# Why isn't Mcdonalds non for profit? **URL:** \ **Category:** Factual Questions\ **Created:** [June 21, 2012, 8:12pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884 "2012-06-21T20:12:04Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Morgenstern](https://avatars.discourse-cdn.com/v4/letter/m/f9ae1b/32.png) [@Morgenstern](https://boards.straightdope.com/u/Morgenstern)\ **Post date:** [June 22, 2012, 2:39pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/41 "2012-06-22T14:39:51Z")
McDonald’s sells franchises. People who invest in franchises want some return on their money. If there was no return, there would be no one in line to buy the next franchise. ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [June 22, 2012, 2:40pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/42 "2012-06-22T14:40:16Z")
> [@md2000](#): > > Another important consideration - and why McD’s would not be a non-profit. A non-profit is exactly that - it either charges less for services so it makes no money, or its “profit” is passed to a connected worthy cause. Not necessarily - most non-profits put their excess profit back into their own organization. > [@](#): > > A nonprofit (assuming USA is like Canada) cannot accumulate money. They might be able to accumulate reasonable capital (i.e. we have to replace the roof on our daycare within 5 years, start saving) but they cannot simply make scads of money like McD’s and have it pile up in the bank Not true at all - Harvard has over $25 billion sitting in a bank. Many large non-profit organizations have their own endowment in the form of a foundation. I work for one - we’re required by law to spend 5% of it every year (we work on a 3-year rolling average to smooth out any major market fluxuations), but it manages to grow every year. ---
**Author:** ![hogarth](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hogarth/32/1773_2.png) [@hogarth](https://boards.straightdope.com/u/hogarth)\ **Post date:** [June 22, 2012, 3:13pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/43 "2012-06-22T15:13:56Z")
It’s not the same thing obviously, but in China there are government-owned fast food restaurants that compete against privately-owned fast food restaurants. ---
**Author:** ![Philster](https://avatars.discourse-cdn.com/v4/letter/p/13edae/32.png) [@Philster](https://boards.straightdope.com/u/Philster)\ **Post date:** [June 22, 2012, 4:00pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/44 "2012-06-22T16:00:43Z")
How is **Alex’s 29g of Sugar per Serving Lemonade Stand** setup? Seriously people. . ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [June 22, 2012, 4:17pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/45 "2012-06-22T16:17:22Z")
> [@Philster](#): > > How is **Alex’s 29g of Sugar per Serving Lemonade Stand** setup? > > Seriously people. > > . Huh? ---
**Author:** ![Ferret\_Herder](https://avatars.discourse-cdn.com/v4/letter/f/e47774/32.png) [@Ferret\_Herder](https://boards.straightdope.com/u/Ferret_Herder)\ **Post date:** [June 22, 2012, 6:21pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/46 "2012-06-22T18:21:06Z")
In **Philster** ’s absence, I’ll speculate on his meaning: [Alex’s Lemonade Stand](http://www.alexslemonade.org/) is a charity that encourages (sugary, empty calorie) lemonade sales to raise money for childhood cancer research/awareness. Speculation: Thus we are silly for even questioning how McD’s could ever consider being a nonprofit organization. Except that Alex’s Lemonade Stand was started by a little girl named Alex who wanted a way to give doctors enough money to cure the kinds of cancer that affected her and other kids. So at 4 years old, she and her older brother set up a lemonade stand and raised a couple grand in one day. This hit the news and went viral, and she kept selling lemonade, and by age 8 (and her death), she’d raised a million dollars. Later, a full-on charity was created by her parents, with people working all over the US to raise money via lemonade sales, give grants to researchers, etc., etc. McDonald’s started as a BBQ joint owned by two brothers McDonald, switched to burgers and assembly-line techniques, multiple locations, and Ray Kroc bought in as their first franchisee, then as a partner, and eventually bought them out. Publicly-traded shares happened not much later. Now, there are the Ronald McDonald Houses, but these are a non-profit charity independent from the