Benefit-Cost Ratio

Picture a foundation that funds job training, early childhood education, and emergency food aid, all at once. These outcomes are not measured in the same units. So how does the foundation compare them?

The Robin Hood Foundation is a New York non-profit. It funds programmes in four areas: jobs, education, early childhood, and survival. It built its own answer to this problem. That answer is the Benefit-Cost Ratio.

The workbook explains its goal simply. It tries to estimate the total benefit poor people get from each dollar Robin Hood spends. The method turns very different outcomes into one number. That single number is a dollar value.

The Benefit-Cost Ratio sits alongside BACO in the workbook's discussion of the Fully Integrated Model (section 7.2.3), used by social venture capital firms and impact investors to track their investments on a continuing basis.

Its core move is monetisation: whatever the outcome of a programme actually is — a job secured, a child reading at grade level, a family avoiding hunger — Robin Hood's methodology converts it into an estimated dollar value of benefit, then compares that to the dollar cost of the grant that produced it.

The workbook also uses Benefit-Cost Ratio as part of a broader observation about the field: in section 7.4, it notes "few organisations consider cost effectiveness, few consider benefit cost ratio and few organisations use qualitative approaches" — naming Benefit-Cost Ratio as one recognised approach among several, while flagging that lack of common measures across the sector is itself one of the field's standing challenges. Different organisations reach for different tools, which is exactly what makes cross-organisation comparison difficult.

Illustrative figures, in the spirit of Robin Hood's own dollar-denominated methodology.

A foundation modelled on Robin Hood's approach funds two very different programmes in the same year:

Even though a job placement and a nutrition programme produce entirely different kinds of outcomes, converting both into an estimated dollar benefit lets the foundation compare a 3.6 ratio against a 2.4 ratio on the same scale — exactly the comparison problem the Benefit-Cost Ratio methodology exists to solve. The ratio does not say the nutrition programme "failed" — only that, on this specific monetised measure, the job placement programme is estimated to generate more benefit per dollar spent.

Chapter 7, section 7.2.3 (Fully Integrated Model), introduces Robin Hood Foundation's Benefit-Cost Ratio immediately after BACO, as a second worked example of monetised impact comparison; section 7.4 references it again as one of several inconsistently-used common measures across the sector. Expect a question naming Robin Hood Foundation as the developer and asking what problem the ratio solves (comparing dissimilar outcomes on one monetised scale).

• Robin Hood Foundation developed the Benefit-Cost Ratio, not Acumen Fund — Acumen Fund's ratio is BACO; keep the two organisations and their respective tools separate.
• The ratio's purpose is monetising and comparing outcomes across different programme types, not simply calculating one programme's cost-effectiveness in isolation.
• The workbook lists benefit-cost ratio as only one of several approaches organisations use (alongside cost-effectiveness and qualitative approaches) — and flags that few organisations use any one of them consistently, which is itself a named sector-wide challenge.
• Do not confuse this with a generic finance "benefit-cost ratio" calculation taught elsewhere on the platform — this page covers the Robin Hood Foundation's specific social-impact application, as taught in this workbook.