So in AUS you get a 30% profit tax break if you make an existing business owned by a charity? 

That's genuinely ridiculous in a positive way. Even if COA is zero, a philanthropist sitting on cash should do that immediately, and if COA is >0 it compounds even further? 

Almost to good to be true, so what am I missing? 

What I like most is that if you buy profitable companies, turn them into PFG's, and against all research and your arguments, there is a zero COA, you're still left with owning profitable companies. If that's the downside, it's somewhat absurd that there seems to be no philanthropist exploring this option to more efficiently multiply their giving. 

I stand corrected and I apologise for my mistake. An earlier article I wrote sounded like this was PFG (the way I read it is that they gave away 30% of the stock to a foundation), but this is basically a founders pledge. The 30% might diminish with dilution with new investor rounds. 

Still great, but not exactly what we called PFG when we envisioned it, and next time I will read more carefully. 

 

See updated comment: I stand corrected and I apologise for my mistake. An earlier article I wrote sounded like this was PFG (the way I read it is that they gave away 30% of the stock to a foundation), but this is basically a founders pledge. The 30% might diminish with dilution with new investor rounds. 

Still great, but not exactly what we called PFG when we envisioned it, and next time I will read more carefully. 

Old comment: 
@Marcus Abramovitch 🔸 how do we reconcile this profit for good success (8 billion estimated future value to effective charities) with criticism on profit for good being an inefficient way to fund charities?

I expect 99% of Canva users and most of its employees to choose Canva because of price/quality and pay, but even then there's a small and compounding upside to adopting this model over a Canva with no charity beneficiaries? 

Hi Tomek,

A PFG is not a non-profit. PFG's are for profits that have charities or philanthropists as owners (and have that governance locked). This is a very important distinction to make. 

I know from experience that my current fundraising ask would have been easily fulfilled by for-profit investors, so yes we would be able to grow and become profitable much easier if we were for-profit, but these investors wouldn't allow me to go back to my PFG model. I have seen multiple PFG's turn to for-profits and lose their model and impact forever.

@Marcus Abramovitch 🔸 we should absolutely do what you say in your last paragraph, and we also call that PFG. We just have to make sure this is locked in governance (e.g. foundation owned, steward-ownership). I would love to buy existing businesses and turn them PFG, or invest more in existing PFG's (e.g. I think a philanthropist should give Humanitix dozens of millions to try and dominate the American ticketing market). 

There's pretty good evidence on foundation-owned businesses outperforming their competitors (I don't want to seem like I will pick and choose evidence, so start by looking at peer-reviewed data on foundation owned businesses yourself). That's somewhat amazing considering PFG's are mostly not allowed to exist, so I didn't expect this evidence to even be able to exist. Philanthropists and investors have always deprived PFG's of necessary capital, sometimes intentional, but often unintentional. That Rolex, Bosch, Newman's Own, Carl Zeiss, Patagonia, AFAS, Rituals and Humanitix have all outperformed in their industries is a very encouraging sign. It's a shame it's so far missed by philanthropists. I invite everyone to find as much evidence against PFG's as possible, and I agree Glo hasn't been able to be successful. 

I don't feel very strong about any of your points, I just want our business and numbers reflected accurately. To your points:

• Brad wrote the post, he didn't have clear access to my numbers. Again, the pitch has the numbers, and happy to have Brad add them to the post (but don't think it matters since I posted them in the comments).
• 2025 actuals Jan-Sep: 324K/-177K. Important to note than in retail Q4 usually amounts to 30-45% of yearly revenue instead of 25%. I won't see such strong revenue growth because we lack funding, but the 450K quoted earlier is likely too conservative. Flat extrapolation would put us at 440K, and I have bigger stores, Q4 holiday season and some B2B deals just closed.
• You are absolutely right that startups and non-profits present things as happening. I also agree it's put too optimistic. Our financial models use market standard discounted cash flows to account for risks, and this remains a high-EV case.
  • In our latest bridge round (estimated 2025 financials in 2024, but closed april 2025) we raised 100K instead of the required 200K and we're ending at 440-500K instead of the promised 580K revenue for 2025. I'm not sure how we would have performed with the actually needed capital, but currently we're making 4-5 euro's of revenue for each euro burned, so it seems realistic that my forecast was realistic.
• I don't want people to invest in BOAS without looking at it rigurously, because even with very large discounts (higher than market discount rates), BOAS has a higher EV than donating to give (feel free to adjust the mistakes in Patrick Grubans EV model, discount even more, add continuing values (or not if you somehow argue that you shouldn't do that), and check for yourself). I'm still missing good economic points on why this couldn't be an interesting but risky investment for future donations.

I will park this discussion from my end, I've made my points (people can dismiss them, more than fine with that) and I have funding to raise for a PFG, which is hard enough with accurate data and portrayals of our company. I encourage everyone to request our actual numbers, contracts and letters of intent, and our different financial models (base, worst, minimum funding cases), and come and jump on a call with me. I wish you and EAIF had done the same before dismissing it. 

Thanks for following BOAS, and I hope to prove you wrong in the future. 

@Kevin Xia 🔸  thanks for pointing out the mistake too. 

In addition to the previously mentioned mistakes, from an economist perspective it would be more accurate to use a 'continuing value' after using a 'discounted cash flow' for post 2029 profits, adding the lifetime of average foundation owned businesses. This would likely change results (possibly dramatically) while making them more accurate. Your BOTEC stops when BOAS reaches higher profitability in 2029, which is when most of the impact is just starting.

