Introduction
Most organizations can be classified by their funding mechanism. Some rely on voluntary contributions, others on natural resources, and some — critically — on coercion. To capture this last category in a clear, neutral, and symmetrical way, I propose the term Extortion-Funded Organization (EFO).
This definition applies equally to states that levy taxes under threat of penalty and to criminal cartels that demand protection money under threat of violence. The symmetry is intentional: the underlying structure of funding is the same. What differs is only the degree of institutionalization, legitimacy, or cultural acceptance.
Core Definition
Extortion-Funded Organization (EFO): An organization whose primary funding is derived from payments extracted under a credible threat of harm.
Credible Threat: The harm must be real and enforceable. Without enforceability, the threat collapses into bluff.
Harm: This may be direct violence, imprisonment, property seizure, or other forms of coercive deprivation.
Payment: The extracted funds are not voluntary; they are transferred under duress.
Comparative Typology
The value of defining EFOs lies in placing them within a broader taxonomy of organizational funding mechanisms:
Voluntarily-Funded Organization (VFO):
Relies on voluntary transactions, donations, or membership fees.
Examples: private businesses, charities, clubs.
Extortion-Funded Organization (EFO):
Relies on coercion-backed compulsory payments.
Examples: nation-states (taxation), mafias (protection rackets).
Resource-Funded Organization (RFO):
Relies on control of natural resources or monopolies.
Examples: oil states, landlord monopolies.
This framework clarifies distinctions without moralizing. Each funding model has different implications for legitimacy, efficiency, and human flourishing, but the taxonomy itself remains descriptive.
Implications
Recognizing governments as EFOs alongside criminal cartels forces a reconsideration of political authority. If both derive their revenue from extortion, the difference lies not in method but in scale, structure, and social acceptance.
This does not mean states and cartels are morally identical. Rather, it highlights that the funding mechanism is identical. From there, one can debate whether legitimacy, consent, or social contract justifications redeem state-based EFOs — or whether all forms of extortion remain fundamentally harmful.
Conclusion
The term Extortion-Funded Organization (EFO) provides a neutral, precise label for any organization that sustains itself primarily through extorted payments. It strips away euphemism and forces a structural clarity: coercion, not voluntarism, is the lifeblood of the entity.
By adopting this term, we gain a sharper conceptual toolkit for evaluating the true nature of institutions, whether they cloak themselves in legality or operate outside it. Ultimately, it allows us to ask the right question: Is this organization funded by voluntary exchange — or by extortion?