Measuring Return on Investment:

The Value of Nonprofit Partners

By DeShele Dorsey

Philanthropy headlines and annual studies say it is true: companies that integrate corporate social
responsibility (CSR) programs into their overall business strategy are hailed as good corporate
citizens. Companies with strong CSR programs often have significant brand strength and a loyal
consumer base. However, the verdict is still out on how best to demonstrate the social impact of the
millions of dollars invested annually in charitable causes, through cash contributions, employee
volunteerism programs, in-kind donations, or sponsorships.

Measuring the value and benefits of good corporate citizenship is nothing like demonstrating the
return on investment (ROI) of a media spot during the National Football League's playoff games.
Public relations and communication teams track financial performance through indicators such as
changes in sales and share value. There is no simple method for quantifying the "added value" that
philanthropic activities provide towards distinguishing or improving a company's competitive
advantage.

No perfect science exists for measuring social impact, unless the company is willing to invest
significant dollars on a formal evaluation, which could take years to complete and assess. And even
with this effort, the company will still have a difficult time measuring all of its social impact. So, how
can corporate community involvement and philanthropy programs communicate to key internal and
external stakeholders that beyond good corporate citizenship, investing resources in a strategic
partnership with a nonprofit organization is a worthwhile effort?

One approach is to measure success based on the depth of the relationships that a company has with
key nonprofit partners. A strategic partnership is often defined by a multi-year commitment with
large grants, the use of other corporate assets such as product donations or volunteer time, and a
greater investment of time collaborating with the nonprofit to ensure successful execution of the
funded program.

There are a variety of indicators that corporate philanthropy staff can use to help make the case that
strategic partnerships are mutually beneficial, not only to the charitable organization, but to the
company itself.

Roadmap to Tracking ROI

1. Outline the specific outcomes and overall impact the company desires to achieve through its
corporate foundation program. Using this information as a guide, select key nonprofit
organizations to serve as the company's primary partners. Not only will the company avoid using its
limited resources on misaligned programs, but it can also work closely with the grantee to target its
efforts towards achieving the desired short- and long-term outcomes. A company doesn't want to
reshape the grantee's program, but it might be able to offer resources that can support the grantee's
interest in expanding the types of services offered.

2. Apply a more vigorous assessment to the donations provided (in-kind or cash). Most grants
can generally be satisfied with a report on outputs, best defined as the number of units of service
provided as a result of implementing the program. For example, outputs might include the number of
counseling sessions offered for domestic violence victims, the number of home-delivered meals
served to low-income seniors, or the number of youth who attended summer camp. These results are
very tangible because they can be counted and should be presented as part of a final report from the
grantee. It is much harder to determine if the domestic violence victim feels more empowered as a
result of an intervention program or if the student actually experienced an increase in self-esteem after
his or her participation in camp.

In order to capture this type of social impact, the foundation will likely need to help the grantee
improve its evaluation capacity, or hire an expert to help develop the assessment tools and provide
guidance on the types of data to be collected in order to demonstrate results. Again, the assessment
should focus on the outcomes that the nonprofit has agreed to help the foundation achieve, based on
its expertise in a specific focus area. When establishing the partnership, the nonprofit should
articulate clearly how it will measure results and how often the information will be shared with the
donor. Together, foundation staff and representatives from the nonprofit should review the results and
discuss how the program could be enhanced to achieve greater results. It is important to celebrate
even subtle results that demonstrate the nonprofit is moving the needle on the desired outcome and to
reflect on new objectives and goals for the program in the future.

3. Assess how well the company has leveraged all of its assets to strengthen the stability and
vitality of the nonprofit partner. Credible nonprofits have likely been successful because of their
expertise in a particular focus area. Sometimes, this could mean that the organization lacks skills and
expertise in other areas that are important to its growth and development. Often times, the nonprofit
could benefit from assistance in the development of its organizational capacity (e.g., leadership
transition, data processing, board development, etc.).

