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Analysing project benefits

Analysing project benefits

Everyone says that charities are becoming more like businesses, and they’re right. Like it or not, we have to think more commercially these days. It’s not all bad. There are some very good tools and techniques we can learn from business.

In the first of a series of articles, we present the Boston Consulting Group’s method for analysing the value of investments in a company’s portfolio, but with a twist to make it helpful for those of us in the voluntary sector.

This is the BCG box.

In the world of commerce this grid is interpreted as follows

Cash cows – these investments don’t cost much but promise high returns. Milk them.
Stars – these devour money, but the hope is they will turn into cash cows. Invest.
Question marks – with a lot of work these may be turned into starts. Tough call.
Dogs – low share in a saturated market. Only keep them for vanity or to do someone a favour, otherwise liquidate.

 

How can we use this idea in the voluntary sector?

In these tough times, it’s important to really think about the services we deliver, and whether we should continue with some, or even strike out and start up some new ones.  We could use the BCG box with some different labels.

When we consider the services we offer to our clients/service users, or the projects we’re planning or implementing, we can put them into similar boxes based upon the amount of resources they tie up versus the benefit they bring to the charity.  We need to think carefully about the benefit as it’s a real judgment call.  A project may not deliver great financial benefit but it might be brilliant for increasing the profile of the organisation.

So now we have

Question marks – high resource input for low benefit.  How valuable are these projects?   Does they justify all the work for so little return?  Will they eventually turn into cash cows?  Think carefully.

Stars – these projects demand a lot of resource, but they do bring a high benefit to the charity.  Is there any way we can move them down a box and make them into cash cows?

Dogs – although these projects don’t require much effort, they don’t bring much into the charity.  Considering your resource is scarce, is it worth considering dropping them and redeploying your resource into a more beneficial project?

Cash cows – not much effort for lots of benefit.  Of course you will continue with these projects.

So we’ve taken a model developed for analysing investments, tweaked it, and can now use it to analyse our projects.  And that’s no surprise really, as a project is an investment of our valuable resource, and we need to understand what kind of return we’ll get from it.

The big difference between us and the financial boys in the flashy suits and sports cars is the way we measure benefit.

For help in analysing your projects or with any other aspect of charity management, contact us

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