Again, this should be discounted for the risk, which your model has done (accidentally twice, which needs to be adjusted). 

@Patrick Gruban 🔸 could you run the model with continuing values for stock market and BOAS, and remove double risk counting? I can check the BOTEC after to make sure it's actually accurate. 
 

There is a mistake in this analysis, but I'm happy that by removing the mistakes we come out as a clear winner. 
- Double accounts for risk (in expected value, and then it applies risk again on the expected value, which already included an 80-90% risk/failure rate)
- Your analysis gives zero weight to the social cost of carbon and social return on investment, which in conservative scenarios return additional millions to society in our case, and in most stock market cases would have costs instead of benefits
- We are not a consumer marketplace, and we are not in recycling

Could you adjust for the mistake please?

Hi Marcus,

I appreciate you taking the time to write out a critique. I had to clarify and rectify some of what you wrote below. 

But first, I'm not going to go into your take on PFG's not having a disadvantage, because a lot has been written on it, and a lot of data has been referenced there. For that I refer to the research on foundation-owned businesses, the success of Rolex, Bosch, Patagonia, Humanitix, ThankYou and other PFG's, the talks of the PFG conference, and the reasoning for their success in the TEDx talks of Alex Amouyel, Brad West, myself and the writing of Peter Singer and The School for Moral Ambition on these subjects. You can also read my writing, as well as that of @Brad West🔸 on this forum about it. People can make up their own minds on benefits for PFG's existing or not. I can only anecdotally share that I have had many benefits of being a PFG (I have written on that already), and only one clear disadvantage (the one that might kill this business): the lack of access to funding. Your comment reinforces that system, although you do it with the best intentions (wanting people to donate directly or ETG, which I believe perpetuates suboptimal systems). What I can say with certainty is that we would have not gotten the contract that is likely to make our company much larger and profitable next year (the 3.4M/KG per year textile resale streams). 

What is important is that the data and critique on my company is accurate. I'm sure it's unintentional, but there are some things that I need to clarify and rectify: 

• I do share monthly KPI's in our investor newsletter (the one you're getting), including the ones you mention. Any investor has full and transparent access to past performance and predicted performance. Anyone on here can request and get them immediately ([email protected]). Sharing monthly's here is going to be messy without tables. So sharing FY and estimate of this year here for 2023, 2024 and 2025 (expected). 2023 Revenue/Net Profit 30K/-47K. 2024 225K/-151K. 2025 450K/-170K. This post was written by Brad West, with my approval, and focuses on future performance. There was never any intention to hide past performance, nor do I think it's as bad as you say:
  • Granted to you, we still burn 1 euro for each 3 euro's we make, but this is quickly declining (we burnt 5 more euro's per revenue euro 2 years ago), and our revenue has doubled in a year where focus wasn't on revenue growth (see below). I can share current costs and new contract costs, which cuts our biggest cost center (resale fashion buying) in half, so I can substantiate revenue increases and cost decreases with contracts and data. Please note that in the last 6 months our company burnt less than 50K and I expect our Q4 to be close to or break-even, and our two store are net profitable, so the burn is mostly going to overhead and the building of the hub.
  • This year was a bridge year, we built robotics (in a separate company because BOAS didn't get the necessary investment for it because it's a PFG, but I did manage to pledge 90% of my shares to the BOAS foundation, currently valued by signed investors 1M, and most of that value is thanks to BOAS) and AI for faster and higher margin resale with BOAS, and we were securing large contracts (which we succeeded in). With the new contract (can be shared under NDA) we have access to 4-6x more clothing at half the price I'm currently paying. Considering our stores are net profitable (again, happy to share numbers with investors) at the current 2X higher price, we have made it somewhat credible that this company will be significantly bigger and break even at the end of next year. Again, all of this is modeled extensively in financial forecasts, which were made by me (economics degree) and checked with dozens of professionals, as well as passing due diligence by investors, including a bank.
  • Our pitch deck obviously includes past financials, but cannot be shared without NDA because it contains information I'm not allowed to share. I can share an anonymised version, but prefer to hop on a call with serious investors to show the actual contractors (since the contract is of demonstrably high value).
• BOAS pivoted 2.5 years ago, and I do acknowledge I ran a sustainable marketplace before that (for 1.5 years, parttime next to a fulltime job with zero funding), which was a terribly bad idea. I think it's fair to say that BOAS should be judged on the past 2.5 years, and I don't think our numbers offset to the investment received are bad, but I do agree they are not great either. I argue that with the contract, they will be significantly better.
• Our investors include economic ones, and they include a bank. Obviously you're going to get philanthropic/foundation funding if you donate 90% of profits, since you can't go to for profit investors, so the 'non-economic investors' isn't completely true.
• Of course, BOAS would have surely died without investors, similar to our for-profit competition, who have raised and burnt (far) more money. We're trying to scale up fashion resale, which is very hard (I would argue impossible) to do without funding. Is there a problem to me asking for investment vs. my for-profit competition asking for investment?
• We are not a recycling company. We are a clothing resale company. We agree recycling is a terrible business with high failure rates, although you should be aware of the EPR and ESPR regulations in the EU currently and quickly changing the recycling game for the better. 

• "If BOAS isn't giving to your preferred cause areas, it obviously makes more sense to donate there directly. If Global Health is your preferred cause area, you should simply, donate there directly and/or invest money and give away returns." Investors can invest X% in BOAS and we can return the multiple of that investment in future donations to preferred cause areas (e.g. X% of the profits), as the post clearly states. We disagree on investing to give being more effective than PFG (see top of this comment for people to make up their own minds).