{"id":1411,"date":"2010-04-13T08:31:14","date_gmt":"2010-04-13T15:31:14","guid":{"rendered":"http:\/\/www.artsjournal.com\/artfulmanager\/wp\/2010\/04\/net_present_joy_npj\/"},"modified":"2010-04-13T08:31:14","modified_gmt":"2010-04-13T15:31:14","slug":"net_present_joy_npj","status":"publish","type":"post","link":"https:\/\/www.artsjournal.com\/artfulmanager\/main\/net_present_joy_npj.php","title":{"rendered":"Net Present Joy (NPJ)"},"content":{"rendered":"

In the business world, Net Present Value (NPV)<\/a> has long been an essential calculation when making investment and program decisions. The NPV formula helps managers focus on four essential truths about their financial decisions:<\/p>\n

    \n
  1. It’s the long-term value or cost of a decision that matters, much more than the perceived immediate return;<\/li>\n
  2. All calculations should include both expected returns AND expected costs (hence the ”net” in net present value);<\/li>\n
  3. A dollar earned a year from now is LESS valuable than a dollar in your hand today — since you could earn interest on today’s dollar (which is why NPV ”discounts” all money earned in the future to assess its ”present value”);<\/li>\n
  4. Investing in one project means you can’t invest in another — there is an ”opportunity cost” to any business decision, the lost opportunity to do something else. So, it’s not good enough for an investment to yield positive returns. Rather, those expected returns must be GREATER than any other possible use of your money, time, and energy.<\/li>\n<\/ol>\n

    The NPV calculation brings a touch of discipline to financial decisions, that can so often be influenced by the lure of immediate return. Of course, it’s all still guessing (”expected returns” and ”expected costs” are just guesses, after all, despite the historic data we bring to the effort). But it’s a structured guess, which is a start.<\/p>\n

    As I talk with arts groups about their investment and programming decisions, I often sense them struggling with essentially the questions above. But, because they’re driven by passion rather than profit, financial concerns are only a part of the balance. Certainly, they want to make decisions that are financially viable and responsible — they can’t make a difference if they’re out of business. But the calculus is more complex than that.

    Net Present Joy (NPJ)<\/b>
    Which is why I hereby suggest the discipline of Net Present Joy (NPJ)<\/b>. Like Net Present Value, Net Present Joy would assess all immediate and future joy created by the decision in question, discounting future joy a bit since we’d certainly prefer to be joyful now rather than later. And, of course, the calculation would deduct all current and future grief associated with the initiative (emotional, organizational, logistical, etc.), adjusted to present value.<\/p>\n

    And before the world dumps on me for suggesting a ”discount rate” for future joy, consider this: Do you really want to spend a year of hard work only to achieve the same joy you could have had without the work? Or is the point of that hard work to reach a GREATER joy, for you and your community, than you could have received immediately or by any other means? That’s the function of ”present joy.”<\/p>\n

    I won’t begin to suggest where you get the numbers for this calculation, nor who’s joy you’re estimating (yours, your audience, your artists, your community, mankind). But it strikes me that even a back-of-the-envelope analysis would bring some useful insight to your decision process. And if you haven’t already considered the OTHER opportunities that might yield a greater return, this will be your excuse to do so.<\/p>\n","protected":false},"excerpt":{"rendered":"

    In the business world, Net Present Value (NPV) has long been an essential calculation when making investment and program decisions. The NPV formula helps managers focus on four essential truths about their financial decisions: It’s the long-term value or cost of a decision that matters, much more than the perceived immediate return; All calculations should […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[4],"tags":[],"class_list":{"0":"post-1411","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-main","7":"entry"},"_links":{"self":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts\/1411","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/comments?post=1411"}],"version-history":[{"count":0,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts\/1411\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/media?parent=1411"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/categories?post=1411"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/tags?post=1411"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}