Rate on Investment (ROI) For Non Profit Organization

Rate on Investment (ROI)


What is ROI?

A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the profit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.

The return on investment formula:


In the above formula “gains from investment”, refers to the proceeds obtained from selling the investment of interest. Return on investment is a very popular metric because of its versatility and simplicity. That is, if an investment does not have a positive ROI, or if there are other opportunities with a higher ROI, then the investment should be not be undertaken.

Monetary ROI


If we invest $100 on a product and later able to take out that $100 plus $10 more, the ROI =10%.


If we put $100 on product and later can only get $80, the ROI = 20%
We lost 20% of every dollar we put in.

 ROI in Nonprofits

In the world of volunteer engagement the inputs is money and volunteer time. The outputs is whatever service is provided, products created  or money raised etc.


If an organization spends $100 worth of money and volunteer time and in doing so produces $110 of value added to the community, the ROI = 110%


However, if an organization spends $100 worth of money and volunteer time and in doing so produces only $80 worth of value added to the community, the ROI = 20%. It represents a net loss of resources.

In previous post I have talked about Non Profit organization and there approach towards social media and where they fit in McKinsey levers. In this blog I will discuss how Non Profit organization calculate ROI and what the factors to be taken in consideration are.

Social Return on Investment

Non-profit organizations exist to achieve social and/or religious goals. Some non-profit organizations are very effective and efficient at converting money into the achievement of their social and/or religious goals. Others are notoriously ineffective and inefficient. Although it is not always easy to measure social return on investment, it is important to develop measurable indicators that allow the non-profit organizations to assess their social return on investment. There is a direct relationship between visible results and the willingness of people to donate and volunteer.

Financial ROI in Fee Charging Non-Profits that do not Solicit Donations

The business definition of ROI does have a number of direct applications to non-profit organizations as well.

Many non-profit organizations deliver products and/or services for fees. They differ from businesses primarily in their full reinvestment of profits into their organization. In many respects they are like “growth stocks” except there are no owners who will eventually reap a capital gain. For example, in the past there were many “mutual” insurance companies that functioned in this manner, although many of them have become for-profit businesses in the last few decades. ROI in these non-profits is similar to ROI in businesses, although it must be balanced with their social ROI.

Financial ROI In Non-Profits that Rely Primarily on Donations

Even non-profits that rely primarily on donations should consider the financial return on certain investments. For example, if they buy a facility, they should determine that the cost will be lower than leasing the same kind of facility and that the investment pays back more than, for example, an endowment fund. Money invested into various donor development programs need to be compared in terms of financial ROI.

Financial ROI In Fee Charging Non-Profits that also Solicit Donations

Private schools and camps are good examples of non-profit organizations that charge fees but also solicit donations. While social ROI is an important measure in these organizations, financial ROI is also very important. Many private schools and camps charge fees that cover the full cost of their operational and capital expenses and then solicit donations to fund scholarships for families that cannot afford full fees. Financial ROI can easily be measured in these organizations. In fact, financial ROI is an excellent tool for evaluating their financial “investments” program and capital areas. Money invested into donor development programs must also be assessed in terms of ROI.




Category of Fund Raising Activity

Fund Raising Investments

Number of Gifts

Amount of Gifts

Average Gift Size


Minimum ROI

ROI Variance Above/ (Below)









1. Non-income producing capacity building








2. Donor acquisition (List or constituency building








3. Special Events-public relations (Marketing/PR programs)








Total Capacity Building








Fund Raising Costs %









4. Donor renewal, soliciting prior donors under $1000








5. Special events – fundraising








6. Major individual gifts (soliciting prior donors, $100 & up)








7. Planned giving/estate planning (After 4 to 7 years of losses!)








8. Capital and endowment campaigns








9. Corporate and foundation grant seeking








10. Government grant seeking








Total NET Income Producing








Fund Raising Cost %
















Fund Raising Cost %
















(1) Below minimum ROI, try to improve ROI, study cost benefit.

(2) Below minimum ROI, only in 3rd year, expected to improve.

(3) Below minimum ROI, try to improve ROI, study cost benefit.


Unfortunately, complex questions require complex answers. On the surface, the basic question appears simple: “How can we know if the returns on our investments in various fund raising activities are reasonable?” However, there are many answers and they all depend on several variables.

The ROI Analysis has ten different categories of fund raising activity. Each one is different from all the others, depending on its purpose and/or source of funds, and for each one there is a different answer to the basic question of reasonableness.

