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Demonstrating Your Impact: Return on Investment

Graph of Cost and Benefit with Push Pin near benefit

Are you looking for ways to demonstrate your impact to your administration? This is Part 1 in a 3 part series on demonstrating your impact.

The NN/LM MidContinental Region (MCR) has created three online tools that can be used to enable a library to put actual figures to their importance within an organization http://nnlm.gov/mcr/evaluation/tools.html.

CBA/ROI Calculator: Sometimes it’s a good idea to speak the language of the administration. Cost/Benefit Analysis (CBA) and Return on Investment (ROI) are measures used by financial managers to indicate if their money is going in the right place.  In a cost/benefit analysis, the goal is to show how much benefit the organization receives for the cost of the library.  For a cost/benefit analysis, the result is actually a number: the benefit to cost ratio.  If $50 was spent and the benefits to the organization could be seen as worth $25, then the benefit/cost ratio would be $25/$50 or 1/2 (50 cents of benefit for every $1 spent). This would obviously not look good for your library.  However, if you could show that for the $50 that was spent, the benefit to the organization could be valued at $150, then the benefit/cost ratio is $150/$50, or $3 of benefit for every $1 spent.  This could make your library look like a real asset!

Return on Investment is a very similar concept.  In order to get the final percentage, the benefit of an investment (minus the original cost) is divided by the cost of the investment.  So using the figures from the second case above, if $50 had been spent and a $150 benefit was achieved, $50 is subtracted from $150 to show a total return of $100.  Then dividing that by the original investment ($100/$50), equals 2.00 or 200%.  A 200% return on investment would make your library look very good!

“How can I apply this to my library” you might ask?  The CBA/ROI Calculator from the MidContinental Region does most of the work for you.  You simply fill in the blanks with the cost of books, cost of staff time, time saved, etc., and the final costs, benefits and ratios are determined at the bottom.

Database ROI Calculator: The calculator above is mostly designed for the books in your library’s collection.  The MCR also provides a CBA/ROI calculator for databases.  Getting statistics for databases can be a little more difficult than for other library services. Databases are often bundled with other products, and vendors define use statistics in multiple ways that make if difficult to compare across databases.  Nevertheless, the MidContinental Region has some helpful tips for deciding which statistics to enter.

Valuing Library Services Calculator: Isn’t this what we all want – to explain that our library services have a financial value to the organization?  Using this calculator, you can assign a dollar amount to the services you supply based on their retail value.  You type in the number of times a particular service is used, and the calculator multiplies it by the retail value of that service. And at the bottom, it sums up your library’s total retail value.

The MCR is gathering data for advocacy purposes. If you would like your data included, be sure to fill out the form completely including the CAPTCHA box, and hit “submit data.” Librarians everywhere will appreciate your thoughtfulness.

Stay tuned for Part II – Collecting Stories.

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