No organization can invest resources in every idea and program. So when an organization is presented with two different program ideas, how should they proceed? I recently read about the method that the Robin Hood Foundation, whose mission is to fight poverty in New York City, uses, which is the benefit-cost ratio: they assign a dollar amount for the outcome and divide that by the amount they invest in order to achieve that outcome. For example: an organization invests $1000/person to help people in recovery. The outcome from the investment is that these people end up leading healthy and fulfilling lives. The dollar amount assigned to the outcome is $10,000. So the ratio for this program would be 10:1, a pretty good investment. Organizations must have methods to quantify their programs, not only because donors usually ask for it but, because it is beneficial for the organization.
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AuthorBaruch Hecht is a management consultant, experienced COO, the founder of Management Shop, and an avid reader of business literature. Archives
December 2019
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