Mike Godwin make several claims that the only way for the .org tld to survive is that it requires capital to improve. Another point that is repeated is that PIR (current owner of .org) is constantly making a surplus of money. The reasoning for this disparity is that a non-profit cannot use money it generates to improve itself. Is this a valid point, and if so why?

What improvement of a utility is required? Insert records, update records, serve records. Fin.

This is Let’s Encrypt non profit operational model territory, $3-4 million/year at most.

Nonprofits in California are allowed to take out loans to acquire capital. They are also allowed to spend money to improve the service they offer in the furtherance of their tax-exempt purpose, so long as the capital expenses don't count as self-dealing (like the .org sale, allegedly). There's no legal basis for either of those claims. The thing they can't do is go out and sell equity for VC money on their core purpose, or exceed the legal threshold for unrelated business income. But neither should be necessary to improve the nonprofit, especially given that it already has a surplus of money.

> Nonprofits in California are allowed to take out loans to acquire capital.

Just as point of clarification, California non-profit corporation law wouldn't apply to Public Interest Registry. It is formed and domiciled in Pennsylvania. That said, Pennsylvania law appears to permit non-profit corporations to take on debt in the same way that any other corporation formed under PA law can do (subject to rules found in the organization's bylaws or formation documents, which I've not read for PIR). Title 15 of Pennsylvania's consolidated statutes, section 5502(6) reads that a non-profit corporation has the authority "[t]o borrow money, issue or incur its obligations and secure any of its obligations by mortgage on or pledge of or security interest in all or any part of its property and assets, wherever situated, franchises or income, or any interest therein."

I can't think of a reason why PIR, with a surplus of annual income, would have any trouble receiving a loan from any number of financial institutions. In fact, the vast majority of credit unions would be tripping over themselves to make such a loan, based on what I've seen of PIR's financials. Taking out a loan against surplus income to make cash-intensive improvements to the non-profit in furtherance of its mission is basically the whole point of running a surplus that isn't distributed back to members.

Is that Mike Godwin of "Godwin's Law" fame? Giving some of his past activities at .orgs like eff and Wikipedia, that's kind of a surprise

if they're getting a surplus of money, they should then lower their prices.