Why is ARI non-profit?

[Selfish]

I'll start by welcoming myself to the forums here. Just this year I discovered Ayn Rand and her books, and my life hasn't been the same since. I spend countless hours thinking about philosophy, morality, and my life, and I'm always finding new questions. The first one being- Does it strike anyone as odd that the AYI is non-profit?

It's the funniest thing. These past six months of my life, since I stop feeling socialist guilt, when I took pride in my humanity, as i'v constantly pushed myself into a higher and higher ideal of "A man who is an end in himself", it has been some of the most trying and lonely times of my life. I'm sure everyone here has been called cold, heartless, inhuman many a time. But the best thing about it all- I'v loved every second of my life. I'v learned that happiness just is, and to stop letting the moochers syphon off my strength, wilst indoctrinating me with guilt. I think the hardest thing is that there are so few of us. My girlfriend has become pointless to me (She's a truly sad case- immense talent and strength, but allows society to steal every last drop. has no sense of self-worth), and I suffer a guilt over lingering between the transition of moral-less child and Heroic Man. Well, i'll live it at this for the moment

(This post is a bit rambly, but oh well).

micah

[scottkursk]

I'll start by welcoming myself to the forums here. Just this year I discovered Ayn Rand and her books, and my life hasn't been the same since. I spend countless hours thinking  about philosophy, morality, and my life, and I'm always finding new questions. The first one being- Does it strike anyone as odd that the AYI is non-profit?

It's just the title in the tax code that they apply to oragnizations whose goal is primarily educational rather than profit. Technically, the goal of ARI is spreading ideas, not making a killing for investors/donors. So since their missions is "education", the IRS gives them particular tax breaks that they would otherwise not have available as a "for-profit" operation. Plus contributions may be tax deductible or qualify for matching funds from employers.

As for the other stuff, don't ever give up.

[Oakes]

I believe ARI also gives out copies of Ayn Rand books to universities for free. If you're wondering what selfish benefit could possibly come out of that, you need to focus on the long term effects: If you agree that a rational society would benefit you, then there is a huge personal benefit in spreading Objectivist ideas. Making money is not the only way of improving your place in the world.

And welcome to the forums

[nimble]

yea...simply put the phrase "tax exempt status" should answer your question.

[Concerto of Atlantis]

I don't know about every little detail of ARI's structure, but a good 'not for profit' organisation can be extremely profitable. It's just that their profits may not always be monetary.

[Capitalism Forever]

Pssssssst!, lest the IRS get an idea about requiring non-profits to quantify and report their non-monetary profits!

[y_feldblum]

Of course ARI is a for-profit organization. It currently exists, and I have evidence it will continue to exist for some time.

Its not-for-profit status under tax law just means it (1) conforms with certain regulations, such as being non-partisanship and giving charitable donations, and (2) pays different, most likely lesser, taxes.

It's the same thing for many other not-for-profit organizations. Notable exceptions are Rainbow/PUSH and MoveOn.org.

[Proud_to_be_SELFISH!]

I was just on the ARI website and I noticed they are a non-profit organization. What's the catch?

[A.West]

The catch is that the profit is philosophical, cultural, and intellectual, and that I'm allowed to deduct my donation to ARI from my income taxes.

[McGroarty]

I was just on the ARI website and I noticed they are a non-profit organization.  What's the catch?

A non-profit doesn't have to pay several kinds of taxes, a person funding a non-profit can save on his own tax bill, and the degree of transparency required of a non-profit inspires confidence in its fiscal activity.

A non-profit is the best way for many businesses to operate in the present tax climate. Don't forget that a non-profit doesn't mean nobody's drawing a salary, or even a good salary at that.

[hopeful]

The idea of a "for profit" organization to pursue an agenda like that of ARI is quite interesting.

[scottkursk]

Two big factors in determining if a place is non-profit is 1) a single person or private interest isn't enriched disproportionatly 2) the main purpose is, among other things, education. As long as you pretty much meet those two standards,you don't have to pay corporate taxes, and people who give you money get to write it off their taxes.

Just because it's non-profit doesn't mean it isn't profitable or has lots of money. The Missionaries of Charity (mother Theresa's old gig) is one of the richest religious orders in the world. They really don't mention that much since the whole ladies living in poverty would make you assume they have no money and are desperate for your donation.

I was just on the ARI website and I noticed they are a non-profit organization.  What's the catch?

[y_feldblum]

The distinction is a joke. Non-profit organizations are certainly for-profit. "Non-profit" does not mean non-profit; it means controlled under a set of regulations and taxed under a code different from those applicable to "for-profit" organizations. It's a non-objective legal classification by non-essentials, and it's based on altruist premises to boot.

[hopeful]

The distinction is a joke.

