it's time for return on mission
DESCRIPTION
It's a familiar story. A major purchase needs to be made. You try to tell your board about how the purchase is necessary to benefit the staff and the mission. Your board wants to hear about return on investment (ROI). How do you get everyone on the same page? It's about having the right metric. Return on Mission is the ability to financially calculate and map tangible mission impact and value. This webinar will give you the tools to work towards and calculate Return on Mission.TRANSCRIPT
It’s Time For Return On Mission
Andrew Urban
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Today’s Speakers
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Andrew UrbanThe Nonprofit Buyer
It’s Time for Return on MissionPresented by: Andrew Urban
January 26th, 2011 The
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Return on Mission is a registered trademark of The Nonprofit Buyer
Let’s talk about a story….
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A familiar story….
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CONFLICT!
Involves the standard story arc….
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Who are the main actors in our story?
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There are numerous parts that are played…..
Your Staff
Board Members and other influencers
Multiple Vendors
test
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Board Member Expectations
Donor Recognition and Information
Staff Needs
Finance AccountabilityVendor Timing
Sales Rep Quota
Vendor Financials Pressures
Donor ExpectationsMembership Requirements
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Story Typically Goes….
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CONFLICT!
Story Typically Goes….
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CONFLICT!
Story Typically Goes….
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CONFLICT!
The story can take dramatic and out of control turns quickly
First conference calls with team members tasked to research options
Possible initial demo or more in-depth call with the research team
Big meeting with multiple stakeholders representing all departments
Smaller meeting with exec team
Large meeting again because we're a finalist
Smaller meeting with exec and/or implementation team
Information Technology Department review
Executive board meeting
Follow-up meeting with implementation team to review scope
Full Board Meeting
Negotiation meeting
Contract written
Lawyers involved - usually two to three rounds.
Scope concerns
Legal concerns again - another conference call
"Trust your decision" conversation if the exec sponsor is wavering
Identification of final issues
Contract re-do one more time
Final push over the line
Sign a contract!
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Story Typically Goes….
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CONFLICT!
The Nonprofit Buyer Model of Control
The high level reasons your organization
needs to make a particular purchase.
Definition of your
organization's mission, users
of all sorts who might need
access to the system you are
researching, and the like.
Explanations of how you expect
your purchase to impact the
mission of the organization.
A move beyond traditional Return on
Investment (ROI)
Critical Business
Issues
Return on Mission
Organization Outline
Doable Logistics
An explanation for the vendor
as to your timeframe, budget, and
communication process during the sale along
with other good
relationship expectations.
Think CORD!
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Case Study
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Critical Business
Issues
Return on Mission
Organization Outline
Doable Logistics
Project Goal: Replace outdated and broken
donor database system
“After reading the book, it was much easier for us to determine…the clear vision and goal set that we were trying to achieve….allowed us to not only meet but actually exceed all of our goals and expectations of our database solution.”
Kelly Snyder, Big Brothers Big Sisters of Central Texas
Critical Business Issues
• Very old donor database that was not being maintained any longer by the manufacturer
• System was crashing often. Serious risk of data loss
• Began managing most data tasks outside of the database
• Managed funds, lists and events in separate spreadsheets
Technology Budget Personnel
• Temporary fixes on current database utilized almost all of budgeted database monies for the year
• Board was resistant to spending any more on a new databaseand wasn’t understanding the staff’s case for one.
• New database would need new appropriations from board
• Managing day-to-day tasks was extremely difficult and prone to data entry errors
• Took hours to do basic tasks of gift entry, fund management, etc.
• Morale was suffering due to the difficulties
• Was hurting abilities to target and manage relationships
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Critical Business
Issues
Return on
Mission
Org Outline
Doable Logistics
Organization OutlineBBBS of Central Texas Organizational Profile (2009 stats)-Assets: $967,477 Income: $2,377,844 Year Founded: 1971
Expenses: $2,444,924 Liabilities: $96,332
Areas Served: Serves Travis, Williamson, McLennan, Burnet, Brazos and Hays counties.
Impact on Central Texas Littles in 2009
- Over 74,000 mentoring hours for 1,519 children in 2009.
- $51,500 in higher education scholarship money via BBBS' Foundation to Littles.
- The cost of supporting a match for one year is about $1,250, or $104/month.
