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On October 12, 2011, Jonathan issued a report on iMentor with a "BUY" rating. …

On October 12, 2011, Jonathan issued a report on iMentor with a "BUY" rating.

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  • 1. NONPROFIT INVESTORINDEPENDENT RESEARCH FOR PHILANTHROPYiMentor SUMMARY iMentor uses technology, curriculum, and targeted support to createNonprofit Investor Rating: a new, more powerful mentoring model that is more scalable andBUY easier to adopt than traditional mentoring models.Mission Statement STRENGTHSiMentor’s mission is to improve the lives of Through its unique mentoring model, iMentor has tapped mentorshigh school students from underserved who have not been able to participate in traditional programs. Itscommunities through evidence-based, corporate and school partnerships have created long-lastingtechnology-enabled mentoring. relationships with its participating mentors and students. In theFinancial Overview company’s most recently reported program year, 83% of its mentees$ in MM, Fiscal Year Ended Dec 31 in NYC graduated from high school while the citywide graduation rate was just 63%, which begins to validate the program’s 2007 2008 2009 effectiveness. iMi, an online interactive mentoring program, hasRevenue and Support $7.3 $7.3 $6.8 successfully begun to address the sizable 17.6mm mentoring gap ofOperating Expenses $1.8 $1.9 $2.9 youth in need of mentoring.% of Total: Program Expenses 85% 72% 71% CAUTIONS G&A 10% 17% 17% Public company financials and specific program data points are Fundraising 5% 11% 12% limited. Recent 2010 financials are currently unavailable and will be critical in evaluating iMentor’s efficiency of deploying its expanding base of funds as well as its growth objectives. The quality andContact Details effectiveness of its mentoring program is difficult to accurately gauge.iMentor The company has started to take steps to evaluate its mentoring30 Broad Street, 9th Floor model by launching “Public/Private Ventures”, a 2,000-participant,New York, NY 10004(212) 461-4330 six year study.www.imentor.org/ RECOMMENDATION: BUYEIN: 30-0105507 iMentor’s unique, proprietary mentoring model has gained greatAnalyst traction with its participants, funders and community. The companyJonathan Tran has expanded rapidly over the past few years and has a solid network of corporations and partnerships in place. The companysPublication Date continued plan to innovate its mentoring model, validate itsOctober 12, 2011 program’s effectiveness, and increase their asset base puts the company in a strong position to help serve its growing population of mentees in need. Nonprofit Investor.org
  • 2. STRENGTHS▲iMentor program successfully attracts more mentors because of its flexible online and in-person model. Manypotential mentors are excluded in a traditional model because 1x1 meetings are often set at inflexible after-school timesand are typically in-person. iMentor’s program provides more flexibility: mentors email mentee once a week, pairs meetin person once a month, mentors devote 6-8 hours a month to mentee on their own schedule.▲ Mentors are carefully screened, matched, and trained. Mentors must apply via an online application process,undergo criminal background and reference checks, and a phone interview. It seems like the application process is moreof a way to screen out obviously egregious applicants vs. “qualified” candidates. Selected mentors attend an initial 2hour training session and are provided a specific curriculum/checklist to adhere to during mentoring process. The entireprocess takes 2-4 weeks in total to complete.▲ Partnerships with corporations and schools are designed to be long-lasting and heavily involved. For whole-schoolpartnerships, iMentor partners with the entire school by enrolling every single student, eliminating self-selection amongstudents. This creates a long term relationship between mentor/mentee/school with the common end goal of highschool graduation and college attendance. This partnership addresses the problem of under-resourced in-houseguidance programs. For corporate partnerships, iMentor targets leading companies’ employees to build positive andlasting impacts on their communities. 100% of the current 16 corporate partners renewed with iMentor last year, whichdemonstrates powerful participation stickiness.▲iMentor fundraising programs are diverse and community engaging. Events seem to be well-planned out, diverse,and fun. A few event examples include Twestival NYC, 4 Under 40 guest speakers, wine tastings, galas, happy hours,workshops. iMentor has done a good job building its brand and reputation, especially in the New York City community.