Experienced fund raising managers know how to plan and implement very sophisticated or complex fund raising operations and programs. The sophistication (complexity) is increasing constantly. However, the way most nonprofits currently budget, account for, and evaluate fund raising costs and related income is not only uncomplicated but also unsophisticated and not very useful for decision-making.

The time has come for the nonprofit sector to take a more sophisticated and business-like approach to these aspects of fund raising management. While the need for community services is growing rapidly, government is cutting back and the burden of fund raising to meet community needs is falling more heavily on nonprofits.

Nonprofits that find it too burdensome to analyze the ROI of their fund raising programs could compare themselves to for-profit businesses. It would certainly be easier and less complex for businesses to only measure and evaluate their overall, year-end profitability. But for-profit organizations are usually far more successful when they measure the profitability of their various products and/or services separately and do so more often than once a year.

Decision-useful evaluations of fund raising activities require complex but accessible evaluation procedures broken down by categories of fund raising activity and gift size ranges. The methodology presented in this paper is the most useful procedure for management’s evaluations of fund raising return on investment. True, they are complex, but they are not inaccessible to the conscientious fund raising professional.

ROI Poetry 🙂

Examples of ROI in Action

  • ƒƒOne U.S. government agency estimates that adding a frequently asked questions (FAQ) page to the web site
    saves nearly 400 work years annually for staff responding to citizens’ questions by telephone or in person at
    agency field offices.
  • ƒƒAn Australian government agency found that banner ads costing $40,000 resulted in 145 visitors downloading
    forms from their site at a cost of $275 each. Since 60 percent of their site traffic came from searches, they
    used Google Ad Words for the next campaign. After spending $40 for pay-per-click (PPC) search to promote
    downloading forms from the Web site, they had 294 form downloads. This was more than double the number they
    had using banner ads at 1/1000 the price.


Public-sector and nonprofit organizations can follow this approach for evaluating the effectiveness of their web sites.
The biggest challenge, in most cases, will be determining which measurement units will yield the most reasonable
analyses of resources expended and benefits gained. While for-profit methodologies do not necessarily translate
well for noncommercial settings, they can be used as models for public-sector and nonprofit organizations.


What is ROI

Web Analytics Key Metrics and KPIs

ROI Calculator

Hubbard, D.W. 2007. How to Measure Anything: Finding the Value of “Intangibles” in Business. Hoboken, NJ; John
Wiley & Sons

Facebook ROI

Social Networking ROI Calculator for Nonprofits

ROI for Volunteer Programs



Social Media Monitoring Tools


In previous blog we have discuss how business can be enhanced using social media tools like blogs, twitter and wiki’s. Today we will learn about the Social Media Monitoring tools (SMM). Why the organization uses this tools, what tools are available and how they can be used as a helping hand.

The internet has made 24/7 news a reality and social media monitoring tools are available to help you get things organized whether on a personal or business level. There is now continual data being uploaded to social media by users all over the world. Social media users can now manage the news and information they receive according to their interests and needs.

SMM tools allow you to measure, monitor, understand and engage with social media users. SMM have following benefits:

  • Covers all major social media sources
  • Facebook Page Central
  • Automated Sentiment
  • Engagement Central
  • Connect with Google Analytics
  • No Spam
  • Global and multi-language

There is n number of free SMM tools in the market. But which one to choose that will fulfil your requirements? To select the SMM we need to consider few points:

  • Ease of use – You definitely want social media monitoring tools that are easy to use and learn.
  • Cost – Some tools charge a fee and some are free. Feedly.com is a great tool that is free. Take into account the cost of monitoring your social media verses the benefits.
  • Content monitored – When choosing a social media monitoring tool be sure that it is capable of handling the content that you want to monitor.
  • Device usage – Check to see if the tool you would like to use is compatible with your device.

SMM tools should make your life easier and provide a benefit to you. Some tools are: dd

Among all this freeware SMM Tools, I would like to talk on Hootsuite SMM tool.


Launched in Dec. 2008 by Invoke Media, HootSuite’s rapidly growing user base includes governments, artists and organizations like The White House, Martha Stewart Living Omnimedia, SXSW and Zappos. Accolades include awards from Mashable’s Open Web, Canadian New Media, and Shorty Awards. HootSuite is a social media dashboard that helps organizations use the social web to launch marketing campaigns, identify and grow audience, and distribute targeted messages across multiple channels.

