Redefining ROI
People involved in nonprofit organizations are often fond of couching their world in for-profit language. I suspect it is because, in a world which defines success in largely capitalistic ways, they are afraid of not being taken seriously unless they apply the requisite vocabulary and, sadly, jargon.
Consider the term, ROI, or “Return on Investment.” Its meaning in the for-profit realm is obvious. An investor gives money to a company and expects, in return, payments over time that will exceed the investment. They want profit, money, green, scratch, cabbage. Indeed, until just a few years ago, a notable collection of American CEOs, with great influence on American life, and duly echoed by some celebrities and media outlets, officially reduced everything to this prospect. Whatever does not provide return (scratch, cabbage, etc.) to shareholders is deemphasized, irrelevant, cast aside, eliminated.
Now consider the case of nonprofits. These groups do not have shareholders who expect monetary return. Money is not the center of the activity but a means to an end, the result. That result serves the mission, the purpose. It may be, for example, education, arts and culture, the humanities, human services, the sciences, medical research or care, or one of many others. Monetary return on investment is not relevant here. When I make a donation or approve a grant to a charitable cause, I don’t want them to return the money to me. That’s not the point. I want to see the cause addressed, the mission pursued. It’s a fundamentally different proposition with a far different end from return on investment. The traditional decoding of ROI, then, just doesn’t fit.
I therefore propose, for nonprofits, a redefinition of ROI to Result of Involvement. Result, not return. Involvement, not investment.
So what difference does this make? Who cares? We’re still talking about giving money to some entity and expecting something to happen with it. Even if it’s not paying the cash back with interest, it’s still a transaction with one or more expectations.
Well, language matters. How we say things matters nearly as much as what we say. It provides color and depth, and illuminates perspective. Thatt all enhances precision. For us musicians, it’s often the timbre of a work. Maurice Ravel’s Daphnis and Chlöe wouldn’t be nearly as compelling if it were all one instrument instead of the lush orchestration he crafted. This is why the redefinition of the initialism, ROI. Ultimately, it’s about precision of intent, of purpose.
OK, now back to Result of Involvement. The words, “result” and “involvement” are the color here, the timbre, what we’re pasting in. “Result” is a term which focuses the transaction on the intended goal which is shared by both the funder and the recipient. It’s the art, the education, the change we want to effectuate. It’s why we in arts support are all here. Working together in a shared mission is the ideal model in the artist-funder relationship. It’s the most productive, trust-producing, bonhomie-inducing, and positive structure there is.
“Involvement” acknowledges the depth of interest of the donor. (Want a business term? OK, how about “buy-in?” I’m fine with that one. It works equally well here.) Involvement can be so much more than the money. A grant maker with expertise in the field can not only provide funds, but also connect peers, provide advice on practices and resources, devise new funding structures and programs to address specific problems or needs, and even help with balance issues in the concert hall. I’ve seen it before. It happens all the time.
An organization gets something else when a funder gets deeply involved. They understand that this person, the funder, cares. The artist-applicant is more than just a blip on a screen, a funding decision swiped left or right. They are part of what makes America deep, meaningful, beautiful. Being involved is an acknowledgement and appreciation that makes this kind of difference to an artist or srts leader. I’ve been told as much.
Now, I’d like to clarify one thing. There’s nothing inherently wrong with businesses and investing. I’ve been involved with both in my life, including for-profit, and have enjoyed and learned a great deal from them. Also, some of the best arts supporters I know have been businessmen, and some of those have helped me better a better supporter of the arts. When investing a portfolio of assets, it’s definitely germane to seek financial return. Of course. The problem is when we look at all situations, interactions, and valuations with this focus.
For example, some (many?) grantmakers make the mistake of assessing the worth of an applicant organization strictly through a financial lens. We typically ask to see, as an attachment to a grant application, an audited financial statement, a budget, and a federal form 990 (the equivalent of an individual taxpayer’s 1040). These are not bad barometers for gauging the fiscal health of an organization, but they tell little to nothing about its program goals, professional qualifications, and artistic aesthetics, let alone the potential for exciting art. Without consideration of the latter qualities, the former documents yield no meaning. It’s a skeleton without organs, an outfield wall without ivy.
Put simply, ROI must be understood by both arts donors and the nonprofits they serve through the appropriate lens. It’s time to replace the standard version of this initialism, that doesn’t fit, with one that keeps our focus on the art and the beauty which lies on the road ahead. This will also reap benefits in how we deal with each other, ourselves, and our audiences and interlocutors, with honesty and a mutual focus.
Result of Involvement.