Non-profits, Barack Obama, and Atlas Shrugged

Non-profits, Barack Obama, and Atlas Shrugged

The term "non-profit" seems to evoke feelings of goodness and charity. Generally, I've always liked the idea of non-profits helping to care for less-fortunate people. However, after some consideration, it is easy to see that we must be careful how we think about non-profits and their role in society. It is particularly interesting to contrast Barack Obama's views of non-profit organizations with Ayn Rand's views of non-profits, as put forth in Atlas Shrugged.

Most people know that Barack Obama worked as a "community organizer" prior to becoming a well-known politician. The first time I heard him directly mention non-profits was at the Arizona State University Commencement in May 2009. I had recently graduated from ASU with an MBA. As such, I attended Commencement and listened in person to the speech that President Obama delivered. While I'm sure that he had talked about non-profits before, this was the first time I can remember him referring to them:

That is the great American story: young people just like you, following their passions, determined to meet the times on their own terms. They weren't doing it for the money. Their titles weren't fancy - ex-slave, minister, student, citizen. But they changed the course of history - and so can you.

With a degree from this university, you have everything you need to get started. Did you study business? Why not help our struggling non-profits find better, more effective ways to serve folks in need. Nursing? Understaffed clinics and hospitals across this country are desperate for your help. Education? Teach in a high-need school; give a chance to kids we can't afford to give up on - prepare them to compete for any job anywhere in the world. Engineering? Help us lead a green revolution, developing new sources of clean energy that will power our economy and preserve our planet.

The following year, in his 2010 State of the Union address, President Barack Obama mentioned a break for debt-laden former students working in public service (which I'm assuming includes non-profits, although I'm not sure):

And let's tell another one million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years -- and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college.

(Before I continue with non-profits, can someone please explain basic economic principles to President Obama? Why would you give people with debt an incentive to NOT make more money by only requiring them to pay 10% of their income? Moreover, what good is an education in the first place if it takes more than 20 years to pay it back? Why would we encourage that kind of education?)

At first, this idea seems appealing: Serving others and receive little in return. However, if all business majors (or talented people from other majors) worked for non-profits, where would corporations get the analysts and managers-in-training that would become future entrepreneurs? Even worse, it's money made from businesses that supports non-profits (and households, and the goverment, etc.). If everyone worked for non-profits, our economy would quickly shrink down to nothing.

In Atlas Shrugged, Ayn Rand describes what people like President Barack Obama seem to think about non-profits:

In order to deprive us of honor, that you may then deprive us of our wealth, you have always regarded us as slaves who deserve no moral recognition. You praise any venture that claims to be non-profit, and damn the men who made the profits that make the venture possible. You regard as 'in the public interest' any project serving those who do not pay; it is not in the public interest to provide any services for those who do the paying. 'Public benefit' is anything given as alms; to engage in trade is to injure the public. 'Public welfare' is the welfare of those who do not earn it; those who do, are entitled to no welfare. 'The public,' to you, is whoever has failed to achieve any virtue or value; whoever achieves it, whoever provides the goods you require for survival, ceases to be regarded as part of the public or as part of the human race.

Non-profits have an important place in our economic system. They do a lot of good helping the poor, conserving the environment, etc. However, we should not forget that the place of non-profits is secondary to for-profit enterprises. Whether it's a large corporation or a small business, the value creation in our economy is a result of people trying to make a profit. We must be careful when we criticize big corporations like Walmart, Microsoft, or big banks. It would be much better if our focus was on helping business make profits -- non-profits will only thrive to the degree that for-profits grow and develop.


by B. Taylor, 1 May 2010
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