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Law of Diminishing Returns

You may not know this, but we accountant-types think numbers are fascinating!  They are interesting and multi-faceted; they tell a story, many stories.  It is easy for me and my team of accountant-types to get completely absorbed in our fascination with numbers.  The closer we get to a number, the more fascinated we are.

Well, our fascination runs smack dab into the law of diminishing returns more often than not.  There is a moment when adding more effort will not produce significantly more gains.  This is the moment when we have to step away from the number because it is “good enough.”

Auditors have a term for this.  They call this “materiality.”  For instance, in your annual budget of $1.5M, the $79.00 discrepancy in a particular account just doesn’t rise to the threshold of being meaningful. 

Perfection certainly makes sense when you are packing a parachute or doing surgery, but perfection is simply unattainable in most areas of life . . . or at least unattainable in a long-term, sustainable way.  I think that’s what makes us human.

Where do you find yourself running into the Law of Diminishing Returns?

– Annette

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