Lessons from the Field: Building Financial Sustainability in the College Success Sphere

January 11, 2016

By Allison Wallace and Garrett Neiman, CollegeSpring

College success organizations have been historically dependent upon philanthropy; however, changes in the philanthropic market will require organizations to diversity their revenue streams to survive. In order for nonprofits to scale responsibly and generate long-term impact on the communities they serve, they must re-think their financial models and integrate earned income into their revenue mix.

Many college success organizations are currently operating with some form of earned income, or they are planning to diversify their revenue streams in the near future. During a recent convening with Michael and Susan Dell Foundation grantees and NCAN, CollegeSpring Co-Founder & CEO Garrett Neiman explored the degree to which earned income strategies are top-of-mind for college access providers. In this meeting, Garrett Neiman co-presented with Mike O’Brien (CEO, iMentor) and Scott Baier (executive director, College Bound St. Louis) on financial sustainability. Prior to the presentation, O’Brien, Baier, and Neiman administered an anonymous survey inquiring about other college access organizations’ financial models. While the brief survey is by no means a comprehensive look at the financial models of all college access nonprofits, the responses did generate interesting findings about how organizations are navigating earned income strategies:

  • Most organizations cover less than 20 percent of their budget with earned income;
  • Nearly half of organizations expect to cover at least half of their budget with earned income five to 10 years from now;
  • College success nonprofits have attracted earned income from a variety of sources, including partnerships with state and federal governments, four-year colleges, school districts, and corporations, among others;
  • Most national nonprofits charge high schools; only a few charge colleges, and those that do are typically awarded small contracts; and
  • Those who charge high schools typically charge between $10,000 and $50,000 per high school, and contracts over $100,000 are rare.

Although the majority of college success organizations sampled still rely upon philanthropy as a substantial source of income, these responses indicate a shift toward earned income models. Additionally, the data suggest that higher education institutions are emerging as more willing partners.

While partnerships with higher education institutions are still emerging, the data saliently illustrates that high schools are consistent collaborators in the college success space. Blue Engine can attest to this data point, having successfully secured several fee-based contracts with high schools to partner with teachers to personalize and accelerate learning for students. The Blue Engine model operates through both public and private partnerships, with the organization raising $3 philanthropically for every $1 contributed by schools. Nick Ehrmann, Blue Engine Founder & CEO, explains that public funding is a critical component to making a sustainable impact in district schools:

 “We deeply believe in creating change in partnership with districts, and this means schools must be equal partners in the work. Our long-term financial vision is for public funding to cover 100 percent of our variable, school-based costs. Currently, public funding covers over 60 percent of the cost of our work in schools, including both fee-for-service and AmeriCorps funding.”

According to Ehrmann, existing partners renew contracts each year because they recognize the unique value of Blue Engine Teaching Assistants (BETAs) who both provide daily academic support to students and constitute a new pool of talent from which schools can develop and hire teachers.

CollegeSpring has similarly witnessed an eagerness from legacy partners to renew their contracts. Currently, school partners pay an annual fee-for-service that covers a portion of the costs of delivering the program, while philanthropy covers the remainder. Like Blue Engine, we see the value and efficacy of our work illustrated through these renewals: even as fee-for-service rates increase, partners continue to return because they can see the measurable impact that CollegeSpring has on their students’ SAT scores, as well as on their confidence and preparedness to apply to, enroll in, and transition into college.

While CollegeSpring is proud of the impact we are making within our current geographies, there is still a large population of low-income and underrepresented students we have yet to serve. During our most recent strategic planning process, we analyzed financial and programmatic data and came to the conclusion that our financial model was hindering our programmatic scalability and sustainability. After months of thoughtful planning, we fleshed out a new financial model in which earned income plays a much more significant role in covering both regional and national expenses. By increasing fee-for-service rates so that partners cover direct program costs, reducing cost per-student by leveraging regional infrastructure and diversifying our partner portfolio, investing resources in larger, cost-effective programs, and offering a broader menu of service models, we will realize our ambitious programmatic goals and move closer towards establishing financial sustainability. Through these tactics, CollegeSpring aims to double our earned revenue and serve an additional 15,000 students by 2018.

Restructuring financial models to incorporate earned income is a challenging but increasingly imperative step toward building financial, programmatic, and organizational sustainability. The philanthropic field is shifting and nonprofits must adapt along with it. Now is the time to explore new financial models and foster partnerships in a variety of sectors. Embracing this change will allow college success organizations to enhance their impact and more effectively work toward closing the opportunity gap.

Allison Wallace is development and communications coordinator for CollegeSpring. Garrett Neiman is CollegeSpring's co-founder and CEO.



 
 
 
 

 

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