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Are you capturing the full impact of your nonprofit organization?

Are you a nonprofit leader who wants to measure the value of your work beyond dollars and cents? If so, you need to know how to calculate Return on Investment (ROI) in a way that captures the full impact of your organization.

In this post, Iโ€™ll share ๐Ÿฐ ๐—ฎ๐—น๐˜๐—ฒ๐—ฟ๐—ป๐—ฎ๐˜๐—ถ๐˜ƒ๐—ฒ ๐—ฅ๐—ข๐—œ ๐—บ๐—ฒ๐˜๐—ฟ๐—ถ๐—ฐ๐˜€ that can help you do that.

But first, let me explain why the standard ROI formula is not enough for nonprofits.

The standard ROI formula compares the financial gain from an expense or investment to the cost of that expense or investment. This makes sense for businesses that aim to maximize profit.

But nonprofits have a different goal: to create positive change in the world. Thatโ€™s why they also need to consider the mission impact of their expenses or investments. However, measuring mission impact can be challenging, especially if you donโ€™t have enough data or a clear way to track outcomes.

Thatโ€™s why you need more than just financial and mission impact measures. You also need to consider other factors that affect your organizationโ€™s success, such as:

  • The time and resources required to pursue an opportunity, partnership, or activity

  • The effect on your staff, reputation, effectiveness, and community

  • The learning and improvement opportunities that come from trying something new

  • The trust, equity, and relationships that you build or strengthen along the way

These factors are often overlooked or undervalued, but they can make a big difference in your long-term sustainability and influence.

So how can you measure them?

Here are 4 alternative ROI metrics that can help you evaluate your work from a broader perspective:

โ†’ ๐—ฅ๐—ฒ๐˜๐˜‚๐—ฟ๐—ป ๐—ผ๐—ป ๐—œ๐—ฑ๐—ฒ๐—ป๐˜๐—ถ๐˜๐˜† - this metric assesses how well an opportunity, partnership, or activity aligns with your organizationโ€™s core purpose and expertise. Does it reinforce who you are and what you do best? Or does it confuse or dilute your identity and value proposition?

โ†’ ๐—ฅ๐—ฒ๐˜๐˜‚๐—ฟ๐—ป ๐—ผ๐—ป (๐—ง๐—ถ๐—บ๐—ฒ) ๐—œ๐—ป๐˜ƒ๐—ฒ๐˜€๐˜๐—บ๐—ฒ๐—ป๐˜ - this metric evaluates the efficiency and effectiveness of your use of staff time. Are you getting enough benefit for the amount of time you spend on something? Or are you wasting time on low-priority or low-impact tasks?

โ†’ ๐—ฅ๐—ฒ๐˜๐˜‚๐—ฟ๐—ป ๐—ผ๐—ป ๐—œ๐—บ๐—ฝ๐—ฟ๐—ผ๐˜ƒ๐—ฒ๐—บ๐—ฒ๐—ปt - this metric measures the learning and growth opportunities that come from an opportunity, partnership, or activity. Does it help you develop new skills, knowledge, or capabilities? Or does it keep you stuck in old habits and patterns?

โ†’ ๐—ฅ๐—ฒtฬˆฬคuฬˆฬคrฬˆฬคnฬˆฬค oฬˆฬคnฬˆฬค Iฬˆฬคnฬˆฬคtฬˆฬคeฬˆฬคgฬˆฬคrฬˆฬคiฬˆฬคtฬˆฬคy & Iฬˆฬคnฬˆฬคfฬˆฬคlฬˆฬคuฬˆฬคeฬˆฬคnฬˆฬคcฬˆฬคe - this metric gauges the impact of an opportunity, partnership, or activity on your internal and external relationships. Does it help you build trust, equity, and collaboration with others? Or does it erode or damage those bonds?

By tracking these 4 alternative ROI metrics, you can get a more holistic and accurate picture of the value of your work. You can also use them to make better decisions about where to invest your time, money, and energy.

What do you think of these metrics? How do you measure ROI in your organization?


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