return on investment an introduction to establishing value and using roi for managing and marketing...
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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
Assess Need
Implement Solution
Evaluate Results
Incorporate Improvement
… a diamond in the rough, continually refining…
ROMA logic model
Accountability
Agency’s client case record and
client notes.
Shelter log, client case record and
notes.
Planning
Families are at risk of
being evicted or
are homeless.
There is a lack of
affordable, safe low-income
housing.
©The Center For Applied Management Practices ROMA Logic Model 1.0B – Example (P40) Program: Housing Assistance
√ Family Agency Community� �
Mission: To ensure that all families have access to safe, clean shelter and to help families obtain safe affordable permanent housing.
Identified Problem,
Need, Situation
Service or Activity
Outcome
Indicator
# and % of clients/units to achieve
each outcome
Measurement Tool
Data Source and Collection Procedures
Frequency of Data
Collection and Reporting
Intervention 280 families receiveemergency housing assistance or support: Emergency rent paymentfor 150 families. Emergency shelter for 50 families.
Result of Intervention
Families remain in their own residence.
Homeless families obtain emergency
shelter.
Result of Intervention 150 of 150 or 100% of families remain in their own residence 30 days.
120 of 150 or 80% of
families remain in their own residence 60 days.
100 of 150 or 67% of
families remain in their own residence 90 days.
50 or 100% of homeless
families obtain emergency shelter lasting no longer
than 30 days.
Accountability
Housing Assistance
Form
Housing Assistance
Form
Accountability
Activity reported
daily, entered into
agency MIS.
Weekly report
generated to department
head.
Same
Transitional housing for 60 families.
Families obtain temporary subsidized housing.
50 of 60 or 83% of eligible families obtain and remain in transitional housing for a period of 180-360 days.
Same
Public Housing for 20 families. Unsubsidized rental (0) Home Ownership (0)
Families obtain permanent housing.
20 families are placed into public housing.
Same
City public housing records reported to case-manager monthly.
Same
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 Outcomes Achieved Clients in Program Exited Program
Individuals HouseholdsIndividuals Households Individuals Households Outcomes AchievedDropped out
Outcome Individuals HouseholdsIndividuals Households Individuals Households Outcomes AchievedDropped out
Cost per Outcome
Parents able to work through affordable child care 1207 737 1207 737 0 0 100.0% 0.0% $1,259Adults receiving GED increase earnings 1930 1734 3655 3444 367 359 52.8% 19.0% $1,102Ex-Offenders recidivism prevented 1775 1766 3139 3037 181 181 56.5% 10.2% $716
OutcomeSavings Per
Revenue Per Total Savings
Total Revenue
Total Savings & Revenue Total Cost
ROI (1st year return)
Parents able to work through affordable child care $2,270 $10,712 $2,739,890 $12,929,384 $15,669,274 $1,520,000 10:1Adults receiving GED increase earnings $0 $6,760 $0 $13,046,800 $13,046,800 $4,028,244 3:1Ex-Offenders recidivism prevented $18,880 $0 $33,512,000 $0 $0 $2,248,691 15:1
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
