Return on Investment An Introduction to Establishing Value and Using roi for Managing and Marketing

Return on Investment

• An Introduction to Establishing Value and Using ROI for Managing and Marketing

• Jane M. Conroy

What is “Return on Investment”?

• Definition:

• Return on Investment (ROI) is a measure of an organization’s ability to use assets to generate additional value for those contributing resources to that organization.

Why is it ROI important?

• Funder confidence

• Public accountability

• Marketing

• Additional funding

• Management tool

Who is the audience and what does ROI mean to each of them?

• Funders

• Legislators – Local, State & Federal

• Public

• Management

• Staff

Levels of ROI measurement

• - Program

• - Agency

• - State aggregate

• - National aggregate???? (think big)

Needs assessment to outcome measurement: an iterative process

ROMA logic model

Tying funds to outcomes:

• Challenges in data collection, indirect costing, and cost per outcome

• - Too many outcomes (select one)

• - No allocation of administrative costs (use percentage distribution of admin. costs)

• - Cost per outcome is per outcome, not per client served

Savings & Revenue

• Return on investment can show up as:

• - Savings (costs not incurred)

• - Revenue (dollars generated)

• - Both

Savings

• Examples of Savings:

• - Unemployment costs averted

• - Homelessness prevented

• - Emergency room visits avoided

• - Teenage pregnancies prevented

• - Ex-offender recidivism reduced

• - Seniors kept in independence

Revenue

• Examples of Revenue:

• - Earnings of people placed in jobs

• - Increased earning ability of trained workers/GED achievers

• - Value of volunteer labor

• - Micro business jobs created

• - Value of local housing stock

Outcomes, percentages of success, and ROI: some examples

Calculating ROI – Keep it Simple

• Annualized Savings per outcome + Annualized Revenue per outcome divided by total costs of trying to achieve outcomes

• = ROI

• …. and that is your……

• First Year Return on Investment

Adding it up – Conservative & Defensible

Where to go for backup data?

• Google is your friend (search engines)

• Universities – existing studies or student projects

• Self-study & tracking

Presentation & Communication

• Audience

• Style considerations

• Audience comprehension: From sound bites to detail

CSBG & Leverage

We are aiming toward:

• Progress, not Perfection

• ….if we needed perfection, we’d have died out a long time ago

Success Stories - some examples

• Lynchburg Community Action Group – Transportation Program

• VACARES – funding restored by the Governor

• VA CAA’s: only non-state entity to receive TANF earmark from General Assembly during budget cuts

• VA CAA’s: no overall cuts

Questions?????

• [e-mail]