How to Calculate the ROI of Online Communities

By Richard Millington

ROI People

Social Return

Non-profit organizations develop communities for a variety of different reasons. These typically are to fulfil the organization’s mission by improving the lives of stakeholders, developing a sustained long-term social impact, or eliciting donations from members. This can broadly be encompassed under the umbrella of social return.

Quantifying social return is difficult. For example, how would you quantify the return of a community-organized petition preventing a fracking operation being established in the local area?

Or how would we quantify the return of helping members better understand a disease they are afflicted by and take preventative actions? How would we measure helping members with depression connect with others who have been through similar experiences?

Trying to capture these aspects in a financial metric is inelegant and neglects the full picture. Many of these communities yield tremendous psychological benefits to their stakeholders. However, because it’s difficult doesn’t mean it’s not possible to identify a relevant proxy metric we can use.

We might not be able to determine the benefit of preventing a fracking operation in the local area, but we can compare the cost of collecting a signature via the community against other methods (e.g. having someone on the street collecting signatures).

Likewise, we might not be able to measure the complete financial benefit of members being more informed or supported by others afflicted by the same disease, but we can capture and contrast how well they feel they are handling their disease, their self-reported life satisfaction ratings, and their current level of knowledge against other methods the organization is taking to achieve the same outcome.

This can, however, lead to big mistakes. Imagine if a petition collects 500,000 signatures at a cost saving of $1 per signature compared with $2 via other methods. The organization might calculate a return of $500,000 ($1 saved per signature collected). Yet, now imagine the petition doesn’t achieve its goal. This would still be calculated as a $500k saving despite the petition itself being a failure. There is no simple solution to this problem. It does help, however, to be aware of it.

With the full acceptance that calculating the financial value of social benefits may make us feel queasy, we have tried to put together a means of estimating the return of a non-profit community.

Social Return

Improved lives of individual stakeholders

Capacity Building

Improving the ability of stakeholders to handle their environment

More informed members

Social support

Social Impact

Influence change on a broader social level

Petitions

Protests

Crowdsourcing knowledge/revenue

Donations

Eliciting donations from community members

Peer to peer fundraising

Social proof

Challenges and milestones

 

Chapters

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