- 99% avoided early parenting- 99% remained in school- 94% improved or maintained academic performance- 93% avoided substance abuse- 90% avoided delinquent behavior
Project Goal: Replace outdated and broken donor database system
Project Number of system users: 3 main and 5 secondary users
Other “nice-to-haves” to share – Any business process mapping done, 990s, funding
sources, etc
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Critical Business
Issues
Return on
Mission
Org Outline
Doable Logistics
Traditional Metric for Success
Return on Investment (ROI)
Doesn’t properly measure the success of the tug-of-war interests
Is a financial-only metric in a mission-focused, people-oriented sector
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Critical Business
Issues
Return on
Mission
Org Outline
Doable Logistics
What is Return on Mission®
Return on Mission (ROM)
Properly measures the success for all tug-of-war interests
Measures both the financial and mission-based aspects of a decision
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/ Impact on Mission
Critical Business
Issues
Return on
Mission
Org Outline
Doable Logistics
Return on Mission Calculation
/ Impact on Mission
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Assume:• Print 10,000 pages per month on a current printer/copier• Current printer/copier costs $0.02 per printed page• New printer copier costs $800.00
If new printer copier cost $0.01 per printed page:• New copier/printer has half the cost per printed page• Monthly printing costs from $200 to $100• Gain $200.00 in trade-in on old printer/copier
Then:• ($100 printing savings x 12) – ($1000 for new copier/printer - $200 for trade-in) = $400
savings for year one• The initial investment of $600 ($800 for the new printer/copier minus trade-in)
produced a return of $400 in the first year of production• Standard ROI of 33%
Return on Mission Calculation for this scenario:• $400 savings in first year of production / $400 (a sample amount of one month
electricity cost at a children’s shelter building) = 100% return on identified mission costs
Critical Business
Issues
Return on
Mission
Org Outline
Doable Logistics
Return on Mission Calculation
/ Impact on Mission
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Hard costs are items such as: • Software costs• Software Maintenance costs• Support costs• Implementation services
Tangibles Intangibles
Soft costs are items such as: • Staff productivity• Donor goodwill• Staff morale• Lost donations due to data
process inefficiency
Impact on Mission is its own calculation of tangible and intangible benefits apart from the basic ROI calculation.
Critical Business
Issues
Return on
Mission
Org Outline
Doable Logistics
Doable Logistics
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BudgetTimeframe Communication Demonstrations
Critical Business
Issues
Return on
Mission
Org Outline
Doable Logistics
• Not just “When you want to buy.”
• Walk backwards to a date
• Provide time for implementation and the inevitable issues
• You are buying based upon your needs first
• Search for vendors through multiple venues
• Most vendors will proactively disqualify you on budget early
• Establish clear schedules
• Elect a champion
• Keep all communications above board
• Brevity in proposal responses
• Demo to your CBIs
• Demo to your processes
• Demo to the unique points of their product
Testimony
“…we had little knowledge on how to pick the right solution for a new database for the agency. All of the sale pitches we had heard sounded great, but left us wondering which one should we believe. His book, The Non-Profit Buyer, gave us the much needed tools to take control of the buying process. Ultimately, we have great confidence in the solution we purchased and have already seen a major difference in the functioning power of the agency overall.”Kelly Snyder, Big Brothers Big Sisters of Central Texas
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Testimony
“Before reading the Non-Profit Buyer, we were struggling with how to effectively communication to our Board of Directors, why the large investment needed to be made on a donor database. After reading, we were able to establish clear and concise Critical Business Issues and a Return on Mission, that enabled us to get the approval from the board for the project.”
Kelly Snyder, Big Brothers Big Sisters of Central Texas
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RecapThe Nonprofit Model of Control enables –
• Your organization to take control of the buying process
• You to find harmony instead of the usual unfortunate chaos of a buying process
• Your vendors, staff, board, and others to always have the same goals in mind with a buying process
Return on Mission gives you -
• The right metric of success
• A way to measure both the financial and mission success of your project
• The ability to communicate about a project in both financial and mission-oriented terms
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Contact
• www.nonprofitbuyer.com
• Andrew Urban
• Voice - 512-751-2241
• Twitter - @NPBuyer
• Facebook -
http://www.facebook.com/pages/The-Nonprofit-Buyer/198021632072
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