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  • 1. NONPROFIT INVESTORINDEPENDENT RESEARCH FOR PHILANTHROPYCFY SUMMARY CFY is a national education nonprofit that helps students in low-Nonprofit Investor Rating: income communities leverage digital learning solutions to help enhance education experiences. The organization offers anBUY interactive digital K-12 learning platform, PowerMyLearning.com, as well as an on-the-ground direct service initiative, the CFY DigitalMission Statement Learning Program. Through these programs, CFY has served more than 50,000 families from 100 schools nationwide. CFY isCFY’s mission is to help students in low-income headquartered in New York, New York and has offices in the Sancommunities, together with their teachers and Francisco Bay area, Los Angeles, Philadelphia and Atlanta. Thefamilies, harness the power of digital learning organization also maintains an Affiliate Network of over 30to improve educational outcomes. CFY’s digital organizations in more than 20 states and the District of Columbia.learning programs and initiatives help extendlearning beyond the classroom, offer STRENGTHSinteractive / customized learning solutions, ▲ Holistic digital learning initiative. CFY Digital Learning Programand enable parents to more effectively support aims to enhance students’ learning experiences by providingtheir child’s learning experience at home. solutions that target / assist all stakeholders – students, teachers and parents.Financial Overview$ in MM, Fiscal Year Ended June 30 ▲ Systematic data-driven approach. Strong policies and procedures 2009 2010 2011 for monitoring and measuring the impact of CFY Digital LearningRevenues $5.9 $5.2 $20.3 Program implementations.Operating Expenses $5.4 $5.4 $20.3 ▲ Near-term leverage in model. Digital platform fully-funded following $7MM contribution from Bill & Melinda Gates, Eli and% of Total Expenses: Edythe Broad and W.K. Kellogg Foundations. Grants Paid 0.0% 45.0% 63.6% ▲Strong relationships with leading corporate enterprises. Salaries & Other Comp. / Benefits 30.9% 34.9% 25.7% Extensive network of education companies and software providers. Other 69.1% 20.1% 10.7%Source: Form 990, tax basis financials CAUTIONSYear Founded: 1999 ● Reliance on grants could create long-term funding concerns. >90% of CFY’s annual revenue is from “contributions andContact Details grants,” which could be challenging to maintain over the long-term; concerns mitigated by high degree of philanthropic interest in digitalCFY learning initiatives, above-mentioned $7MM contribution and520 Eighth Avenue, Floor 25 currently limited (<3% of revenue in 2011) fundraising spendNew York, NY 10018(212) 563-7300 RECOMMENDATION: BUYwww.cfy.org CFY has proven to be effective in helping introduce digital learningEIN: 13-3935309 initiatives in low-income communities throughout the country. With a learning platform that is now fully-funded (following recent $7MMAnalyst: Jason Schifman investment from three leading foundations), CFY should benefit fromPeer Review: Nadia Anggraini, Burt Chao near-term leverage in model. NPI would highly recommend further considering a monetary donation or volunteering with one of CFY’sPublication Date programs.June 6, 2012 Nonprofit Investor Research | nonprofitinvestor.org
  • 2. OVERVIEW OF CFYS ACTIVITIESCFY provides digital learning solutions that aim to enhance students’ learning experiences by extending learning beyondthe classroom, offering interactive / customized learning programs, and enabling parents to more effectively supporttheir child’s learning experience at home. The organization pursues this mission through its core PowerMyLearning.comand Digital Learning Program initiatives.PowerMyLearnings.com. CFY curates a library of “best-in-class” digital learning activities so that students, teachers andparents have a trusted and pre-screened source for digital learning resources. CFY’s digital learning library, which ismade available through the organizations K-12 learning platform, PowerMyLearning.com, includes hundreds of freelyavailable activities, such as academic games, instructional videos and interactive simulations. The digital activities areorganized by subject, grade band and type of activity. Further, PowerMyLearning.com includes functionality for tailoringthe learning experience to individual needs, as well as for receiving user feedback.Digital Learning Program. CFY partners with more than 100 high-poverty public middle schools via its Digital LearningProgram, which aims to provide students, teachers and parents with digital learning training, tools and resources. CFYprovides each participating student with a free broadband-ready home computer loaded with educational software –including PowerMyLearning.com programs, as well