Using HootSuite’s unique social media dashboard, teams can collaboratively schedule updates to Twitter, Facebook, Linkedin, WordPress, and other social networks. Updates can be published via web, desktop, or mobile platforms, and teams can track campaign results and industry trends to rapidly adjust tactics.

San deigo Zoo and HootSuite story 🙂

Simply put, personalized content makes applications and user experience better. HootSuite cloud is offering a simple yet powerful way to add content to existing applications or to design new ones.

On personally based experience, You just need to get an account on HootSuite Website and add all the different social media which you want to monitor. As shown below in screen shot we can add the the social media like LinkedIn, Twitter, Facebook etc. Later we can monitor the website with particular feeds. With use of HootSuite I can do below task at my finger point:

  1. Monitor Multiple Streams in One Place
  2. You Have a Team Managing Your Social Media Empire
  3. Managing Customer Service on Twitter
  4. You Want to Cross Post to Your Google+ Page
  5. Completely Cross Platform
  6. Get Free Reports by Email
  7. You Want to Connect Lots of Services Together

HootSuite Home Page at finger tips


HootSuite Adding other social media

I hope this gives a brief idea on how the HootSuite and other social media works and can be used in an SMM tool for an organization.


Apple Is Not Just Apple :)

You might be thinking that why I have said “Apple is not just Apple”. As Apple is proudly and honorably known for the PC, cell phones, iPOD and iPAD. Apple has given a quality product to the consumer. Apple has year-over change of approx. 90.5% as compared to other cell phones in market.
Apple In Socialization

Apple In Socialization

But do you know how Apple is using blogs and Twitter? Or Why they will be using?

Apple is constantly using Twitter for twitting news and spread the word of their new iPhone “iPhone 5C & iPhone 5S” and what was the motto for releasing the iPhone 5C with iPhone 5S when there was no news about iPhone 5C in the market. The feature of iPhone 5S has been released before product comes to the market and we are pretty much aware of the exclusive specification of iPhone 5S. I would like to talk about iPhone 5C and how they have publicized both the iPhone using twitter, Facebook and blogs.

Apple = Twitter + Blogs

Apple = Twitter + Blogs

One of the Apple’s twitter account twits about the new iPhone launch of iPhone 5S and 5C in New York on the same day of product launching. They also revealed the screenshot of the iPhone, their features and yes the prices in US. Later after couple of days they twitted the prices in other countries and comparison of prices with respect to other Dollar exchange rate.

Sad, Australia will be getting in higher prices than the U.S.


As I have mentioned in my earlier blog, each firm is keeping track of their friends and rivals. Apple keeps tracks of Microsoft for the windows updates and Google for the android versions. We can say, in today’s world we have two major platforms in Computer (windows or Mac OS) and Cell phone (Android or iOS) sector. As we can see in below screens how apple is updating the news of Microsoft and Google.


Apple also has an official blogging website on which they highlight all news related to Apple products. On this web page they talk about only and only Apple products, there new feature, patch for Mac OS, announcement or achievements of an milestones or goals.

According to McKinsey Value levers, Apple widely uses the Marketing and Sales functions to promote and achieve the precision in technology which will increase the growth all over the world. Organization like Apple also needs to do market research about product and brands which will lead them to be on the top of all the companies in mobile sector. Apple knows how social media can impact the consumer to gain the sales rate. How social media can really help in growth of Apple Stocks.

For more about apple :



The Smith’s Family


“The Smith Family”

“The Smith Family” is a national, independent children’s charity helping disadvantaged Australians to get the most out of their education, so they can create better futures for themselves.

There are more than 638,000 children are living in disadvantage and don’t have access to the education, health or life opportunities that we have and we consider it in granted. The children which are left out, they get behind and have no support, this disadvantage will leads to adulthood, to our future.


We believe and know that education is the key of success in life. It will change a child life, and by supporting to children it will break the cycle of disadvantage and ensuring they too can have the same opportunities as their peers.

So we might be wondering how “The Smith family” support the underprivileged children. Smith Family provides financial support, Emotional literacy, working with Indigenous Australians and other part of ways in life.

We might be thinking how The Smith Family is using Enterprise and Social media tools and how they are in the McKinsey levers. The Smith Family using Facebook,

YouTube and Twitter. Smith Family uses these media to broadcast the event, programs or news about the foundation.


How The Smith Family might support this disadvantage people? Here McKinsey “Customer Service” lever comes into picture.

