ROI in charity

Return on Investment (ROI) is defined as "a performance measure used to evaluate the efficiency of an investment" (Investopedia). ROI is used to judge how well an investment has performed. In other words, the benefit an investor will receive in relation to their investment cost.

When considering an investment in a company or fund, the ROI is a factor of the time it takes to repay your investment and the value above the investment obtained. For example, suppose repayment of an investment takes five years, and only the value of the initial investment results. This result is likely a bad ROI. If, on the other hand, an investment returns 100 times the original value invested in 5 years - good ROI.

Can the principle of ROI be applied in charitable giving? When a donor gives to a charitable cause it's because they want to support the outreach the charity is championing, e.g. clean water, disaster relief to hurricane victims, education for poor children, etc.

At Mite, our project coordination team starts every project process by determining the efficacy of the proposed outreach and the expected ROI. Our team applies ROI by factoring the impact of a given outreach compared with the charitable contribution being applied to accomplish it. If $16 can buy two prosthetics that will allow 2 amputees to walk again, we consider this high ROI.

We believe the joy of giving is linked to both the giver and the recipient within a charitable transaction. Both are affected by the act of generosity, but in different ways. The giver receives the benefit of knowing their resources are used to positively effect lives. The recipient receives the benefit of the gift and the love and hope that it brings. It’s in the interest of both the giver and the recipient of the gift that a high charitable ROI occur.