On the terminology of “non profits”

Why do we call charities “non profit companies”? The idea of “non profit” seems to imply that the surplus would be shared out towards some socially desirable end. This is, I believe, a general site of confusion for anti-capitalists: there is nothing inherently capitalist about the notion of an economic surplus. Under capitalism, the surplus is controlled by the owners. But in a worker co-op, for example, the surplus is controlled and allocated by the workers. In a non profit company that is actually a company, the surplus would be allocated by the CEO according to principles established by the board. In any form of socially-controlled capital, there will be some social-control over the allotment of the surplus.


But if an organization depends on grants, or on charity, then there is no “surplus”. A surplus is created through economic activity. Non-profits which receive grants are not companies at all, they are much more like government departments. Except, instead of being accountable to the government, they are accountable to their funders. And fundamentally, what is the relation between an elected government and a government department other than a ‘funder’ relationship? Ok, they get to appoint the leader. You think foundations can’t pressure NGOs to remove a leader they don’t like? I suspect they can…

The more I learn about it, the more I feel all the “non profit” sector which is grants based does anyway is take power away from the state and put it in the hands of “grant foundations” which are controlled by the rich. It’s like the rich have learned how to create their own private para-states which they control much more directly (and “locally”).

Oh, and it does one other thing. It keeps a huge number of people who genuinely care about the improvement of society employed as “grant writers”. A job which benefits society exactly as much as the people who create advertising campaigns. And, in a sense, it is actually the same job.