Defining Essential Work for Public Profit
Freeing ourselves from the for-vs-not profit framework is critical if we actually want to generate public profit
We all know essential work when we see it. During the pandemic, essential workers were universally lauded: nurses, doctors, teachers, farmers. These are the people without whom we cannot meet the basic requirements of life: a roof over our heads, food in our bellies, healing when we are sick. Essential work enables public profit. Enough studies have shown that a dollar invested in early-childhood education returns $4–9 to the public in value. An investment in high-intensity primary health care provides 2-to-1 returns. To call this essential work “non-profit” obscures both the qualitative benefits and the very real follow-on economic benefits that it conveys, effectively dismissing the public from the equation.
Profit, at its most basic, means to get out more than you put in. It describes the gap between the investment of resources into solving a problem, and the benefits returned once that problem has been solved. In this way, “profit” does not exclusively refer to money. When we describe essential work as either ‘non-profit’ or ‘not-for-profit,’ we reify financial profit above all else, and ignore the very real social, health, and environmental profits our society depends on to improve the prosperity of its members.
When we describe essential work as either ‘non-profit’ or ‘not-for-profit,’ we reify financial profit above all else, and ignore the very real social, health, and environmental profits our society depends on to improve the prosperity of its members.
Moreover, as Dan Pollotta chronicled in Uncharitable, the very label ‘non-profit’ restricts the range of ventures we undertake in pursuit of public profit. By categorizing ventures focused on creating public profit as ‘charitable,’ we restrict the people and capital a venture can attract with inurement clauses, and most importantly we excuse the public from paying for essential measures to improve our world by ceding the ground to private philanthropists who often have private interests at heart.
We cannot afford to let this be the message any longer. Instead of defining ourselves in terms of whether or not our organizations seek private financial profit, we must define purpose-driven, publicly focused work based on the very real value it provides: essential services for public profit. To communicate this value, we need a new framework for understanding the varied roles organizations play in our society.
Instead of defining ourselves in terms of whether or not our organizations seek private financial profit, we must define purpose-driven, publicly focused work based on the very real value it provides: essential services for public profit.
We can start by defining essential work as work done to address a particular public target, and contrast it to the instrumental work carried out to gain a related but not inherent measure. Whereas the success of essential work is measured by its impact on the problem it is seeking to solve (better health, better education, and so on), instrumental work has as its aim a return orthogonal to the field in which the work is done. For example, Google’s success is not measured by how much knowledge it makes accessible to the world, but rather by how much money it returns to shareholders from its advertising business.
This leads us to conclude there are two types of purposes for any effort (Essential or Instrumental), and two earners of profit (the Public or a private Corporation). Managers with a clear understanding of the bottom line by which they will be judged will direct their efforts towards maximizing one of these measures over the other, optimizing either for public or corporate profit, optimizing for instrumental or essential metrics.
Overcoming the dichotomy of ‘for profit’ and ‘not-for-profit’ enables us to more adequately and accurately understand where ventures are located on the spectrum of essential-versus-instrumental returns, and to identify how the profits accrue. The EPIC framework is a tool that can help.
EPIC — Essential, Public, Instrumental, Corporate — describes the strategic decisions a firm or association’s leadership makes that determine their definition of success. Will the organization’s success be defined based on the public outcomes of its activities? Is leadership willing to adjust activities to generate a higher return for its shareholders, despite potential public cost? Will the public profit so much from the work that it would accept that the entrepreneurs behind it will profit financially as well? These decisions reside on a spectrum: not all firms are monomaniacally willing to sacrifice the good of the public for an extra buck, just as not all social activists would martyr themselves for their cause. Yet both know their bottom line measures.
Situating organizations in the EPIC framework enables that organization’s leadership — and policy — to engage in a reason-based and structured conversation as to the contribution of that firm to the needs of society and the public good. For example, few would argue that early-childhood education is anything but essential work in the interest of the public profit, or that Google’s maintenance of search is an instrument to drive private profits from advertising. However, there are more industries where the distinction is more complex, and a public conversation is warranted. Especially in these cases, EPIC illuminates what the current dichotomy obscures.
For example, during the pandemic, meatpackers were categorized as essential workers. Their work is, in fact, essential: meatpacking is measured by the food processed, and is not an instrument whose activities can be easily substituted with another good for the same aim — at least, not at the moment. The availability of food is essential for the functioning of our society, even if the financial profits overwhelmingly accrue to a few private corporations.
It would not be unreasonable for the public to weigh the public cost incurred due to the contribution of the meat industry to the degradation of the climate against corporate profits, as advocated by impact accounting measures. On the other hand, so long as our public profits from the ready availability of high density protein in the form of meat, ensuring the regular provision of this essential good to citizens is in the public’s interest no matter the level of corporate profit. By recognizing this complex picture, policy makers may decide that it is in the public’s interest to invest in essential industries that address the same essential aim, but which are better aligned to result in public profit.
An alternative example is the defense forces. Following the Russian invasion of Ukraine, it should be clear we still live in an age when the instruments of war are still necessary to protect public wellbeing. Which instruments, however, is a decision wholly dependent on the strategic goals. War is, to paraphrase Carl von Clausewitz, politics by other means. The desired outcome isn’t to kill — it is to achieve strategic goals, and those goals that can be accomplished with cyber should not be attempted with artillery. By considering the defense forces within the EPIC framework, we are able to recognize both the public profit they seek and the instrumentality (and therefore mutability) of the investment.
Adopting the EPIC framework will enable us to more clearly describe the role a firm plays in society, and to better align our public and private investments accordingly.
Adopting the EPIC framework will enable us to more clearly describe the role a firm plays in society, and to better align our public and private investments accordingly. A firm seeking to ensure it has qualified engineers 10 years from now should be able to make that investment in education on its balance sheet. A public that wants to balance its carbon budget should be able to look across all of the essential services it sponsors and supports, and to weigh costs against profits. Innovators seeking to build companies should be encouraged by the public to address essential needs for public profit, without being required to forgo the possibility of personal profit in order to do so.
By casting aside the reductionist definition of our essential work as a mere negation of private enterprise, we can more effectively emphasize its critical nature and true value. We shouldn’t have to face another wave of lockdowns before we recognize the essentiality of the organizations that heal us, feed us, and keep us safe. Using the EPIC framework we can ensure we correctly understand the roles any given organization plays in our society, to whom the gains, and how we, as a collective public, would like to encourage certain initiatives while potentially discouraging others.
