In our article Why Evaluate, we turned to some of the organizations we work with to understand the why behind their data collection. In this article, we are unpacking evaluation more to help you estimate the return you get from your investment in evaluation.
We broke down return on investment, or ROI into three categories: monetary, educational and social.
Monetary return on investment, are finances, the grants or program fees you are able to collect with the information provided from an evaluation.
We believe a large part of Monetary ROI when it comes to evaluation should be centered around opportunity cost. What grants you would not qualify for without data, employees you might not recruit, social engagement you might not have received or participants who would not have registered had you not shared core evaluation results.
To obtain this information you might have to go further in your questioning after an evaluation. This might be a survey question on participant registration, a conversation with a grantor or a donor survey.
Educational return is the knowledge you obtain and apply to your work from an evaluation, what you uncover about your beneficiaries, donors, employees and your own organization. These nuggets of information inform your program design, investment for the next year and program focus.
Calculating educational ROI can be done internally, either formally through a survey or informally in a post-evaluation meeting. It involves reviewing the information you collected from your evaluation and marking it as new vs old, applicable vs not applicable. After a quarter, or year after you can revisit and see if you were able to apply the information or not.
The New Economics Foundation defines Social Return on Investment as translating your social value into financial outcomes. SROI goes beyond your internal program evaluation, it is your financial and your social impact, including how your participants grow, how your community changes and the cost of what would happen if your initiative did not exist. Often times SROI is completed in the form of a ratio, if your ratio is 7:1, it means for every dollar invested, social value worth 7 dollars would be generated.
There are multiple ways to calculate SROI, one of the most useful SROI’s completed are Evaluative SROI’s, they are based on your actual outcomes that have taken place over a given evaluation time.
Establishing your SROI is an investment, you need to choose your scope, stakeholders and evaluative data, but has it’s returns. It can help you understand your value beyond your evaluation, and determine how to maximize that value. It puts your impact in the language of investors and lenders and can push you forward in your next round of financing.
We believe determining the value behind your evaluation is an important process. We suggest folks make a hypothesis about their value before an evaluation, and revisit it afterwards. This information can make sure you squeeze the benefit out of your evaluation and target your evaluation to fit your needs.
Want to chat more about evaluation value? We’d love to hear from you