an organization that binds itself not to distribute its surpluses to owners may be trusted more by customers and donors unable to judge service quality directly...
Second...The nonprofit form provides a weak guarantee to donors that their funds are not being syphoned [sic] off as profits...
Third, nonprofits provide a shell within which people can reify their ideological beliefs without having to be accountable to profit-seeking investors. Ideological entrepreneurs, not focused on amassing wealth, will disproportionately select the nonprofit form.
I am starting to come around to the view that the distinction between profit and non-profit may not be the central issue.
My original question is why a young idealist would insist on working for a non-profit. One answer is that what the young idealist wants to be able to say is "I work on providing food to the poor," rather than, "I work on providing luxury cars to the rich."
Incidentally, if you work in a profit-seeking grocery that takes food stamps, you can say that you work on providing food the poor. But my guess is that most idealists would not think of taking a job working in a grocery in a poor neighborhood, although they would consider volunteering in a soup kitchen.
In a poor neighborhood, which is more valuable--a soup kitchen, or a grocery? My inclination is to let poor people take their money and their food stamps to the outlet of their choice, and let profits determine which one survives. Why does that inclination trouble an idealist?
I suspect that what is going on here is that non-profit donors and employees both dislike the idea of letting money to go non-profit firms [sic? I assume he means "letting money go to profit firms"], regardless of how much that might benefit aid recipients. They affiliate with non-profits in order to gain an image of "doing good" and substantial affiliations with for-profits in that process taints that image.
Read the whole thing. He brings up the food stamp (voucher) alternative, also.