perplexing inquiry that had been quietly brewing in my mind:

As We All Want A Free Capitalist World, Then Why Have We Restricted Those Who Choose to Do Good?

In a free capitalist world, individuals have the opportunity to amass wealth by working in industries of their choosing. These industries range widely, including Oil, Weapons, Mining, Intelligence, Retail, Internet, Technology, Finance, Investments, Banking, Hedge Funds, Electric Vehicles, Artificial Intelligence, Space Exploration, Pharmaceuticals, Healthcare, Consumer Goods, Alcohol, Minerals, Travel, Tourism, Transportation, Communication, Social Media, Cloud Computing, Data Management, Information Security, Adult Entertainment, Ecommerce, and many others. Each of these sectors offers the potential for significant financial success and influence.

In this world of free-market capitalism, we celebrate the success of innovators who transform industries and amass fortunes by solving significant problems and addressing unmet needs. Entrepreneurs in industries like Pharmaceuticals, Biotechnology, Internet, and AI are lauded for their ability to build corporations, create jobs, and generate wealth, often attracting individual and institutional investors eager to share in the potential for growth and profit.

However, a glaring paradox exists in this capitalist celebration. Innovators who choose to do good are often restricted from accessing the same benefits of capitalism. Social enterprises, which focus on sustainability and social impact, generate wealth in a different way. While they also build corporations and create jobs, their primary goal is to address social, environmental, or humanitarian challenges. These enterprises reinvest their profits into their mission rather than distributing them to shareholders, which sets them apart from traditional for-profit industries. As a result, social enterprises are often excluded from financial markets, limiting their access to capital, and constraining their growth potential, despite their significant contributions to society.

Whereas nonprofits almost solely rely on support in the form of grants, donations and charity. Organizations like ACLU, Amnesty International, American Red Cross, Save the Children US, Feeding America, NAACP among many others are just as innovative in their approaches to solving big problems. Yet, they are excluded from the financial markets, limited in their access to capital, and constrained by regulations that curtail their growth potential.

Why should giving to nonprofits or supporting social enterprises be seen as an expense when it could be an investment in our collective future?

The Case for Equal Treatment of Nonprofits and For-Profits

Publicly trading non-profits presents a transformative opportunity to elevate their impact and operations on multiple fronts. With equal access to capital markets, non-profits can secure funding beyond conventional grants and donations, significantly enhancing their scalability and reach. This financial empowerment will allow them to expand and intensify their programs, directly impacting more lives and effectively addressing broader issues.

The introduction of market efficiencies would further refine resource allocation within the sector, as investors could direct funds towards non-profits based on tangible performance metrics and impact outcomes. This market-driven approach fosters a competitive environment that could attract new talent, spur innovation and operational efficiency among non-profits, encouraging them to develop new solutions to social, environmental, or humanitarian challenges.

Additionally, aligning with the stringent transparency and accountability standards required of publicly traded companies would bolster governance in the non-profit sector. This shift promises not only increased trust among donors and investors but also improved overall organizational management. Moreover, publicly traded non-profits would align with the growing trend towards socially responsible investing (SRI), attracting investors keen on merging financial returns with genuine social impact.

This alignment, coupled with enhanced visibility and internal support, positions non-profits to play a pivotal role in global efforts to create a just and sustainable world, allowing them to compete on a more equal and equitable footing with their for-profit counterparts.

A Brief History of Non-Profit Restrictions

The restrictions on non-profits have deep historical roots, dating back to the early 20th century when the U.S. tax code was first established. The Revenue Act of 1913 introduced the concept of tax exemption for organizations that operated exclusively for charitable, religious, scientific, or educational purposes. This tax-exempt status was granted on the condition that these organizations would not engage in political campaigning or lobbying, and their earnings would not benefit private shareholders.

The intent was to encourage the growth of charitable organizations while preventing the misuse of funds for personal gain. However, this well-meaning regulation also inadvertently created a rigid framework that restricted the financial capabilities of non-profits. Over time, these restrictions have only grown, with further regulations introduced in the 1950s and 1960s that reinforced the division between for-profit and non-profit entities, solidifying the notion that non-profits must rely on donations and grants rather than investments.

The Capital Market Divide?

To understand this discrepancy, let's examine the capital markets. For-profit companies have the ability to raise funds through initial public offerings (IPOs), private placements, and by issuing bonds. They are driven by the goal of maximizing shareholder value, which aligns the interests of the company's executives, employees, and investors.

