In its April issue Fast Company magazine offers a glowing report that compares a $15 million growth campaign by an organization called College Summit to a "private placement," and compares the 10 "investors" to the venture capitalists that funded the Palm Pilot. While the piece acknowledges that there is no equity or monetary return involved, the funders at least have the opportunity to build a nonprofit brand name.
Is there anything to this extended metaphor of venture capitalism?
College Summit (EIN 52-2007028 Form 990) has a program to help low income students in the mid-tier (EPA 2.85) get into college through intensive summer workshops and a year-long senior curriculum. The workshop program has been around since its founding by Jacob B. Schramm in 1993 and the senior curriculum was added in 1999. The BridgeSpan group prepared a report about the organization with the hopeful title, "College Summit: Balancing aggressive national expansion with centralized control." As the report says, written in 2004:
A Congressional commission estimates that there are 200,000 “college-capable” low-income high school graduates who fail to enroll in college each year. [College Summit] has reached 5,000 of them since the organization started in 1993.
College Summit has been able to attract significant private funds in the past, such as a $3 million, five year matching grant from the Samberg Family Foundation. In 2004 alone, it received $3 million from the Department of Education due to a Congressional earmark (less politely known as a pork barrel project). The current funding is to expand the program to 14 cities by 2009.
Though the idea has some plausibility and the organization's ability to inspire fund raising is impressive, there is still a mismatch between its fund raising to date and the target 200,000 students per year who need its help. It reminds me of the scene in Chicken Run where the engineer identifies the problem with chickens flying: they need more thrust.
The BridgeSpan report indicates that the program has had only one year of doubling in size. Of late, the growth rate has declined to around 50% per year. This would be incredibly impressive for most nonprofits, but not for one with national ambitions that has yet to reach $10 million a year.
The BridgeSpan report identifies several factors that may be connected to the stalling.
- The organization retains strong direct control over its programs, and unlike most national charities has opted for a direct branch system rather than a chapter structure. While this improves quality control, it makes it more difficult to expand at an exponential rate.
- The organization has also chosen to base its ongoing operations on fees for service from local schools districts. Again, this is a trade off: it decreases reliance on grants, but it also means that school districts need to be sold on the program.
- The organization is also in direct competition with for-profit college prep programs like Kaplan and Princeton Review, who have the means to offer wide-scale programs without worrying about the next year's funding.
All in all, the venture capital metaphor is probably too apt, for this organization did not receive enough funding and or develop the management team in its first decade to achieve the national scale it sought (for comparison, see Teach for America), and it still seems to lack a plausible strategy and funding on a scale to achieve that goal.