fast food corporation. If McDonald’s CEO decided “hey, even though we’ve been increasing shareholder dividends yearly for a couple decades, I’ve seen the light - fuck profit, we need to go non-profit and funnel the profits into the Ronald McDonald Houses,” well, he’d probably get ousted by the board, or majority of shareholders, or whoever else had a vote in telling him he was insane for wanting to stop making (and paying them) all that money. But assuming they all got an attack of guilt via a well-crafted speech, then drastic changes would have to happen in order to change it into a non-profit, not-traded organization. The company was built and grown to a worldwide powerhouse on the desire to make money and sell burgers. It is\*\* theoretically\*\* possible that they could be merged into the Ronald McDonald House Charities, but I suspect that franchisees would all jump ship, stockholders would revolt, etc. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [June 22, 2012, 6:31pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/47 "2012-06-22T18:31:42Z")
> [@Munch](#): > > Not necessarily - most non-profits put their excess profit back into their own organization. Usually they lower costs or they expand operations. The problem is ensuring reliable sources of funding. If a windfall one year is spent on hiring more people, they now need to sustain that level of funding. Even improved infrastructue (like buildings) means that there are higher maintenance costs down the road. > [@](#): > > Not true at all - Harvard has over $25 billion sitting in a bank. Many large non-profit organizations have their own endowment in the form of a foundation. I work for one - we’re required by law to spend 5% of it every year (we work on a 3-year rolling average to smooth out any major market fluxuations), but it manages to grow every year. Is that Harvard, or is that a separate charitable trust / foundation to provide capital and scholarships to Harvard? A trust which basically accumulates capital and then distributes it according to a process defined by the board, in an approved manner. Lots of charities are like this. The Ford Foundaton comes to mind. It owns the best part of (for profit) Ford Motor Co. shares, collects their dividends, and spends it on charitable causes. If Ford the car maker wants to expand, it uses its for-profit cash reserves or borrows from banks. If it has a bad year, the Ford Foundation has less money to distribute. I would be surprised if Harvard the University was itself sitting on a wad of cash. I don’t know if it is entitled to accumulate piles of money. I suspect the large endowment in the trust is from donations, not highly profitable day-to-day operations? Another major problem is bureaucracy vs. enterpreneurship. While it is possible to find selfless dedicated workers who will do a good job on behalf of an organization, generally the best job is done by those with the incentive to receive a big benefit for a good result. I think it was Jerry Pournelle who remarked once that eventually the bureaucrats drive out the visionaries in any large organization; whereas the market will help pick the best entrepreneurs. Snicker all you want about McDonalds, it is still a lot better run and a lot more profitable than other, less successful competitors. ---
**Author:** ![mlees](https://avatars.discourse-cdn.com/v4/letter/m/ba8739/32.png) [@mlees](https://boards.straightdope.com/u/mlees)\ **Post date:** [June 22, 2012, 6:35pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/48 "2012-06-22T18:35:46Z")
I guess I’m a dolt. When I read the OP, I thought he was asking “why don’t we force McDonald’s to be non-profit?”. But now I see he may have been asking “why don’t we consider McD’s non-profit [based on the existance of other profit making non-profits]?” ---
**Author:** ![Telemark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/telemark/32/372_2.png) [@Telemark](https://boards.straightdope.com/u/Telemark)\ **Post date:** [June 22, 2012, 6:42pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/49 "2012-06-22T18:42:01Z")
> [@md2000](#): > > Is that Harvard, or is that a separate charitable trust / foundation to provide capital and scholarships to Harvard? [Harvard Management Company](http://en.wikipedia.org/wiki/Harvard_Management_Company), a wholly owned subsidiary of Harvard University. ---
