It can be hard to mix for-profit and non-profit activities.
If everyone on a joint project is in a for-profit mode, competing within the limits of reputation, ethics, and the law to advance their own interests, then people generally figure the dynamic tension balances out. Everyone gets what they need or deserve, or the participants will move along. And, if someone manages to make out with a bit more, well, good for them, everyone was trying for the same.
If the joint project has non-profit characteristics, or some participants are maximizing a cause rather than their own financial interests, then every bit of profit can become suspect. How much is the right amount? Couldn't that be ceded to the cause? At some level there's a 1-for-1 tradeoff of profits-vs-monies-raised. People understand and tolerate that sort of zero-sum division-of-surplus competition in the for-profit realm, but that same dynamic can be toxic to the motivations of those donating effort for a cause/community. ("I donated my time and money so that company X could have a another record quarter?!?")
Those considering a for-profit startup to service non-profit causes/entities should keep this in mind: there may be a rather low cap on how profitable you can become before partners start to suspect your motives and margins.
The problem can be somewhat avoided if there's a large competitive market for the services with understood prevailing rates. In such a case, each side can take a more arm's-length/take-it-or-leave-it attitude towards the other, trusting the market prices as roughly 'fair'. (The non-profit doesn't mind paying a provider with competitive rates; the for-profit provider could easily serve other for-profit or non-profit buyers with the same capacity.) This didn't seem to be the case for Palotta Teamworks' fundraising projects: each party seemed completely dependent on the other, making the entire profit-margin-vs-program-revenue pie-splitting open to review and mutual suspicion.
If everyone on a joint project is in a for-profit mode, competing within the limits of reputation, ethics, and the law to advance their own interests, then people generally figure the dynamic tension balances out. Everyone gets what they need or deserve, or the participants will move along. And, if someone manages to make out with a bit more, well, good for them, everyone was trying for the same.
If the joint project has non-profit characteristics, or some participants are maximizing a cause rather than their own financial interests, then every bit of profit can become suspect. How much is the right amount? Couldn't that be ceded to the cause? At some level there's a 1-for-1 tradeoff of profits-vs-monies-raised. People understand and tolerate that sort of zero-sum division-of-surplus competition in the for-profit realm, but that same dynamic can be toxic to the motivations of those donating effort for a cause/community. ("I donated my time and money so that company X could have a another record quarter?!?")
Those considering a for-profit startup to service non-profit causes/entities should keep this in mind: there may be a rather low cap on how profitable you can become before partners start to suspect your motives and margins.
The problem can be somewhat avoided if there's a large competitive market for the services with understood prevailing rates. In such a case, each side can take a more arm's-length/take-it-or-leave-it attitude towards the other, trusting the market prices as roughly 'fair'. (The non-profit doesn't mind paying a provider with competitive rates; the for-profit provider could easily serve other for-profit or non-profit buyers with the same capacity.) This didn't seem to be the case for Palotta Teamworks' fundraising projects: each party seemed completely dependent on the other, making the entire profit-margin-vs-program-revenue pie-splitting open to review and mutual suspicion.