The Check Isn't the Only ROI: What We Get Wrong About Investing in the Work

A recent conversation with a nonprofit leader stayed with me. We were talking about consultants when he said he doesn't particularly like working with them because there is no guarantee on the return on investment.

Fair point.

But there is no guarantee when you hire an employee either.

An organization can hire a development director at $100,000 a year, add benefits, payroll taxes and all the other costs of bringing someone onto the team. There is still no guarantee that person will raise $500,000, win a federal grant or secure a major donor.

Yet we understand that we're paying that employee to do the work. We're investing in expertise, strategy, relationships, research and execution.

Why do we change the definition of ROI when the person doing the work is a consultant?

That's when I realized this isn't really a consultant problem. It's an investment problem.

We've become so focused on the return being money that we overlook the work that makes the money possible.

The Check Isn't the Work

This happens all the time in nonprofit consulting, particularly around fundraising.

An organization hires a consultant for $5,000 and the calculation becomes: We paid $5,000. How much money did we get?

If the consultant helps secure a $100,000 grant, everyone sees the ROI.

But what if the consultant discovers that you're not ready to pursue that grant? Your financials aren't ready for scrutiny. Your program isn't clearly defined. You don't have the data to demonstrate outcomes. Or you've been chasing opportunities that aren't aligned with your work.

Sometimes the most valuable thing a consultant can tell you is don't apply yet.

That advice may save dozens of staff hours, protect your reputation with a funder and redirect your resources toward an opportunity you're actually positioned to win.

The check isn't the only return.

Entrepreneurs Do It Too

Entrepreneurs aren't exempt from this thinking.

We hear business owners looking for grants, loans and investors all the time. But before we ask where the money is, we need to ask whether the business is ready for it.

What does your credit look like? Are your books current? Do you understand your spending? Are your personal and business finances separated? Do you know your margins? Have you researched your market? Do you know how much capital you actually need—and what you're going to do with it?

Getting your credit in order is ROI. Cleaning up your books is ROI. Discovering that your pricing isn't sustainable is ROI. Understanding where your money is going is ROI.

Sometimes the return on your investment is discovering you aren't ready for the money you're trying to get. That can save you far more than it cost you to find out.

Some investments produce a check. Others change the conditions that determine whether the check ever comes. That's what good strategy, financial management and consulting should do.

Stop Waiting Until Something Is Broken

Another problem is that organizations often wait until they need something immediately to invest in expertise.

We need a grant. We need funding. We need a strategic plan. We need this fixed.

Then the consultant is hired for a transaction and judged by whether that one transaction produces the desired result.

There is value in working with a consultant long enough for them to actually understand your organization or business. They know what you've tried, what worked, what didn't, where you tend to get stuck and where you're trying to go. They start seeing patterns and opportunities that someone hired for one isolated project may never see. That's an accumulating ROI.

Long-term doesn't mean keeping a consultant forever. It means giving strategic work enough time to create value.

If you only hire consultants to produce transactions, you may never experience the real ROI of having an advisor.

Now, we understand why some organizations are skeptical. They've been burned.

There are bad consultants. There are people selling expertise they don't have and promising results they can't guarantee.

But organizations also have a responsibility to do their homework.

Look at the consultant's experience. Look at their work. Check references. Ask what they've actually done—not just what they say they can do. Make sure their expertise matches the problem you're hiring them to solve.

The answer to a bad consulting experience isn't deciding consultants aren't worth the investment. It's becoming a better consumer of consulting services. Because we've also experienced the other side. Sometimes experienced consultants aren't hired to build the house.

We're called after somebody else burned it down.

And by then, most of the construction budget is gone.

Now someone has to correct the strategy, repair systems, redo work, fix financial assumptions and sometimes rebuild relationships. Then we're told there isn't much money left. That's where price and cost become two very different things.

A $3,000 engagement that requires $10,000 worth of corrective work wasn't a $3,000 engagement. It was a $13,000 lesson. Good stewardship isn't always about spending less. Sometimes it's about investing appropriately the first time.

Consultants: We Have Work to Do Too

Consultants aren't exempt from this conversation either. We have to understand the value of our own work.

Not just our hourly rate or how long something takes us. What problem are we solving? What knowledge are we bringing to the table? What costly mistakes are we helping clients avoid? What becomes possible because of our expertise? Experienced consultants can make difficult work look easy. Something may take me two hours today because I've spent decades learning how to do it.

The client isn't purchasing those two hours. They're benefiting from the years that made those two hours possible.

If we don't understand that value ourselves, we can't expect clients to understand it.

So, What's the ROI?

Organizations should absolutely hold consultants accountable. There should be a clear scope, deliverables and expectations. But accountability and guarantees aren't the same thing.

ROI can be increased revenue. But it can also be stronger systems, better decisions, financial clarity, avoided mistakes, increased capacity or being better positioned for the opportunity when it comes.

Because if the only work we consider valuable is the work that produces an immediate check, we aren't measuring ROI. We're measuring cash receipts. Those aren't the same thing. Before asking, Where's the money?, maybe the better question is:

What are we building that makes the money possible?

Invest in the Work Behind the Money

At Gibson Consulting & Solutions, that's a big part of what we do.

Our VIP Strategy Intensive helps nonprofit leaders and entrepreneurs get underneath the immediate problem, look at what's really happening and determine what needs to happen next. Sometimes the answer is funding. Sometimes the most valuable answer is what needs to be fixed before pursuing it.

And for consultants, Financial Clarity addresses the other side of this conversation: understanding what it actually costs to deliver your expertise, what that expertise is worth and how to communicate that value to clients.

Whether you're running a nonprofit, building a business or selling your expertise:

Don't just chase the return. Invest in the work that makes the return possible.

Inside the Work is a Gibson Consulting & Solutions series about the real conversations, decisions and strategy behind building sustainable organizations and businesses.