**Author:** ![ftg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ftg/32/2801_2.png) [@ftg](https://boards.straightdope.com/u/ftg)\ **Post date:** [June 22, 2012, 6:54pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/50 "2012-06-22T18:54:44Z")
There have been companies that incorporate as non-profits but aren’t really. [Infamous examples](http://www.ftc.gov/opa/2004/03/credittestimony.shtm) are some of the consumer credit assistance companies. Officially non-profit but some work various loopholes. Funneling customers into the for-profit side, paying the owners/execs huge salaries, etc. The FTC tries to track down and stop these people, but they have extremely limited resources. A company on the scale of McDonalds, OTOH, would definitely attract enough attention that the FTC would take a look at them. ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [June 22, 2012, 7:09pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/51 "2012-06-22T19:09:01Z")
> [@md2000](#): > > I would be surprised if Harvard the University was itself sitting on a wad of cash. I don’t know if it is entitled to accumulate piles of money. I suspect the large endowment in the trust is from donations, not highly profitable day-to-day operations? Many organizations with a separate foundation do so out of convenience, not out of obligation to a legal requirement. As for Harvard (and other universities with endowments that are larger than life), there has been a great deal of discussion in the world of philanthropy on what, exactly, to do about this. Clearly, the tax code never envisioned this sort of cash accumulation, but yet it accumulates. The money at this point comes from itself - endowments that large are able to access investments the average person couldn’t possibly invest in. Last year Harvard announced that their endowment [earned 21.4%](http://news.harvard.edu/gazette/story/2011/09/harvard-university-endowment-earns-21-4-percent-return-for-fiscal-year/) in its fiscal year. They certainly get large gifts and bequeaths that add to the pot, but that sort of momentum is a beast unto itself. It’s even hard for them to spend it down - they have probably the most generous financial aid program in the country: > [@](#): > > More than 60 percent of Harvard undergraduates are receiving need-based scholarship aid this year, totaling more than $160 million. The average undergraduate student on financial aid pays only $11,500; in addition, an average of one in five students pays no tuition, based on economic need. Then if you look at the Bill & Melinda Gates Foundation - and the Warren Buffett gift specifically - you see how easy it is to maintain this sort of cash pile. The Gates Foundation was already enormous - probably one of the largest of its kind in the world. Then Warren does the unimagineable - he makes a one-time $31 billion gift. There are some really interesting requirements for that gift, which are detailed well [here](http://www.gatesfoundation.org/about/pages/implementing-warren-buffetts-gift.aspx). But at the end of the day, there simply \*is \*no end of the day for that funding source. ---
**Author:** ![kenobi\_65](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kenobi_65/32/13178_2.png) [@kenobi\_65](https://boards.straightdope.com/u/kenobi_65)\ **Post date:** [June 22, 2012, 7:38pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/52 "2012-06-22T19:38:53Z")
> [@Ferret\_Herder](#): > > If McDonald’s CEO decided “hey, even though we’ve been increasing shareholder dividends yearly for a couple decades, I’ve seen the light - fuck profit, we need to go non-profit and funnel the profits into the Ronald McDonald Houses,” well, he’d probably get ousted by the board, or majority of shareholders, or whoever else had a vote in telling him he was insane for wanting to stop making (and paying them) all that money. For a fictional (but similar) example, see Tony Stark in the first _Iron Man_ movie. 🙂 ---
**Author:** ![kenobi\_65](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kenobi_65/32/13178_2.png) [@kenobi\_65](https://boards.straightdope.com/u/kenobi_65)\ **Post date:** [June 22, 2012, 7:40pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/53 "2012-06-22T19:40:35Z")
> [@mlees](#): > > When I read the OP, I thought he was asking “why don’t we force McDonald’s to be non-profit?”. > > But now I see he may have been asking “why don’t we consider McD’s non-profit [based on the existance of other profit making non-profits]?” I didn’t take it in either of those ways. I took the question as, “why didn’t McDonald’s choose to be a not-for-profit enterprise?” ---