▲Recent statistics demonstrates directional effectiveness of iMentor. During the 2009-2010 program year, 83% ofmentees in NYC graduated from high school while citywide graduation rate was just 63% (65% for 2010 per MikeBloomberg). 75% of teachers say students benefited academically from participation in iMentor, while 92% of teacherswitnessed mentees becoming more confident in talking with adults and building relationships.▲Online interactive mentoring program (“iMi”) helps to address the sizable mentoring gap and is scalable.Of the17.6mm youth considered in high need of mentoring, only 2.5mm adult mentors exist, leaving ~15mm young people stillwaiting for mentors. To address this, iMentor created iMi, a multi-year, structured research-informed mentoringcurriculum on an online platform for managing all aspects of the mentoring program. Currently, there are 50 iMipartnerships in 20 states across the country. iMi’s technological infrastructure allows for the monitoring of mentor-mentee relationships and provides an easier way to track participation statistics, which may help with competing forgovernment grants.▲Funding sources are diverse and help provide free program services to all mentors, mentees and partnering schools.iMentor receives its funding from 5 sources: 1) corporate partners, 2) individual donations, 3) government grants, 4)online donor drives and 5) fundraising events. The majority of iMentor’s funding comes from contributions, gifts andgrants. For a more detailed analysis, please see “Financial Overview”.CAUTIONS▼ Quality of mentoring is difficult to gauge and current monitoring controls may not be very effective. iMentorsvolunteers are not youth development experts, so the level of impact will vary significantly across each mentor-menteepair. The background, education and qualifications of the individuals who developed iMentor NYC and iMi’s programsare undisclosed. Although all mentor-mentee emails are logged and can be searched, it seems difficult to accuratelygrade how effective mentor-mentee conversations are progressing. Some statistics are released on website tosummarize results, but much more details are needed in order to gauge and validate effectiveness. Some importantmetrics and data releases that would be helpful to know from company may include: 1) % mentees who graduate high iMentor | Nonprofit Investor Research 2
  • 3. school, 2) % mentees who get accepted into college, 3) % of mentees who graduate from college, 4)parent/teacher/counsellor testimonies and 5) level of improvement of average grades.▼ Financials and program data points are very limited. Company has only made available their financials for selectyears (2007, 2008 and 2009) and details are limited. Financial information before 2007 would be helpful to moreaccurately assess growth and efficiency of corporation. The release of 2010 financials will provide extremely importantdata in judging how effective iMentor has been in deploying the company’s rapidly expanding level of funds.▼ Inconsistencies exist between iMentor’s NYC based program and iMi interactive model. Mentor screeningstandards are different between these two programs, which questions how the company will control quality ofmentoring. iMentor NYC has the burden of responsibility to screen their mentors, while iMi outsources the screeningand employment background checks to the partner organizations.OVERVIEW OF IMENTORIn the last 10 years, iMentor has affected over 20,000 lives by cultivating relationships between young mentees andvolunteer adult mentors through an innovative combination of e-mail correspondence and in-person meetings. To-date,iMentor has matched over 10,000 mentor-mentee pairs, partnering with 30 NYC schools and after school programs infour of New York Citys five boroughs and programs all over the country through iMi. Currently, iMentor serves 2,400mentor-mentee pairs through its NYC program and 4,500 students through partnerships with 50 orgs in 20 states usingits iMi interactive structure. iMentor | Nonprofit Investor Research 3
