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NONPROFIT INVESTORINDEPENDENT RESEARCH FOR PHILANTHROPY SUMMARYCollege Summit College Summit was created by a former academic advisor at Harvard University who saw the need to create a program to assist both topNonprofit Investor Rating: performing and mid-tier low-income students in securing college admission.BUY The founder, himself a graduate of an inner-city Denver high school, saw that students with mid-tier credentials, many of whom he believed could have succeeded in college, lacked the know-how and senior year supportMission Statement that students whose parents had gone to college enjoyed.College Summit’s mission is to help bright, low-income students who, with the right support during STRENGTHSthe post-secondary transition, can propel their lives ▲ Management team strength. College Summit has augmented its(and communities) in a positive direction. Over the management team as the organization has grown without outsizedpast decade, College Summit has worked in increases to its operating expense base.partnership with schools, school districts andcolleges to develop a sustainable model for raising ▲ Strong national and regional recognition. College Summit has beencollege enrollment rates community-wide. widely recognized and is the recipient of various national and regional awards attesting to the broad impact of the organization’s programs. TheFinancial Overview organization is constantly under review by various awarding and review$ in MM, Fiscal Year Ended April 30 organizations. 2009 2010 2011Total Revenue $14.0 $29.6 $13.8 CAUTIONSOperating Expenses $18.7 $18.9 $19.1 ● Expense trend/profile. Total operating expenses have grown in the last 3 years. However, College Summit has managed to decrease the share of G&A% of Total: expenses in the last year. The fiscal 2011 level was also below the fiscal Program Expenses 77.3% 76.7% 80.5% 2009 level. G&A 12.9% 15.8% 12.0% ● Expenses currently exceed revenues. Operating expenses in fiscal 2009 Fundraising 9.7% 7.4% 7.5% and 2011 exceeded revenues. In 2010, revenues did exceed expenses, butSource: College Summit 2009, 2010 and 2011 Form only as a result of several extraordinary one-time contributions. In response990s. Tax accounting method used. to this trend, College Summit’s senior leadership has recently enacted a program to “right size” organization expenses through a reorganization ofYear Founded: 1993 paid leadership. Additionally, College Summit’s recently enacted budget plan is aimed at increasing revenues and reducing expenses to a level whereContact Details annual revenues can cover annual expenses. It is not uncommon forCollege Summit growing non-profit organizations to experience a similar dynamic between nd1763 Columbia Road, NW; 2 Floor revenues and expenses in a rapid-growth phase.Washington, DC 20009(202) 319-1763www.collegesummit.org RECOMMENDATION: BUY College Summit’s strong operational track record coupled with a brightEIN: 52-2007028 outlook is only further supported by the careful selection and development of a world-class leadership team. Not unlike many other highly-successAnalyst: Burt Y. Chao high-growth non-profit organizations, College Summit has experiencedPeer Review: Nadia Anggraini & Jason Schifman some issues with the fast pace of growth. Ultimately, we believe the organization’s past results, wide reach and strong leadership team create a compelling combination for a likely successful organization aimed atPublication Date increasing educational access in the U.S.August 17, 2012 Nonprofit Investor Research | nonprofitinvestor.org
OVERVIEW OF COLLEGE SUMMIT’S ACTIVITIES“College Summit and our school partners, together with our higher education, corporate and philanthropic allies arecommitted to the day when every student who can make it in college makes it to college.” - College Summit WebsiteMission and Aim: College Summit aims to build the capacity of schools to increase college-going school- and district-wide. College Summit attempts to complete this through providing districts and schools with a strategy and tools totransform college going throughout each district. By equipping students, teachers, counselors, principals andadministrators, College Summit builds the capacity, expectation and excitement for change at all levels. The organizationbelieves that trained student “influencers” build college-going culture, while teachers and counselors use a managedcurriculum and technology tools to help all students create postsecondary plans and apply to college. College Summitalso promotes data and accountability tools that enable school leaders to manage improved student outcomes.Methodology: Since inception, College Summit has worked in partnership with schools, school districts and colleges todevelop a sustainable model for raising college enrollment rates community-wide.College Summit employs a variety of tools and goals to drive the organization’s day to day activities and overall direction: Comprehensive curriculum that guides students through every stage of planning; and a web site for students to manage their college application materials that act to introduce post-secondary planning courses for all seniors. Summer Educators’ Institutes help to equip educators to lead the course, plan lessons, and build a college culture in the classroom; plus on-site technical assistance throughout the school year from College Summit staff. This serves to provide teachers and counselors with professional development resources. Immersion summer Workshops for each schools influential rising seniors, where they complete their entire college application and are equipped to return to school senior year to motivate their classmates. This serves to help establish and forge the college going culture promoted by College Summit. Data management tools that enable the real-time tracking of student postsecondary planning milestones which further enable teachers and administrators to provide targeted student support. College Summit’s annual College Enrollment Reports provide data on student outcomes.Geographic Footprint and Expansion: College Summit has offices in 11 regions across the U.S., including Northern andSouthern California, Colorado, Connecticut, Florida, Indianapolis, New York, the National Capital Region (DC, MD, andVA), Missouri, South Carolina and West Virginia.Currently, the organization is looking to increase its presence in its Los Angeles and Miami markets. According toconversations with the organization’s leadership, the goal is to serve 10,000 students in the Los Angeles area withinthree years and eventually get to serve 14,000 students in the greater Miami area.In addition to focusing on the organization’s 11 core regions, College Summit is actively pursuing a more rapidly scalablemodel to expand to areas not currently covered by the organization. Recent progress has been made in the form ofcommissioning a three-month study amongst other achievements. While still in its early stages, this strategy wouldallow the organization to reach more schools and students with less overhead and capital expense. College Summit | Nonprofit Investor Research 2