**Author:** ![mlees](https://avatars.discourse-cdn.com/v4/letter/m/ba8739/32.png) [@mlees](https://boards.straightdope.com/u/mlees)\ **Post date:** [June 22, 2012, 8:15pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/54 "2012-06-22T20:15:35Z")
> [@kenobi\_65](#): > > I didn’t take it in either of those ways. I took the question as, “why didn’t McDonald’s choose to be a not-for-profit enterprise?” 😃 ---
**Author:** ![3\_20\_59\_or\_bust](https://avatars.discourse-cdn.com/v4/letter/3/47e85d/32.png) [@3\_20\_59\_or\_bust](https://boards.straightdope.com/u/3_20_59_or_bust)\ **Post date:** [June 22, 2012, 9:45pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/55 "2012-06-22T21:45:06Z")
> [@Munch](#): > > I’d wager a guess that the cost to raise a dollar for the non-profits that the Newman brand donates to is far less than the cost that it takes Newman to make that dollar. Not sure that it’s an official part of Newman’s charter, but his non-profit also provides many, many more jobs than a typical non-profit would. So they’re providing a benefit to people in more than one way. ---
**Author:** ![Mr.Miskatonic](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mr.miskatonic/32/310_2.png) [@Mr.Miskatonic](https://boards.straightdope.com/u/Mr.Miskatonic)\ **Post date:** [June 22, 2012, 9:51pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/56 "2012-06-22T21:51:46Z")
How is companny formed? ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [June 22, 2012, 10:03pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/57 "2012-06-22T22:03:03Z")
> [@samclem](#): > > Moderator Note\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\* > > **Farmer Jane**. > > This is a highjack of the OP, or, if you prefer, a “political” comment. It has no bearing on answering the OP. > > No warning issued. > > **samclem** , Moderator It was a rhetorical answer to a non-question. The op asked why is a company incorporated for profit set up to make money. ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [June 23, 2012, 2:28pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/58 "2012-06-23T14:28:02Z")
> [@3\_20\_59\_or\_bust](#): > > Not sure that it’s an official part of Newman’s charter, but his non-profit also provides many, many more jobs than a typical non-profit would. So they’re providing a benefit to people in more than one way. Newman’s Own is a for-profit corporation. ---
**Author:** ![BigT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bigt/32/12044_2.png) [@BigT](https://boards.straightdope.com/u/BigT)\ **Post date:** [June 23, 2012, 3:21pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/59 "2012-06-23T15:21:33Z")
I agree that the question is kinda weird, (unless we assume a McDonald’s inside a hospital, which makes you wonder why a not-for-profit hospital would want a for-profit company that has known health risks working inside their walls.) But the idea that people go into business solely to make money is not always true. I can easily think of another goal for McDonald’s: to provide relatively cheap, fast food to a growing populace that was, at the time of the company’s foundation, rather woefully undernourished. In fact, I try my best to patronize companies that have more than just profit-making as their goal. ---
**Author:** ![copperwindow](https://avatars.discourse-cdn.com/v4/letter/c/4af34b/32.png) [@copperwindow](https://boards.straightdope.com/u/copperwindow)\ **Post date:** [June 24, 2012, 2:00pm UTC](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884/60 "2012-06-24T14:00:56Z")
> [@mlees](#): > > I guess I’m a dolt. > > When I read the OP, I thought he was asking “why don’t we force McDonald’s to be non-profit?”. > > But now I see he may have been asking “why don’t we consider McD’s non-profit [based on the existance of other profit making non-profits]?” I’m asking why McDonald’s doesn’t say that they are non for profit like the hospital, this way instead of paying employes they can just hire volunteers and they can have people give them large tax exempt contributions. If Fletcher Allen is non for profit, why does it CEO make so much money? [Previous page](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884.md?page=2) [Next page](https://boards.straightdope.com/t/why-isnt-mcdonalds-non-for-profit/625884.md?page=4)