Interpreting ROI results
What Total Investment, Total Return, Net Return, ROI, and BCR mean on the ROI Metrics page, how the underlying markup relates to them, and where the estimates have limits.
Last updated
The model produces one result for each organization-project pair, for each markup method (see below), plus a yearly breakdown of the same figures.
The main numbers
| Figure on the page | Plain meaning |
|---|---|
| Total Investment | Everything the organization spent on the project: direct fees plus the estimated cost of staff time |
| Total Return | Estimated value the organization receives |
| Net Return | Total Return minus Total Investment |
| ROI (return on investment) | Net Return as a share of investment, shown as a percentage: (return − investment) / investment |
| BCR (benefit-cost ratio) | Return per dollar invested, shown as a multiple such as 5×: return / investment |
Note: ROI and BCR carry the same information: BCR = ROI + 1. ROI and BCR are blank when there is no investment to divide by.
Two model concepts sit behind these figures but are not shown on the page:
- Markup — the value the organization perceives per dollar of direct cost. It is how the model recovers return from behavior. See How the model works.
- Break-even markup — the markup at which return would exactly equal investment. It is
investment / (cost of the efficient mix), so it is at least 1.
Return is the markup times the cost of the efficient version of the organization's portfolio. An organization whose actual mix of contributions costs more than the efficient mix therefore has a lower BCR than its markup. The model calls the ratio the allocative efficiency: BCR = markup × allocative efficiency. See Allocative efficiency.
Reading them
- ROI of 50% means each dollar invested is estimated to return a dollar and a half. Net gain is 50 cents per dollar.
- ROI of 0% (BCR of 1) is break-even. For some pairs it is a lower bound rather than an estimate. When the calibrated markup would put a pair's value below its investment, the model raises the markup to break-even, because an organization that keeps contributing must value participation at least at its cost. An ROI of 0% therefore means "at least break-even". See Participation floor.
- ROI is not negative. Because of that floor, estimated value is never below investment for a pair.
- A high break-even markup means the investment is large relative to the cost of the efficient mix, so the pair needs a high perceived value per dollar to justify it.
Things to keep in mind
- Investment is estimated. Staff time is derived from activity counts and estimated hours per activity, multiplied by standard salaries and overhead. It is a consistent yardstick, not a payroll record.
- Only observed activity counts. Private work, work not tied to a recorded project, and activity LFX cannot attribute to an organization are not captured.
- Value is inferred, not observed. It reflects behavior plus a calibrated distribution, not a measured benefit.
- ROI is not a recommendation. Projects are complements as well as alternatives, so pair-level numbers should not be used to pick a single "best" project.
- Two markup methods. Results are available for two ways of ranking pairs (logistic and direct). See Stage 1: markups. They differ in how behavior is converted to a ranking and usually agree on the broad picture.
- Yearly figures are an allocation. Annual value and profit are the total split by each year's share of spend. They do not independently estimate value per year. See Annualization.