Change Capital Fund’s grantees have been increasing their capacity to implement cross-program tracking systems, use program data to analyze progress and confront pitfalls, and understand the true and full cost of achieving an outcome.

Now, with the help of Lili Elkins, Chief Strategy Officer at Roca and Associate Professor at Columbia University’s Mailman School of Public Health, they are creating public benefit rationales to compare their results and costs against the outcomes and costs for similar populations. The grantees’ public benefit statements demonstrate that their programs merit sustained and scaled investment and point to the need for more access to administrative data.

Below, Ms. Elkins briefly explains why public benefit analysis is an essential tool for service providers and funders alike.

A public benefit rationale is a way to clearly illustrate a problem within the community and highlight how a service provider is effectively working to address that challenge.  The rationales examine program outcomes and impacts the program will have on clients served and the broader community.  Creating a public benefit rationale allows a program to demonstrate both its outcomes and its cost effectiveness when compared to other potential alternatives.  In a time when sustaining organizations has become increasingly more competitive, it has become incumbent on providers to show not only that they offer a unique service, but that the service has a positive impact on the community.  A public benefit rationale provides the service provider with a key tool that can be used to differentiate itself from others and to monetize the value of its programming.

It started at Roca, a nonprofit in Massachusetts that works to reduce recidivism and poverty, where I serve as Chief Strategy Officer. We developed a statement around the costs and impact of delivering our work that eventually led to us being able to secure a $28 million social impact bond.  That’s putting it in the simplest of terms.  It actually took six years to build out the cost benefit argument, including creating a data system and capturing and analyzing data.

At Roca, we had a relatively easy argument to make because we work to reduce recidivism and there are well-documented costs for incarceration.   When you boil it down, we just had to look at the cost of successfully serving a young person through our program and compare that to the rates of reincarceration for similar young people, and the duration and cost of that incarceration which is $53,500 a year in Massachusetts.  Compare the two and you have the cost savings to government.

CCF grantees, like most nonprofits, have a much harder task.  There is no dollar figure associated with literacy, for example.  That makes it harder for organizations like St Nicks, that invest heavily in literacy in their after-school programs, to make an argument to funders for the financial return on improving a child’s reading.  It is also much harder for them to access reading scores, to show that their program work since St. Nicks has to go to individual schools and negotiate the release of the data with principals.

Understanding impact is hard work that takes a long time.  Building out a data system is expensive and time consuming.  And once you have cleared that huge hurdle, you still have the work of collecting good, clean data and figuring out how to make a cost argument.

Cypress Hills Local Development Corporation (CHLDC) and New Settlement Apartments, for example, tracked college persistence.  Luckily, there is a national clearing house that reports college graduations by social security number. But, saying a student in your program graduated – which is what most programs do –  doesn’t tell you anything.  However, taking that simple outcome and comparing it with the average college graduation rate for similar populations in New York City is an important measurement that allows you to get to your program’s impact. Taking this a step further, telling funders how much more that graduate will earn over a lifetime,  or how much more they will contribute to the tax base because he or she got through college is one example of a public benefit rationale.

The biggest obstacle is data.  Accessing administrative data from government agencies is hugely complicated and time consuming.  Roca has been running programming for 30 years and we only got our first direct access to administrative data this year, after several years of negotiations, as a result of our engagement in our pay for success project.  Nonprofits too have enormous financials barriers to tracking data – it could cost well over $100,000 to build out a data system, plus nonprofits need staff to manage the data, and entire organizations need to be retrained to always capture good and complete data.

These types of analyses make it easier for funders to see the potential impact of their grants.  St. Nicks could only tell funders how many grade levels a 3rdgrade student went up during the year in their after-school program.  Now, they can tell them that seven percent of students were reading at grade level at the beginning of the year and by the end of the year’s program, that number jumped to 36%. That is much more meaningful and impactful data for funders because we know that reading at grade level in 3rd grade is a predictor of academic success in future years, including predicting college enrollment.