Stuff To Think About: The Profitability Equals Value Assumption

You haven’t been working in the non-profit arts and culture sector long enough or you haven’t been paying close enough attention if you haven’t heard/read someone say that an arts organization shouldn’t exist if it can’t be self supporting.

If you have found yourself at a lack of response to this argument, you might read up a little on a blog post Seth Godin made earlier this year where he addresses the mistake of equating profitability with value.

Profit is a good way to demonstrate the creation of value.

In fact, it’s a pretty lousy method. The local water company clearly creates more value (in the sense that we can’t live without it) than the handbag store down the street, and yet the handbag store has a much higher profit margin. That’s not because of value, but because of mismatches in supply and demand, or less relevant inputs like brand, market power and corporate structure.


I hope we can agree that a caring nurse in the pediatric oncology ward adds more value than a well-paid cosmetic plastic surgeon doing augmentations. People with more money might pay more, but that doesn’t equate to value.

The best way to measure value created is to measure value, not profit.

The purpose of society is to maximize profit

Well, since profit isn’t a good measure of value created, this isn’t at all consistent. More important, things like a living wage, sustainability, fairness and the creation of meaning matter even more. When we consider how to advance our culture, “will it hurt profits?” ought not to be the first (or even the fifth) question we ask.

Pay attention to the last line of this next quote from Godin because it is basically verbatim a core point made by the Potter-Warrior-Philosopher Carter Gillies.

The only purpose of a company is to maximize long-term shareholder value.

Says who? Is the only purpose of your career to maximize lifetime income? If a company is the collective work of humans, we ought to measure the value that those humans seek to create.

Just because there’s a number (a number that’s easy to read, easy to game, easy to keep track of) doesn’t mean it’s relevant.

Okay, so Carter may not be a warrior, but he does fiercely fight to advance the notion that just because we can measure it, it doesn’t mean the measure is relevant.

One of my favorite quotes from Carter that runs along these lines is in a guest post he made on Diane Ragsdale’s blog.

The way we mostly talk to these people is we have found that our ends, the things we value in themselves, can be the means to their own ends. They value the economy? Well, the arts are good for the economy! They think that cognitive development is important? Well, the arts are good for cognitive development! We make our own ends the means to their ends.

But this never teaches them why we value the arts. It is not a conversation that discusses the arts the way we feel about them. Its not a picture of the intrinsic value of the arts, because in talking about instrumentality we always make the arts subservient. That’s never only what they are to us. Sometimes we just have to make the case for a lesser value as the expedient means to secure funding or policy decisions. It’s better than not making any sense at all.

Just as Godin says, concepts like economic impact and cognitive development can produce numbers that are easy to understand, game and keep track of which helps when making the case for funding and policy. But none of these numbers are expressions of the core value of arts and creativity. Why those of us in the field value it.

It takes more effort to explain a complex concept like the value of arts and culture which is why Arts Midwest and others are engaged in a long term project to build public will for it and create an environment in which a similarly shorthand expression of value is possible.  I don’t think anyone will necessarily equate the value of arts and culture with clean water and pediatric nurses. The goal is an environment where the value of arts and culture is generally assumed.

Back in June Diane Ragsdale made a similar post exploring the different concepts of value and cited an idea that there are different types of “economies” that exist, each with a different “currency” that serves as a valid measure of value and relevance. In this context, we wouldn’t equate the value of clean water and pediatric nurses with that of arts and culture any more than we would equate the winner of the World Series with the most effective Coast Guard cutter crew.

About Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker ( website where I focus on topics related to boards, law, governance, policy and practice.

I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (

My most recent role was as Executive Director of the Grand Opera House in Macon, GA.

Among the things I am most proud are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu while working as a Theater Manager in Hawaii. Though there are many more highlights than there is space here to list.


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