March 24, 2008 |

NTEN Conference/Social Return vs ROI

NTen Conference Experiences

I just completed a conference with NTEN, and this time around, I have to say I felt a different vibe – and I’ll explain in a moment.

The NTEN Technology conference brings together the latest trends in technology for the Non-Profit Sector. Full of energy and lots of young people (well, at least younger than I am), it was definitely invigorating to see everyone come together.

Nonprofit Driven Technology Development? or Technology for its own sake?

However, who was coming together? Unlike last year, I definitely noticed many more folks connected with nonprofit technology companies or they were independent consultants. Of course, I fall into this same group, but usually it’s important to see that the people we are trying to serve- actual non profit organizations – attend the event.

I guess I just experienced a different vibe this year – technology seemed to be the focus, and not non profits. There were scores of people selling themselves or the latest wares – and many times I didn’t even know what they were trying to sell. Technology for technology’s sake I guess.

How Nonprofits Should Measure Technology Return on Investment

In reality, the only reason why non profits should invest in any technology is if they believe they will achieve a return on investment greater than their current processes. Now, fundraising ROI can be calculated in many ways, and it’s not just about dollars. There’s certainly SROI, or Social Return on Investment, that must be measured as well, and something I’m calling STROI, or Social Targeted Return on Investment.

Your STROI can be measured and influenced by activities such as public awareness campaigns, volunteer initiatives, special events, and grass-root advocacy projects, just to name a few. So while an initiative may not raise a lot of money, it may raise awareness which could be very worthwhile to your cause, and potentially create a fundraising base in the future – which could be a very, very, very, long time away.

I do believe people put more of an emphasis on STROI than traditional ROI, simply because it’s easier to convince people with feelings rather than fact – the returns are nebulous and not easily measured. I.E., anyone can spend $50,000 and buy a full page ad in USA today. Sure, you’ll get lots of people that read the ad- but will you ever know how many? Will exactly 5% of those readers become advocates and donors? The answer is always ‘maybe’. So people try it and most fail.

I think the same reasoning applies to many new technologies. Let’s create an application on Facebook! They have tens of millions of members! Sure you may get 1,000, 10,000 or even 1 million people to download it – along with the other 30 applications they downloaded already. How many of those that download it are committed to your cause? How will yours rise above the crowd? Is it worth developing an application to try and find a needle in a haystack, when you have to pay and maintain the cart that holds the whole haystack? (And pay for the driver, and maintain the wheels, and the axle, etc. etc.).

Fundraising Technology Offers High STROI

It’s no secret that the best fundraising activities or technologies generate both the return on investment and spread their message to raise social awareness. These types of crowd-fundraising activities include traditional Thons (such as walk-a-thons, bowl-a-thons, dance-a-thons, etc.) where the constituent is actively recruiting (through their social networks) additional constituents and raising a significant and meaningful amount of money at the same time.

Direct mail fundraising, a tried and true ROI king, certainly is a case of lower social return (you target a limited pool of people), and a high return on investment. The same goes for Planned Giving and Capital Campaign initiatives – since the ROI is off the scale for these activities, the fact they only reach a few people doesn’t matter. On the other end of the spectrum, a newsletter reaches many people, but the overall ROI is quite low.

Finally, you have a group of activities that have both low social return AND low ROI. Some examples of these (which include both off-line and on-line technology) include Online Shopping Malls, Paid Banner ads, personalized widgets, full page newspaper ads, television ads, etc. I even think tools like Twitter come into play here- where’s the ROI?

In face of the other alternatives, doesn’t it make sense to avoid this last group of activities if at all possible?