Now you might be thinking this is non-profit foundation and they should not have any customer, but do you the disadvantage people are their customer and client like Microsoft and IBM provide a big contribution towards the society through The Smith Family. Please recall how they support the disadvantage people for a second, donation, sponsors, Volunteering and fund raising activities.

The Smith Family gives a platform to the sponsors and volunteers to help these disadvantage people. They come to their places and help them with education, healthcare and providing other amenities. The corporates support the event to promote and provide a volunteer to work with underprivileged student. They also have mentoring program, in which they engage the employees to volunteer the group of child which give benefits to people who dont have access to the technology. It give a big platform to educate, participate in work force and communicating.

The video explain how a corporate help the people through “The Smith Families”.


IBM And The Smith Family


“My mentor taught me that everything is possible if I believe in myself.”
– iTrack Student

For Example, since 2002 IBM and The Smith Family are providing an Online Mentoring program for school aged students called i-Track. This program help underprivileged student who are facing financial problem during transition of school to work, where IBM provides them experience, encouragement and advice. In 2012, online mentoring programs were coordinated in VIC, NSW, QLD, SA and WA, providing support to over 120 students. To date, IBM employees have mentored more than 745 students through this program.


QUT and The Smith Family

The more interesting part, Queensland University Of Technology (QUT) joined The Smith family (TSF) in 2005 to develop and promote to engage TSF’s learning of Life program students. QUT motivated students for higher education. In today’s date, dozens of disadvantage people are graduating with the degree in Creative Industries, Engineering and Education. The University is proud to be in partnership with TSF in pursuit of fair access to higher education.

This is how “The Smith Family” is providing services to the disadvantage people and acting as a help hand to future of Australia. Be part of “The Smith Family” and help to grow Australia, to grow you, signing in today to THE SMITH FAMILY (Click Here).

“Share Heart To Get Heart”


Smith Family

Smith Family Story

IBM And The Smith Family

QUT And The Smith Family

Legal Policy of Social Media

Why an Organization should have social media policies? What can be they?

In today’s era an organization prefer to promote their organization on social media like Facebook, Twitter and LinkedIn. They post their job requirement, new product launch, updates about the activities or any new events to be conduct. But due to Organization rules and values, they have some policy towards social media.

To easy to understand about the social media policy I would like to take an example of “Queensland Government” (QLD Government).

According to QLD Government policy, few social media policy are as follows:

A.    To Market Your Business:

Business and Industial Portal

Business and Industial Portal

1.   To promote the business, social media can be used:

  • Promote the name of business.
  • Tell customer about your service.
  • To get feedback.

2.   Advantage of using social media policy:

  • It increases the network.
  • It provides the ability to target small groups.
  • Social media is free or at low cost where organization can promote.

3.   Risk of Social Media:

  • Time consuming and money consuming with no return 😦
  • Incorrect information post by organization 😮 and negative feedback by customers.
  • To follow legal policy, in case of breach, penalties may be charged.

B. For Department Promotion:

Social Media for School, TAFE and Departmental Promotion

Social Media for School, TAFE and Departmental Promotion

School, Universites and TAFE may use facebook, MySpace, Yammer, Twitter, Google+ and YouTube to promote the departments.

1.  Reponsiblities can be:

  • Refer to the DETE Code of Conduct Standard of Practice.
  • Not to use any internal learning website used by teachers or school resource on social media.
  • Approval of social media accounts by higher authorities or Board Of Directors.
  • Approval of all the contents.

2.  Planned process:

  • Check if organization needs a social media account.
  • While creating account, a valid account details should be provided.
  • Social media website should be monitored thoroughly.
  • A separate division or technician should be created to keep an eye.

3.  Alegations of Harm:

C. Social Media And Public Officials

Social media and public officials

Social media and public officials

Social media is used to share information, promote and build discussion. Public official needs to consider the misconduction prevention policies:

  1. Official Use:
  • Organizations are increasingly using social media for broad communications with the public but it has to be up-to-the-minute.
  • Using social media for official purpose.
  • For official use of social media, agencies should refer to the Queensland Government Official use of social media policy, and ensure that they have conducted suitable risk assessments and developed adequate policies and procedures governing all official use.

2.   Personal Use:

Organizations have responsibitlity to educate employee to use of social media policy.