as free access to additional subscription-based programs – and 24×7bilingual help desk support. Applicant schools are admitted to the Digital Learning Program each spring and are selectedbased on demonstrated interest in digital learning, availability of resources and an ability to meet CFY’s criteria of havingat least 75% of students on free or reduced lunch programs. At selected partner schools, CFY begins by implementingthe Digital Learning Program with the school’s entire sixth grade class, providing students, teachers and families with thetraining and home technology access required to extend classroom learning and actively engage the variousstakeholders. Following the first year implementation, CFY continues the program with the initial class as they progressthrough middle school, as well as extends the program to each successive year’s incoming sixth grade class.Affiliate Network. CFY’s Affiliate Network is a coalition of over 30 independent nonprofit organizations across 20 statesand the District of Columbia. The Affiliate Network strives to serve as a forum for sharing best practices and resources,as well as provides members with access to CFY’s digital learning resources and discounted rates on CFY’s EducationalSoftware Package & Curriculum.Student Software Team. CFY assembles a group of students from partner schools to help identify “best-in-class”educational software. The student team tests software packages and online resources for their educational value andengagement score. Recommendations from the team directly affect the software included on CFY’s Home LearningCenters, as well as the sites included on PowerMyLearning.com. CFY | Nonprofit Investor Research 2
  • 3. PROGRAM RESULTS AND EFFECTIVENESSCFY currently works with schools and families in five cities across the country and has served more than 50,000 familiesoverall. During the 2010-2011 academic year alone, CFY served more than 17,000 families and over 500 teachers inmore than 100 schools across seven school districts nationwide. Through its Affiliate Network, CFY’s digital learningprograms reach thousands of additional families.The organization maintains a systematic data-driven approach to evaluating the impact of its programs. CFY collects dataand feedback from its digital platform to help improve the product and measure results. Additionally, CFY regularlyconducts workshops and other monitoring procedures at partner schools, as well as operates a multi-lingual call centerthat places outgoing calls to better understand parental feedback and engagement. As listed on CFY’s website, selectindications of impact include:● A study with the Educational Testing Service found that CFY’s program had a positive and statistically significantimpact on student math test scores, finding that students’ engagement and computer use, particularly their homeInternet use and computer use for self-regulated learning, explained 14% of the variance in their 2006 math test scoresover and above 2005 scores.● A comparison study found that CFY’s program helped arrest the typical performance slide in 7th grade writing. Overall,writing scores (scoring completed by independent teachers) for CFY students decreased less over time than did scoresfor comparison students.● Across multiple years, 70% or more of the students in CFY’s program said that having a computer-based HomeLearning Center helped them become more curious and feel more confident.● More than 90% of parents participating in the CFY program felt more confident that they could help their child learn;the biggest increase was in math with the lowest-educated parents experiencing almost twice the gains in confidence ashigher-educated parents. More than 95% of parents said the CFY program enabled them to see more potential in theirchild to learn, and more than 90% said they felt more connected to their child’s school as a result of the CFY program.● Approximately 90% of CFY families in NYC reported having broadband within three months of the training, up from aninitial survey of approximately 45% prior to the start of the program.TRANSPARENCYCFY files Form 990 with the IRS, but does not currently provide access to this form through the organization’s website.The organization’s website also makes available feedback on the impact of CFY’s programs based on various workshopsand independent studies. CFY | Nonprofit Investor Research 3
