The Great ROI Debate

A comment on the blog yesterday spurred an interesting thought. What is ROI and how is it measured? ROI is a business word, meaning return on investment.

One definition from thefreedictionary.com states: return on investment - (corporate finance) the amount, expressed as a percentage, that is earned on a company's total capital calculated by dividing the total capital into earnings before interest, taxes, or dividends are paid

For me, I see return on investment as something much more than that. It's not entirely the money, but rather the return on investment from a particular program as dependent on that program's goals.

So if one of the program's goals were to meet ten donors, I would consider the return on investment the number of donors actually met.

What do you think? Is ROI specifically a word that is used to describe monetary capital earned or can it be more than that? If it is, is there another word to replace it?

Sound off in the comments below!

2 comments:

SkipperMJ said...

Lindsey - I've always had a hard time trying to apply corporate for profit terms into the non profit genre. We're not making widgets, but what we are doing is moving the proverbial needle to engage our followers to take action.

So the question then becomes, what is a successful action? Is it to raise money, more money then last year? Is it to get surveys or polls filled out, or protesters chained to a tree. Numbers for measurement sake don't really prove value on that return unless it's the action itself you are trying to gauge.

For every non profit there is no cookie cutter formula to use to apply ROI. I come from a strong tech background, worked in for profit and 10 plus years in non profit. I still can't wrap my arms around this topic.

If someone figures it out, I want it! You got some really good stuff out there, keep up the good work.

Lindsey said...

Yes, I agree! I think why I'm trying to wrap my head around it is because with the advent of social media, determining the so-called 'ROI' for that is going to be tricky.

But I agree, setting the goal first is the most important.

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