4 Key ROI Metrics Nonprofit Leaders Should Be Tracking

How are you calculating Return on Investment (ROI) in your organization?

Here are 4 key ROI metrics you should be tracking.

First, some background.

Standard ROI calculations focus on the financial gain received from a particular expense or investment. This metric was designed for the for-profit sector, where profit is the main objective.

Many established nonprofits also look at the mission impact to be gained from a particular expense or investment. This is an important lens, but it can be tricky to calculate if you don't have enough long-term, reliable data to reference.

Both of these measures are both important.

But they're also insufficient.

That's because they focus on just one kind of input - dollars invested - to determine the success of a particular strategic initiative, fundraising effort, or program.

Too often, this emphasis on monetary investment means decisions are made without a fuller understanding of:

• the other investments and tradeoffs required, and

• the impact on staff, organization reputation and effectiveness, and the community we serve.

So how can we get a fuller picture? For any metric we're tracking on a regular basis, the aim should be to turn the data we're gathering into insights that can help us:

• see what's working (and what isn't),

• learn something useful, and

• improve our decision-making.

These 4 non-standard ROI measures can help your leadership team and board better evaluate opportunities, partnerships, and activities with a fuller understanding of required investments & tradeoffs, and likely impacts.

• Return on Identity - knowing our organization's role in our community, issue area or ecosystem is essential to developing effective strategy we can implement well. Does investing in this opportunity reinforce that identity and expertise? Or will it create more confusion about who we are and what we do?

• Return on (Time) Investment - staff time is not free, but too often, we treat it like it is. Are we - and the people we serve - gaining appropriate benefit for the total time we're putting in?

• Return on Improvement - will this opportunity help us practice and get better at something? What kind of impact will that improvement have on future efforts?

• Return on Integrity & Influence - does this opportunity help us build trust, equity, and relationships - both within our organization and outside it? Will it improve our ability to advocate for our community?

What ROI measures are you tracking? Join the conversation on LinkedIn.