  • 4. FINANCIAL OVERVIEWCFY roughly quadrupled total revenue in 2011, driven largely by increases in contributions and grants. A recent $7MMinvestment from the Bill & Melinda Gates, Eli and Edythe Broad and W.K. Kellogg Foundations will serve to fully-fundCFY’s digital platform. With a fully-funded platform, CFY has the potential to benefit from near-term leverage in itsmodel, as fully-funding the platform enables incremental contributions and grants to be deployed to scale the DigitalLearning Program.Over 90% of CFY’s annual revenue is derived from “contributions and grants,” which could be challenging to maintainover the long-term. However, concerns are mitigated by the generally high degree of philanthropic interest in digitallearning initiatives and the above-mentioned $7MM contribution. Further, CFY’s has consistently decreased fundraisingand management & general expenses as a percent of total revenue. This highlights the organization’s track record ofchanneling revenues toward funding program service rather than internal costs, as well as CFY’s ability to generaterevenues on relatively limited fundraising expense. Revenue Breakdown Expense Breakdown$ in 000, Fiscal Year Ended June 30$25,000 $25,000 $20,315$20,000 $20,338 $20,000$15,000 $15,000$10,000 $10,000 $5,941 $5,177 $5,000 $5,408 $5,388 $5,000 $0 2009 2010 2011 $0 2009 2010 2011 Program Service Contributions and Grants Other Investment Income Grants and Similar Amounts Paid Other Salaries, Employee Benefits and Other Compensation Source: Form 990, tax basis financials CFY | Nonprofit Investor Research 4
  • 5. Detailed Financial Statements ($000’s)Fiscal Year Ended June 30 2009 2010 2011Revenue and Expenses (Tax Accounting Basis) Revenue Contributions and Grants $5,849 $4,837 $19,510 Program Service 119 246 593 Investment Income (29) 0 0 Other 2 95 212 Total Revenues $5,941 $5,177 $20,315 % Growth 20.4% -12.8% 292.4% Expenses: Grants and Similar Amounts Paid $0 $2,424 $12,933 Salaries, Employee Benefits and Other Compensation 1,669 1,879 5,222 Other 3,739 1,085 2,183 Total Expenses: $5,408 $5,388 $20,338 % of Revenue 91.0% 104.1% 100.1% Revenues Less Expenses $532 ($211) ($23) Grants and Similar Amounts Paid as % of Total Expenses 0.0% 45.0% 63.6% Salaries, Employee Benefits and Other Compensation as % of Total Expenses 30.9% 34.9% 25.7% Other as % of Total Expenses 69.1% 20.1% 10.7%Expenses by Function (Tax Accounting Basis) Program Service 4,523 4,666 19,351 Management and General Expenses 406 321 439 Fundraising 479 401 548 Total Expenses 5,408 5,388 20,338 Program Service as % of Total Expenses 83.6% 86.6% 95.1% Management and General Expenses as % of Total Expenses 7.5% 6.0% 2.2% Fundraising as % of Total Expenses 8.9% 7.4% 2.7%Source: Form 990, tax basis financials CFY | Nonprofit Investor Research 5
  • 6. THIRD PARTY RATINGSAs of June 6, 2012, CFY had a four (out of four) star rating on Charity Navigator with a 61.00 out of 70.00 compositescore. CFY received a 63.61 out of 70.00 score for its financials while it received a 59.00 out of 70.00 for accounting andtransparency. Charity Navigator’s review mentions a lack of a records retention policy, and notes that CFY’s auditedfinancials and Form 990 are not readily accessible from CFY’s website.GET INVOLVEDVolunteer with CFY to assist with CFY Family Learning Workshops and help train Digital Learning Program participants.Donate to support CFY’s digital learning initiatives in low-income communities. CFY is a 501(c)(3) and contributions mayinclude monetary gifts, stock transfers and computer donations.Apply to become a CFY School and participate in the organization’s Digital Learning Program.Join CFY’s Affiliate Network to gain access to CFY’s digital learning resources and obtain reduced pricing on theorganization’s Educational Software Package & Curriculum.Seek Employment with CFY.DISCLOSURESJason Schifman certifies that he does not have any affiliation with CFY and has never made a donation to the organization.Additionally, Jason Schifman has not supported directly competing organizations in a greater capacity than a nominal donation. NPIanalysts and NPI as an organization do not receive any form of compensation from reviewed charities.This report is for informational purposes only and does not constitute a solicitation for donations. While the reliability of informationcontained in this report has been assessed by NPI, NPI makes no representation as to its accuracy or completeness, except withrespect to the Disclosure Section of the report. Any opinions expressed herein reflect our judgment as of the date of the materialsand are subject to change without notice. NPI has no obligation to update, modify or amend any report or to otherwise notify areader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changesor subsequently becomes inaccurate, or if research on the subject organization is withdrawn.Opinions and recommendations in our reports do not take into account specific reader circumstances, objectives, or needs. Therecipients of our reports must make their own independent decisions regarding any organization mentioned by NPI. CFY | Nonprofit Investor Research 6