2026/03/15
Non-profit organizations (NPOs) don't concern themselves with maximizing financial profit, as the name suggests. So supposing that a NPO does not make a profit on any of its goods or services, funding must entirely come from external sources, such as donations or grants. These income mechanisms make a given NPO an arm of the community or of one or more governments respectively. In order to maintain the cash flow, the value to the community or interests of the government body must be demonstrated.
This brings us to two slightly differing paths:
The community can feel the difference a NPO has on itself if it exists. If the impact is not seen or felt, people will stop donating. So community-oriented and community-reliant NPOs are held more accountable.
Governments cannot feel this and rely on standardized reporting in order to assess whether a NPO is doing what was agreed upon in a grant. This opens the door to underperformance.
That's basically all I have to say about community-reliant NPOs; higher quality of impact is incentivized, and poor performance is disincentivized, and so there isn't anything really wrong.
However, government-reliant NPOs can get into some nasty territory. Strong performance to the letter of the grant does not necessarily correspond to impact quality. In this case, tens or hundreds of thousands of dollars could go to an NPO for a single grant award, while most of the money is spend on administrivia and scrambling to get meaningless numbers in order to satisfy reporting requirements. The quality of the impact is not measured! This can lead to negative "social profitability", i.e. the social benefit is not proportionate to the tax dollars spent on funding an NPO, or perhaps the benefit is even negative.
Thus I propose a metric. I'm naming it after myself because that's what you do to put yourself out there I guess. It's still a lot less pretentious than naming a mathematical equation after yourself. People working at NPOs that want their work to actually be meaningful should pay attention to this.
Since we're talking about social profitability from the perspective of investment of money, we can define it as the ratio of impact:$. So now for the tricky part: we need to quantify impact in a meaningful way. The quantity of the impact is simple enough: number of unique individuals served, number of trees planted, etc. But we must consider how to quantify the quality of the impact, and this will differ greatly based on what impact is being measured. In any case, each unit of impact needs to be multiplied by a "quality factor" (QF), and the sum of these values must then be compared with the dollars invested into making those impacts happen.
Each specific category of impact must be separate, and carry different values. We must define five baselines values from which to judge the quality factors. The first two baselines must be negative, the third one must be 0, and the last two must be positive. Besides those constraints, quality factors can be anything between -999 and 999. Here are some examples:
Small summer class (more personal, bigger range)
Made things worse (-20)
Wasted time (-10)
Impact unclear (0)
Some benefit (10)
Life changed (50)
Short videos (can impact culture but mostly has a small impact range)
Made things worse (-3)
Wasted time (-1)
Impact unclear (0)
Some benefit (1)
Positive action taken (2)
Environmental (affects entire community, bigger range)
Plant removed or other clear negative impact left (-100)
Work left unfinished with slightly negative remnants (-10)
Impact unrealized (0)
Plant planted and is thriving (50)
Plant has contributed to revitalizing a community via creating third spaces or shading the street (200)
In many cases it will be up to the staff member handling the data to decide which quality factor to assign, in which case care should be taken not to overestimate the impact to maximize accuracy. Or, the data can be provided directly from those impacted (using surveys etc.) if individual impact is being measured.
Also, while the strict value per unit of impact is a whole number, decimal numbers can be used for larger data sets if it's infeasible to measure the individual impact and the estimated impact ranges between a set of values. For example, the value of YouTube shorts is likely to range between -1 and 1 on an individual; depending on the average watch time, this range could be adjusted to -1 and 0 (if viewers hardly make it to the core of the content) or to 0 and 1 (if most viewers make it to the core content). In the first case, the views can be multiplied by -0.5, and in the latter case, the views can be multiplied by 0.5. If a short gets 1000 views and most viewers got to the main message, and it took an employee getting paid $30/hr two hours to produce, our FSPM is (1000*0.5) : $60 = 500:$60 = 8.33. Not bad. On the other hand, this number can easily become 0 or negative if nobody is paying attention to the content, and the money was either just wasted or you merely helped contribute to wasting someone's time.
An organization gets $50,000 to carry out an intensive youth leadership summer program. 30 students sign up. Let's track the journey of the students:
23 students show up on the first day. Those 7 missing students won't be coming for the rest of the program. The quality factor for 7 of the students is already 0.
5 more students eventually stop coming. They may have gotten some benefit but it might have also been a waste of time, so average -10 and 10 to get 0 again.
15 students complete the program satisfactorily and we assume they got some benefit out of it. 15*10=150.
2 of the students are highly engaged and take full advantage of the program. This could have changed their life for the better. 2*50=100.
1 student in particular goes above and beyond and carries over the work from the program into a self-started company that successfully reduces violent crime in the student's neighborhood by 60%. For this we will need to break out of the baseline values; let's say the QF for this is 300. 1*300=300.
TOTAL: 0+0+150+100+300=550. FSPM is 550:50,000 = 0.011. Could be worse, but for the money it's somewhat hard to justify.
Of course, improvement of the numbers in this case lies in keeping students engaged and interested, making the value proposition very clear to both parents and students, maintaining regular follow-up and notification messages to parents and the students themselves, and ensuring the actual programming is highly relevant and useful in the world.
A variant of the FSPM that uses Quranic/Sunnah guidance to aid the calculation of QF values. This is a WIP.
https://www.abuaminaelias.com/allah-multiplies-the-reward-for-good-deeds/
Governments will continue handing out large sums of money to accomplish various ends in a subpar fashion, and for many this state of affairs is not worth caring about or is even beneficial. But for those who care about maximizing impact, implementation of a variant of this metric can greatly help in the measurement of organizational impact per dollar, and inspire steps to take to increase this value and thereby increase impact. Governments can also require such a metric in order to aid auditing of the efficient use of their grant funds.