Perhaps the legal definition is so. However, "non profit organization" is a concept that predates the US tax code. People have often come together to form organizations for reasons other than making a financial profit. Many clubs, libraries and fire services were organized this way. In old British accounting parlance, such organizations may run a "surplus" or a "deficit", but not a "profit" or "loss". I think the financial distinction is relevant to an accountant.

Yes, "profit" can be used in a broader sense, to encompass non-financial gain, as in the famous quote: "What profiteth a man if he gains the whole world and loses his own soul?"

However, when used in the financial sense, ARI isa non-profit organization. It was not created with the purpose of making a financial profit. Similarly, regardless of the amount of money the "Missionaries of Charity" may have in the bank, they too are a non-profit organization. They seek non-financial gain.

The term non-profit does not scare me like the term "for profit" might scare a socialist.

[White Eurocentric Male]

non-profit means a non profit objective. Like promoting Ayn Rands writings and philosophy, promote trade in general (like chambers of commerce), do a sport etc. Profit organisations would be everything that has to do with commerce and industry, for example baking waffles and selling them for money.

Non profit organisation do not divide a share of the earnings to their members. This doesn't mean members don't have profits. The profit to the member of a non profit baseball team are the facilities they dispose of to practice their favorite sport.

[Free Capitalist]

The non-profit distinction is not a joke at all. A non-profit corporation is not allowed, by law, to have any excess capital by the end of the fiscal year. No accumulation is allowed and all capital must be distributed - and assumed to be distributed to pursue the functions for which the corporation was established.

That's the legal definition, according to my layman's knowledge.

[wishbone]

A non-profit corporation is not allowed, by law, to have any excess capital by the end of the fiscal year.

I do not think this is right. The organization may accumulate capital ad infinitum. Only, it should not "distribute" this to its "owners".

[BurgessLau]

I was just on the ARI website and I noticed they are a non-profit organization.  What's the catch?

What do you mean by "catch"?

[Proud_to_be_SELFISH!]

What do you mean by "catch"?

I meant, why is an organization that promotes profit-seeking individualism for non-profit? Some could view this as hypocrisy. I assume it is just because of some ridiculous anti-profit laws and taxes. And as a result, at the current time, employees are actually able to make more money as a non-profit organization than if they declared a for-profit business.

Am I correct in these assumptions?

[Free Capitalist]

You assume profit is a monetary compensation only, which is quite an enormous assumption (and a philosophical error).

[Proud_to_be_SELFISH!]

You assume profit is a monetary compensation only, which is quite an enormous assumption (and a philosophical error).

Please, do not tell me what I do and do not assume, thank you.

The philosophical profit gained from ARI's operation has nothing to do with this topic. Yes, they gain philosophically, great. But, why not financially as well?

I've seen some other posts with answers I was looking for but some contradict eachother.

[scottkursk]

Please, do not tell me what I do and do not assume, thank you.

The philosophical profit gained from ARI's operation has nothing to do with this topic.  Yes, they gain philosophically, great.  But, why not financially as well?

I've seen some other posts with answers I was looking for but some contradict eachother.

Go straight to the horses mouth. See this page on IRS.gov as to why it's a "non-profit corporation" which should properly be called an educational foundation. As in my above post, their primary purpose is education and the spread of ideas, not the specific enrichment of one person or the spread of renumeration amongst shareholders. Hence it's a foundation and not a "for profit" corporation. So the term "non-profit" is really a misnomer from people who confuse sections 501 & 507 of the tax codes with any other type of corporation.

There are numerous companies and individuals whose sole purpose it to provide direct enrichment to their owners. But there are very good reasons why they formed this way.

It's the same reason that the Communist Party is effectively a corporation under 527. It's so that they can provide their directors certain protection that only a corporation or other "non-person" entity like any other "non-profit". This isn't to say that Peikoff et al can't make a very pretty penny on the board or by speaking at conferences. As long as compensation, advertising, etc falls under the 501 & 507 rules they can indeed get quite wealthy as an organization.

Look into the so called poor charities like Mother Theresa's and you'll find they practically dwarf GE for cash on hand. Again, the term non-profit is really a bad way of describing it, educational foundation is better and more proper.

[Free Capitalist]

PtbS, the assumption in your first post was very clear, so if you did not make it then blame yourself for not being clearer, rather than me for extrapolating on the obvious. If you already know that a philosophical profit is just as possible a value as a monetary profit, then ARI's status as a 'non profit' organization creates no problems. But if you think of the word 'profit' in monetary terms only, then certainly ARI's status seems to go against their professed belief in selfishness.

So if you accept that philosophical profit is a viable value to seek to achieve, then I have no idea why you are asking the question in the first place. Perhaps you could clarify it for me.

Edited April 21, 2005 by Free Capitalist