Profits Beyond Profit: The Returns on Investment in Nonprofit Support
Return on Investment. I remember clearly the moment I heard that term for the first time within the NPO space. I was sitting opposite a funding committee and while looking at our operational budget, one of the committee members explained the importance of return on investment in their decision-making.
That got me thinking: What is the return on investment when investing in the work of NPOs? How do you determine the monetary value of the work that NPOs do in building a stronger society?
In South Africa, we are all familiar with the societal challenges that we face: a struggling economy, high poverty and unemployment levels, rising crime and corruption statistics as well as an inadequate healthcare system, just to name a few. These challenges erode the very fibre of our society, and are not easy to solve.
Yet, in exploring the work of NPOs, one has to celebrate their innovative solutions in addressing complex challenges. Community-based initiatives that lead to impactful outcomes and encouraging results:
🌱 Crime stats are lower in a high-risk community because an NPO managed to get conflicting gangs to play in a band together
🌱 Vulnerable children are rescued from the claws of a child trafficking ring, because a community-based NPO could provide practical and emotional support
🌱 Job opportunities are created because an NPO could equip the unemployed youth with entrepreneurial skills along with a shift in worldview
🌱 Food security in impoverished communities is strengthened because of innovative community garden initiatives
🌱 At-risk children get the opportunity to access school education successfully because of community-based ECD programmes and nutritional support
🌱 Adults and children with special needs lead meaningful lives because an NPO could empower them with skills to live as active citizens.
And so the list goes on…
Looking back, I wish I had asked that funding committee more questions on what they viewed as a good return on investment. Because I don’t know if a formula to determine the return ofn investment in supporting NPOs exists. Even if it does, what is the real value of supporting the work of NPOs?
I think of the small community-based organisations who often just have a volunteer team with no office and very few resources, yet courageously forge ahead to help vulnerable persons build a better future through relationships and community support. I wonder how their efforts will be multiplied if financial partners would invest in their work on a larger scale?
I think of the larger NPOs who provide employment for many people from the communities they serve. Often these employees have been previous beneficiaries of NPO projects and now want to give back.
I think of the power of collaborative projects when NPOs come together to work hand-in-hand with government departments and businesses across different sectors.
And the answer becomes simple.
Investing in the work of NPOs - whether they are big or small - is priceless. Because it does not only change the lives of vulnerable individuals in one community, it changes the trajectory of an entire country.