It has become more common for companies to support the nonprofit in building its skills and/or
expertise in these areas. Communications staff might be lent to the nonprofit to help with a re-
branding project, or a senior manager from human resources may provide some guidance on how to
improve recruitment activities. Support may also be as simple as upgrading the partner's technology
capacity through the donation of computers and new software. A company should take a look at its
core competencies and products in order to share this expertise with its nonprofit partner, where
appropriate. This will deepen the grantmaking relationship and strengthen the nonprofit's long-term
stability.

4. Pause to measure the relationship between consumer loyalty and the company's philanthropic
programs. Companies regularly invest resources in studying their consumers' behavior to understand
shifts in purchasing habits, to introduce new products, and to measure consumers' perception of the
company overall. Why not ask about the company to measure the level of awareness that current and
potential consumers have regarding its corporate citizenship? Consumer perceptions should be
mapped to awareness of the company's overall strategy and specifically to its relationship with key
nonprofits.

5. Ask employees whether the company's philanthropic programs influenced their decision to
work for the company. More and more, potential employees include philanthropy in their evaluation
of a prospective employer. Employees want to be engaged in the company's philanthropic initiatives,
and there are many different ways to meet this interest. Employees are motivated to serve and give
when they are confident that the company is also giving back in a meaningful way. A good practice is
to randomly survey new employees during heavy recruitment seasons to determine if the company's
philanthropy had any bearing on the individual's choice to accept employment. In addition, a
corporation may choose to dedicate a day of service to a nonprofit partner, or to coordinate specific
volunteer opportunities for employees that target professional development needs.
6. Track the number of media hits and periodical references generated from an external
source. Nonprofit partners, advocacy organizations, and other philanthropic think-tanks are the best
advocates for a company's philanthropic efforts. When the story of a corporate success in
philanthropy is profiled in a grantmaking periodical, or through a press release pushed by the
nonprofit, the credibility of the message is improved because someone else is spreading the good
news. Of course, it is important for the company to share its story as well, but do not underestimate
how much a nonprofit can enhance the corporation's image in the marketplace. Corporate partners are
often highlighted in annual reports, on websites, and during annual events, yielding a more objective
review of their good works.

7. Find opportunities to share broadly what the company has learned through its commitment to
a strategic platform. Annual conferences, workshops, and symposia in the field are built on
exchanging information and ideas with other philanthropy practitioners. The staff of corporate
foundations covet the chance to learn what has made their peers successful in grantmaking. The
cross-fertilization of new approaches to philanthropy and community involvement extends the donor's
impact beyond its individual effort to a more collective impact. In addition, the nonprofit partner can
also serve as a leader among its peers, sharing what it has learned through the partnership, helping to
improve the service delivery of similar organizations.

8. Determine if there has been any application of lessons learned from the corporate
foundation's philanthropic efforts to the company's policies or practices. A direct relationship
likely exists between supporting a fellowship program for environmental scientists and the
sustainability practices utilized by a company in manufacturing. It is more difficult to tie the work of
a youth organization to the way a multi-million dollar corporation operates, yet there is value in
discussing what the nonprofit has given to the company throughout the partnership. It also doesn't hurt
to explore what employees have taken from their interaction with a nonprofit partner during a
volunteer experience or agency tour.

9. Leverage relationships with other industry partners to achieve scale and greater impact.
Many companies share common philanthropic interests and goals but rarely seek out opportunities to
work together to achieve long-term impact. The truth is no corporation will ever be able to solve a
large social concern in isolation. Collaborating with other companies and/or governmental agencies
brings a larger number of resources and expertise to the partnership that can decrease the nonprofit's
dependency on a single source, but also create opportunities for the primary donor to pursue new
relationships. The nonprofit can track how the initial investment has yielded additional resources and
share the information in a final report. The multiplying factor of pooled resources is critical to
achieving lasting impact.

Taken together, the indicators shared are a starting point for how to value a company's ROI through
strategic partnerships.

In the coming weeks, onPhilanthropy will feature a case study that demonstrates specific application
of the roadmap outlined in the article.

About the Author

DeShele Dorsey is a Senior Director in the Philanthropy Division of Changing Our World, Inc. helping corporations
create and implement philanthropic programs that positively influence the community while adding value to their core
business. You may contact the author at: ddorsey@changingourworld.com