Donations to nonprofits, by their very nature, provide a return on a community’s investment. In many cases, the return can be estimated in dollars.
For example, with the help of volunteers, WARM may spend $2,500 on the home of an older adult to build a wheelchair/walker ramp, install grab bars, and complete other accessibility upgrades. These fall prevention measures may enable the homeowner to remain safe and independent in their home for three years or longer. Falls can cause head, hip, or other serious injuries, requiring a costly emergency room visit and ultimately assisted care. The median annual cost of an assisted living facility in the Wilmington area (the highest in the state) is over $50,000. That $2,500 investment can save $150,000!
Savvy donors always ask nonprofit leaders to report back on the ROI, measured sometimes by dollars saved and always by impact in the world: homes rebuilt, acres conserved, children fed, patients seen.
I’ve observed four nonprofit investment approaches. If you are on a board or donate to a local charity, think about the characteristics you’ve observed.
The organization is meeting the need for its services at its current capacity. Leaders have decided it is not necessary to grow. Maintenance, staffing, and other ongoing expenses are covered; investing in sophisticated technology, new/larger facilities, personnel, and other infrastructure is not needed.
Many organizations cannot meet the demand for their services, but the leaders shy away from investments. They may look at a recommendation for a $2,000 database and think, “$2,000 could buy a lot of program supplies,” or assume donors don’t want to pay for indirect costs such as continuing education. They are afraid to make a mistake; so, they play it safe.
Any investment decision requires a careful analysis of the expected benefits and risks. This becomes even more important when managing donated funds. Obviously, buying every shiny new toy or spending extravagantly on events and facilities can drain funds intended for the mission. This does not honor our donors or improve our service to the people who need us.
Investments in nonprofits have a high return when they build the capacity of the organization to fulfill its mission. Just as in the for-profit sector, the return can be measured in dollars. That $2,000 database may save $4,000 worth of staff administrative time over the next three years, leaving more resources for the program in the long run.
In the nonprofit sector, there is a second bottom line: How much more impact can we make? That continuing education may result in a stronger after school program or a more efficient building practice. Most donors expect charities to strive for excellence.
At WARM our cost benefit analysis includes questions such as:
Wilmington's $70M Office Plan Faces State Hurdle; New Hanover Seeks $25M Approval
Staff Reports - Jun 5, 2023
For The City Of Wilmington, A $70M Yes Or No?
Cece Nunn - Jun 6, 2023
Wilmington-based Pharma Firm Announces New CEO
Staff Reports - Jun 5, 2023
Local Mortgage Firm Joins National Platform
Jenny Callison - Jun 6, 2023
Soon To Debut, Block Eatz To Lend Helping Hand To Local Food Entrepreneurs
Miriah Hamrick - Jun 7, 2023
Preserving the region’s ecosystem in the midst of rapid development just makes sense, according to Roger Shew. First, being in nature promot...
While new shopping centers are planned in areas outside the Port City, owners are adding to and revamping existing commercial complexes in W...
In magnetic resonance, researchers have looked for ways to improve the detailed pictures, particularly in removing image noise or artifacts....
The 2023 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.