Annual ROI Report Card
ROI (Return on Investment)
ROI? Boring, right? I usually avoid jargon, but these three letters, well, I just love ‘em. And you should too!
ROI means Return On Investment. This calculation shows the number of dollars raised compared to the amount spent on fundraising services. LAPA recommends that every nonprofit take this important performance measure seriously.
According to the Maryland Association of Non-Profits' "Standards for Excellence" and other credible sources, an established ROI benchmark for high-efficiency non-profits is three to one, or $3 dollars raised for every $1 spent on fundraising.
Understanding the results of your ROI allows you to refocus on aspects of your fundraising that are working, and revise those that are not.
LAPA Client ROIs
To our knowledge, we're the only fundraising firm that tracks and publicly reports our ROI for each client. For every dollar that clients spend with us, we calculate--and publish--what they have received in return. This process allows us to make sure our strategies are working.
A snapshot of the 2013 ROI for LAPA clients is displayed on the right. We are celebrating with our clients and are proud to report that we meet or outpace the industry benchmark of an ROI of "three to one” for almost every client.
Process Improvements Help ROI
In addition to the ROI bottom line, we also evaluate the improvements our consultants have made to your fundraising process and related work, including long-range planning, executive coaching, and development committee functioning--all necessary steps in advancing your development program that are not mathematically reflected in the ROI. We document improvements that are made now that will bear fruit later on.
To illustrate this point: we spent a year reinvigorating a certain client's Community Council. It cost them $35,000 and didn’t bring in any money. If we had just looked at direct return, and not process, the Council may have been abandoned. But we knew this work was about the future. One year later, that Community Council had spearheaded and supported a $1 million public grant from their state government, an ROI of $28.57 to $1.
When you look at your ROI, don't forget those activities that will affect your bottom line in the future. Did you start a planned giving program this year? Or begin meeting with more major donors? Those programs will bear fruit if you keep at them, so don't hesitate to invest in them today.
For first-hand testimony about her evolving experience with ROI, read Sara Kirkwood's story
Do you measure your agency's ROI? What have you learned from the results? Let me know at our blog