There have been several allusions in this thread to club-based instruction, which is quite common in Europe. I referred to another thread that briefly explains how it works. I just wanted to make a few points regarding both the economics and motivations behind this.
1) Club-based instruction is not "free". Someone has to contribute time and money. How much of the time and money comes from the club members, and how much is contributed by the students, are variable quantities. In our case, we try to have the "quantifiable" costs, i.e. equipment rentals, air fills and course materials, covered by the students. Instructors and other club members contribute their time. There may be cases where the club has its own equipment and compressor, paid for through membership fees, and may contribute this for "free". BTW, we require our students to sign up as club members for a year, and to pay their dues.
2) There is actually something to be gained from training new club members. As mentioned in another post, one common reason for leaving the sport is lack of buddies. The best way to avoid this is to replenish the pool. I have never been unable to make a dive because I couldn't find a buddy.
3) In the club system, instructor training is not free, but it works on the same basis as lower level training, i.e. the trainees cover the direct costs but not the salaries of their instructors. It is clear that in such a system no one is truly a professional, except for a few that make a living from commercial diving, or that train students in a "private" (i.e. non club-based) capacity.
4) The relationship between clubs and dive shops can be uneasy. Dive shops often give club members discounts to attract business, because there is always more money in equipment sales than in instruction. OTOH, clubs are competing with dive shops for students. But in my experience, the dive shops and the clubs to not really attract the same "customers". Those who want to get certified because of an upcoming exotic trip will go to the LDS. Those who want to make diving a regular hobby will go to a club. Our club has had some heated discussions with a for-profit instructor who wanted to send his students to dive with us. We had to decline, because we felt that this would undermine the whole philosophy of club-based instruction. Basically, if you want to dive with the club, you train with the club.
So there is nothing "charitable" about club-based instruction. We contribute our time because we love the sport and want to acquire new buddies. For many of us (not the instructors, granted), participating in the training of a new batch of students is a nice opportunity to refresh our own skills. Now if only my wife could see it in the same light...