  • To reduce the risk of misuse, organizations like Banks and Telecom sectors block the social website in the Organizations.
  • They follow certain code of conduct which is defined by the organization and government.
  • In case of breach of any misconduct of policy, action may be taken towards the employee.


As we all know that for any social act, there are pros and cons of the post, blogs, images etc. We need to act with in the policy to be a successful 😉 🙂



Social Technologies Helping Organization Values


Amdocs is an Israel based firm which is an provider of software and services to communication and media industries. The company develop, deploy and manages the software and provides services for business support, billing and Customer Relation Management tools (CRM). Amdocs is market leader in telecommunication software and service provider. There major clients are AT&T, BT Group, Sprint and T-Mobile. Amdocs is having branch more than 50 countries and having product like Amdocs OSS, Revenue Management, Customer Management, Self Service and Service delivery. Amdocs provide services like Business consultant, Support Service, Global strategic sourcing and System integration.

Do you know how Amdocs gets his feedback on their product and service right through the end users? Yes, they are using social media like Facebook, Blogs and Twitter.

But we might be wondering why and how they are using this social media to improve their Customer Service and Business Support? They are updating and looking for following points on their blogs and pages:

1. Improve Productivity:

Facebook and twitter are the best media to share and take feedback on the product they are providing to the end users. They get feedback on the product as soon as they launch in the market. Which reduce the time of manufacturing a patch for the bug/issue. Improvement on product keep takes place until the clients don’t demand or are unsatisfied.

2. Customer Service:

As we all know every firm has a call center for customer service, but call center really don’t help with the complaints and especially with feedback. They consider this social media as they get complaints and feedback from users who are using their own product.

3.Business Support Functions:



Amdocs is providing services to daddies of telecom sector like AT&T and BT groups. Amdocs have to follow there thought and look after there experience on the services. 80% of the user do post there request on social media where they can be taken in consideration and telecom firms try to satisfy the clients. The role of Amdocs is to take in the consideration of user feedback and work on the requirements which help to organization to keep the business live 24X7.


Web 2.0 Tools

What is Web 2.0 tools are? Why we should use Web 2.0 tools? How we can use them in day to day life?

Web 2.0 tools are used to share files with in the organization or between organizations or with organization and client. The file like picture, word doc or pdf file can be shared.

Web 2.0 tool

Web 2.0 tool

For example, In a company like Google, Yahoo or IBM & Microsoft, if they want to share document between the employees they have to create their own share drive on intranet and allow other employees to access the share drive prior getting “access” to share drive. What if, say “What IF” they want to share any document on internet to publicly, clients or any business reason, how they will share? Obviously they are not going to give access to internal share drive.

You might be thinking how they might share documents? At this point we come across with Web 2.0 tools, where owner can give access to any user from any domain ID on Internet.index1

To make you at ease we have few Web 2.0 tools in market and that for Free. Yes you heard it its absolutely FREE ! FREE ! ! FREE ! ! !

1. Flickr



Popular photo-sharing site now lets you print. Certainly the best online photo management and sharing application in the world – has two main goals:

  1. We want to helppeople make their photos available to the people who matter to them.
  2. We want to enable new ways of organizing photos and video.

2. myebook



Virtually publish your book and sell it.  myebook aims to revolutionise the way we create, publish and share ebook content online. Built on a feature-rich social platform, complete with powerful, browser-based, builder software, and a slick reader environment, there’s never been an easier way for anyone and everyone to ‘get it out there’.

3. Audioboo



Audioboo is a tool for audio producers to record, upload and share audio. A boo is made up of any clip of audio, a picture, a location, a title and a description. Broadcasters, Newspapers, Sports networks, Podcasters, Educators and local and community organisations all use boos to increase audience reach. They can easily share audio on Facebook, Twitter and other platforms, embed playlists onto their sites, and use our mobile apps and widgets as listen again players.

4. Animoto



Animoto was founded with the vision of inspiring people to share their lives through the magic and power of video. Make beautiful videos from images in a snap.

Simply upload your pictures and video clips, choose your style, add words and music, and click the “produce video” button. Then, Animoto’s cinematic technology does its magic and in minutes brings it all to life with a beautifully orchestrated production you can share with family and friends.

Now we know how its easy to share any file, document with use of Web 2.0 tools for Free of cost 🙂 😀 😉



1. Flickr :- http://www.flickr.com/about/

2. myebook :- http://www.myebook.com/index.php?option=about

3. Audioboo :- http://audioboo.fm/about/us

4. Animoto :- http://animoto.com/about