One theme is that non-profits take advantage of the intention heuristic. The other trope of mine is that nonprofits evade the accountability that is inherent in profit-seeking business.
Add up all of these macro-and-micro funding sluices across the full spectrum of leftist causes and we arrive at a point where the supposedly ancillary “non-profit sector” has become a key instrument on par with the permanent bureaucracy of the administrative state, and a menace to democratic self-government.
He is drawing attention to the way that the left takes advantage of non-profit status. But my criticisms apply as much to the right-wing non-profit sector as the left-wing non-profit sector.
People assume that because non-profits do not seek profits, their intentions are good. And good intentions are sufficient to make them morally superior to profit-seeking enterprises. The intention heuristic ignores the possibility that the outcomes of profit-seeking businesses can be—and often are—more socially beneficial than the outcomes of nonprofits. We should evaluate enterprises based on outcomes, not on intentions.
Then there is the issue of accountability. A profit-seeking business is ultimately accountable to customers, who are in the best position to gauge the value of what the business provides. If customers do not pay more than the cost of what the firm provides, the firm loses money and goes out of business. In contrast, a nonprofit only has to keep its donors happy. If the services it provides are not worth the cost, it can continue to operate by maintaining good relationships between the executives of the nonprofit and the providers of funding.
The problems with nonprofits are particularly acute when the funding comes from government. Ireland writes,