CEO Corner: Investing in the Work We Do
I recently watched Dan Pallotta’s TEDTalk, “The way we think about charity is dead wrong.” If you haven’t had a chance to watch it, I recommend it. His thesis, among other things, is that we need to invest in the people working for nonprofits and their success the way the for-profit sector does. His implication is that nonprofits should not be embarrassed about investing in the work we do in order to generate greater return on investment and impact.
It immediately made me think of the metric that has long been a standard way of assessing our effectiveness – cost to raise a dollar. It is the metric used by Guidestar and Charity Navigator and is one we have tracked through the AHP Report on Giving and Benchmarking for 35 years. Our average cost to raise a dollar is impressive – $0.25 for average performers and $0.18 for our highest performers in 2018 – but framing it in this way perpetuates a conversation around how to invite donors to participate in our missions for a cost that is untenably low.
Many of you have wisely encouraged flipping this conversation on its head to focus on the ROI calculation. If we invest a dollar in philanthropy, we are able to return an average of $4.00 in donor gifts. In fact, for our highest performers, for every dollar invested, we return $5.50 in donor gifts, according to the 2018 AHP Report on Giving for the U.S. So, for every $1 million in investment in philanthropy, our organizations have $4 million to use for projects and programs that advance the quality and accessibility of health care for all our communities. Compelling as a case to our boards and C-suite partners to invest in our teams and our work, don’t you think?
Note: Interested in reading more from Dan Pallotta? Check out his book, Uncharitable, in our bookstore!