Non-profit organizations, on the other hand, rely heavily on donations from such For-profit companies, grants from Billionaire's foundations, and government funding. Their revenue is often unpredictable, tied to the goodwill of donors, and subjected to strict regulations that limit their ability to grow. Unlike for-profit executives, non-profit leaders are constrained in their earnings and are required to disclose their compensation, further stigmatizing the potential for dynamic success within the sector.

This disparity raises a few critical questions:

Could it be that the policies governing these sectors are biased? Perhaps the current system is too old?

Perhaps the rules were crafted by individuals who, despite their good intentions, lacked the innovative foresight needed to recognize the value of social entrepreneurship?

The Opportunity for Change

Given the macro-environment shaped by greed, deception, divisive politics, and control, and knowing that our ability to colonize Mars is still centuries away, it might be time to unleash the potential of those who choose to do good. Imagine a world where non-profits could access the same capital markets as for-profits, where donations becomes investments with the potential for growth, and where social innovation is rewarded just as handsomely as technological innovation.

Why doing good has to be done from a place of sacrifice?

My ASK for Curiosity and Courage

As we stand on the brink of new technological and societal advancements, perhaps it's time to reconsider the boundaries we've imposed on those who seek to create positive change. Could it be that by allowing these innovators to flourish, we might learn to live on Earth in a more sustainable, equitable, and harmonious way? It will take curiosity, courage, and a willingness to challenge the status quo to create new opportunities for those who choose to do good in a free capitalist world.

I trust that this article will help the leaders at the influential institutional investors such as BlackRock, Vanguard, Blackstone, State Street Global Advisors, Fidelity Investments, T. Rowe Price and others, to develop a new understanding of the damage caused by the older rules of capitalism. It will be great if you could organize and facilitate proposed exploratory discussions on "Capitalism as a Responsible Value Creation System"? These socially-driven organizations meet the unmet needs of people in ways that are crucial for the well-being of society. They create impact, address challenges, and innovate just as much, if not more, than their for-profit counterparts. So why are they barred from the financial benefits enjoyed by other industries? Why can't these organizations be traded on the same stock markets, raise unlimited capital, and attract investors who believe in their mission? Let's show some courage and play with this thought?

What future do you want? Choice is yours.

Given my experiences described in the Amazon's Inhuman Retaliation on FTC Witness and its Correlation with Octopus Murders - Discovery of a Systemic Issue?, I would certainly invest in the Civil Rights Advocacy organizations.

Key Questions for All Stakeholders to Consider

1. Internal Revenue Service and U.S. Department of the Treasury : How do you justify limiting non-profits' ability to access capital markets when their mission could potentially benefit society on a large scale?
2. Federal Trade Commission and Bill & Melinda Gates Foundation : How do you see the potential societal benefits that could be realized if non-profits had the same financial opportunities as for-profit businesses?
3. The World Bank and United Nations Development Programme (UNDP) : How do you think unrestricted financial access might transform the capabilities of non-profits to tackle systemic global issues such as poverty, education, and healthcare?
4. National Council of Nonprofits and Oxfam America : How do you compare the risks and downsides of keeping non-profits financially restricted with the potential benefits of unrestricted access?
5. Schwab Foundation for Social Entrepreneurship , Charles and Helen Schwab Foundation and Ashoka : How do you assess the risks of ignoring the potential innovation and impact that could come from financially empowered non-profits?
6. World Economic Forum World Economic Sustainability Forum and Ford Foundation : How do you envision the landscape of charitable giving and social entrepreneurship changing if non-profits could issue stock or engage in other capital-generating activities?
7. U.S. Securities and Exchange Commission & US Congress : How do you evaluate what systemic changes would be necessary to grant non-profits the same financial freedoms as for-profits, and do you think these changes are feasible?

Global Debate

I am including these organizations for a possibility to start these conversations in other regions: Canada Revenue Agency - Agence du revenu du Canada , United Arab Emirates , Charity Commission for England and Wales , Charity Commission for Northern Ireland , Financial Conduct Authority , Parliament of Australia , European Parliament and Australian Charities and Not-for-profits Commission .

Acknowledgements

1. Smith, J. (2023). Capital Markets and Social Enterprise: A Comparative Study. Journal of Financial Economics.
2. Johnson, R. (2022). The Impact of Non-Profit Organizations on Economic Growth. Economic Review.
3. Brown, A. (2024). Innovation and Control: The Regulatory Environment for Non-Profits. Harvard Business Review.

About the Author

Ahmad Khan is an entrepreneur and business growth strategist with a deep understanding of the challenges in building profitable enterprises through incorporating business growth strategies rooted in proactive leadership and responsible innovation. As a mentor, advisor, and supporter, Ahmad empowers CEOs and executives to become innovation-centric, growth-driven responsible business leaders.