  • 4. FINANCIAL OVERVIEWiMentor has driven extraordinary growth in its balance sheet over the last few years and has managed to generate aconsistent and healthy net profit margin since the company became profitable in 2007. Company’s cash position peakedin 2008 and the composition of its more liquid assets shifted to pledges and grants receivable the following year. A largeunanswered question on iMentor’s balance sheet is the specific break down of “Other Assets”, which has increaseddramatically over last two years and composes over 70% of 2009’s assets. A majority of this is most likely fromcontributions, but more clarity from the company on the Form 990s would be helpful.On the revenues side, iMentor has had tremendous growth between 2006 and 2007 with most of its revenue comingfrom contributions and grants. Latest available financials (per Form 990) indicate source of revenues come primarilyfrom non-government contributions, gifts, and grants (91.9%), while government grants compose 3.4%, membershipdues 4.4%, and fundraising events 0.3%. It is a bit surprising that fundraising does not contribute a higher portion, bothon an absolute and relative basis. From 2004 to 2008, iMentor has received strong support from private individualcontributions (non-government and publicly supported organizations) in the amount of 40% of total contributions. Thisis most likely a result of company’s strong outside connections from its key corporate officers and directors. Forexample, iMentor founder John Griffin, also founder of Blue Ridge Capital, has key relationships with The Michael J. FoxFoundation, Tiger Foundation, Stanford and UVA.On the expense front, salaries, other compensation and employee benefits have composed at least 50% of totalexpenses for each of the four reported years. Program expenses make up the bulk of expenses (72%), as would beexpected. It is a bit surprising that the high fundraising expenses in 2009 ($255k) have resulted in only $22k of revenuein the fundraising category. Coupled with the fact that the bulk of these fundraising expenses relate to annualcompensation, it is questionable how effective and worthwhile iMentor’s fundraising program is. Revenue: 2006 2007 2008 2009 Contributions and grants $879,745 $7,254,692 $7,189,799 $6,761,000 Program service revenue $0 $94,062 $94,062 $0 Investment income $0 $10,906 $10,906 $36,530 Other revenue $0 $41,915 $41,915 $29,903 Gain/loss from sale of assets other than inv. $0 -$62,192 $0 $0 Total Revenue $879,745 $7,339,383 $7,336,682 $6,827,433 Expenses: 2006 2007 2008 2009 Salaries, other compensation, employee benefits $546,228 $1,372,688 $1,055,689 $1,811,645 Other expenses $360,803 $464,805 $810,419 $1,085,230 Total expenses $907,031 $1,837,493 $1,866,108 $2,896,875 Net Assets or Fund Balances: 2006 2007 2008 2009 Total assets n/a $530,838 $6,148,857 $10,115,105 Total liabilities n/a $80,454 $196,583 $232,273 Net assets or fund balances n/a $450,384 $5,952,274 $9,882,832 Revenue y/y growth n/a 734% 0% -7% Expenses y/y growth n/a 103% 2% 55% Program expenses as % of total expenses n/a 85% 72% 71% G&A as % of total expenses n/a 10% 17% 17% Fundraising expenses as % of total expenses n/a 5% 11% 12% Net income -$27,286 $5,501,890 $5,470,574 $3,930,558 Y/Y growth n/a n/a -0.57% -28.15% Net profit margin n/a 75% 75% 58% iMentor | Nonprofit Investor Research 4
  • 5. RESULTS AND TRANSPARENCYiMentor provides basic financial information in its Form 990s, but does not make financial statements or annual reportspublicly available. Although this has made it difficult to understand the company’s financial projections and future goals,the available financial information via the Form 990s combined with publicly available on the company’saccomplishments helps validate its progress and program effectiveness. The hope is that this year’s latest Form 990,once released, will help confirm some of the company’s accomplishments.GROWTHiMentor continually looks for ways of validating and improving its programs & services. Company will launch“Public/Private” Ventures launch in the Fall of 2011. This is a 2,000-participant, six year study of iMentor’s mentoringmodel. This study will be one of the largest and most comprehensive studies ever published on school-based mentoringand seek to analyze the quality and quantity of evidence around iMentor’s impact on participants. Since 2007, iMentorhas contracted with Kim Sabo Consulting (“KSC”) to update and strength its evaluation instruments. KSC has found thatthere has been a significant impact on standardized test scores, English grades and school attendance.In the public materials evaluated, iMentor has not commented on specific financial targets or growth drivers.GET INVOLVEDDonate, become a mentor, partner school, iMi member or corporate partner, work at iMentor, join the Young ExecutiveBoard, or participate in the Online Donor Drive.http://www.imentor.org/get-involvedDISCLOSURESJonathan does not have any affiliation with iMentor and has never made a donation to iMentor. iMentor | Nonprofit Investor Research 5