Is It Really About Purpose? Uncovering the Economics Behind Nonprofit Ownership
Nonprofit control of business enterprises is a long-standing feature of the European corporate landscape (Hansmann & Thomsen, 2021; Sanders & Thomsen, 2023). Household names like Novo Nordisk, Carlsberg, and Rolex are controlled by nonprofit foundations—a structure that ensures continuity and long-term orientation, though not always for the reasons many might think. More recently, this model […]
Ofer Eldar is a Professor of Law at the UC Berkeley School of Law, and Mark Ørberg is an Assistant Professor at Copenhagen Business School. This post is based on their recent paper.
Nonprofit control of business enterprises is a long-standing feature of the European corporate landscape (Hansmann & Thomsen, 2021; Sanders & Thomsen, 2023). Household names like Novo Nordisk, Carlsberg, and Rolex are controlled by nonprofit foundations—a structure that ensures continuity and long-term orientation, though not always for the reasons many might think. More recently, this model has gained attention in the United States, especially with high-profile examples like Patagonia and OpenAI (Eldar, 2023). These developments have prompted a broader conversation: Is nonprofit control of businesses a viable alternative to traditional shareholder capitalism?
Many advocates suggest it is. Colin Mayer and others have praised nonprofit-controlled firms as vehicles for embedding corporate purpose and sustainability into the core of business strategy (Mayer, 2023). Lund and Hwang characterize such structures as “purposeful enterprises,” which, by elevating organizational purpose and insulating from shareholder control, may reduce agency costs and promote long-term stability and stakeholder alignment (Lund & Hwang, 2025). Yet, as we show in our forthcoming article in the Yale Journal on Regulation, The Anatomy of Nonprofit Control of Business Enterprise, these narratives often oversimplify or mischaracterize what nonprofit control actually entails in practice.