OVERVIEW OF COLLEGE SUMMIT’S ACTIVITIES (CONTINUED)Peer Organizations: There are countless non-profit organizations operating in the educational access field. Theorganization that most closely resembles College Summit is the National College Access Network (“NCAN”) also based inWashington D.C. Additionally, many regional or local organization also serve the aim of trying to increase collegeenrollment amongst socioeconomically disadvantaged students. However, we believe College Summit is a leader inpromoting peer leadership and development, which creates increasingly independent and autonomous organizationsthat enhance the sustainability of College Summit’s programs. Other organizations depend on highly-centralized modelsthat are both capital and human resource intensive while College Summit’s empowerment of students, teachers andadministrators at the school level creates a unique approach to promoting access to college.Supporters: The organization has several key “cornerstone supporters” that represent a significant amount of thesupport for the organization. In addition to financial contributions and volunteers, these organizations also provideCollege Summit with pro bono or highly reduced-rate consulting services and products to further College Summit’s reachimpact. The organization’s top 19 funders in fiscal 2011 represented 49% of contributions. This is down significantly from16 funders representing 70% of 2010 contributions which reflects a positive decentralization of funding. Significant College Summit Supports (May 2009 to Present) $1,000,000+ $10,000 to $249,000 $5,000 to $9,999Citi Foundation Barry and Evelyn Salzberg Bloomberg L.P.Deloitte Services LLP Catie Marron David E. Retik & Christopher D. Mello FoundationBill and Melinda Gates Foundation Dan Franks David Moody Diana Davis Spencer Foundation Howard Schiller $250,000 to $999,999 Google Inc. Man InvestmentBlackRock Joe and Diana DiMenna StamatsDarden Restaurants Kathleen and Scott Kapnick FoundationJosh Bekenstein Morgan Stanley FoundationKaren A. & Kevin W. Kennedy Foundation Paula Cleary and Paul FarrellLeon Lowenstein Foundation Peter GreeneMetLife Foundation President Barack ObamaNew Profit Richard and Mary Elizabeth KetchumStanley & Fiona Druckenmiller Fund Robert K. SteeleStavros Niarchos Foundation Steve SacksWells Fargo Wallace Foundation, Inc.Source: College Summit Website.PROGRAM RESULTS AND EFFECTIVENESSThe success of College Summit’s program hinges on the tools the organization provides to partner communities. Partnerdistricts use College Summit to build a planning infrastructure that fosters a college going culture across each highschool. Currently, College Summit works with over 160 schools and serves in excess of 100,000 students.Program effectiveness is most directly measured and monitored by college enrollment rates. According to CollegeSummit, “rising college enrollment rates say a lot about what schools are doing right for their kids. College Summit notonly provides the tools to measure increasing college enrollment rates, but also provides the systems to track studentprogress toward this objective.” According to the organization, College Summit participants enroll in college at a rate22% higher than students who do not participate. Furthermore, partner school districts have increased school-widecollege enrollment by 15 percent, while some schools, like College Summit’s partners in St. Louis saw a 20% increase incollege enrollment rates (New Profit Inc.). College Summit | Nonprofit Investor Research 3
PROGRAM RESULTS AND EFFECTIVENESS (CONTINUED)The organization documents and records this progress. The organization constantly tests and adapts its tools to producebetter results for partner schools. Over the last few years, College Summit has expanded its teacher curriculum, teachertraining, and data tools- all with the involvement and support of partner schools.TRANSPARENCYForm 990’s: College Summit provides its latest Form 990 on its website. Historical 990s from fiscal 2008 to 2010 areavailable online.Accounting: College Summit’s 990s employ tax-based accounting methods while its 2010 and 2011 audits are reportedunder GAAP accounting standards. The different accounting standards for each type of document results in reportedfigures that differ between documents but that are internally consistent.Audit: College Summit was audited by RAFFA, P.C., an accounting, consulting and technology firm based in WashingtonD.C. The scope of the audit covered fiscal years 2010 and 2011. The audit, concluded on January 9, 2012 concluded thatthe financial statements included in the report presented fairly, in all material respects, the financial position of CollegeSummit as of April 30, 2011 and 2010, and that the changes in its net assets and its cash flows for the years then endedin conformity with accounting principles generally accepted in the United States of America. The audit also took intoconsideration the internal control over internal controls, but did not cover an opinion on the ultimate effectiveness overinternal controls over financial reporting.Senior Leadership: When contacted, College Summit’s leadership team was responsive and willing to discuss the detailsof their organization. In preparation of this report, we were in contact with several individuals including theorganization’s President, Chief Advancement Officer and Executive Director of Northern California. We were offeredaccess to numerous other individuals and intend to engage these individuals at a later date.Web-based Resources: The organization’s website provides detailed information regarding College Summit’s fundraisingactivities, operations and related metrics. The organization maintains separate pages for National and Regionalsupporters as well as partnership profiles. Form 990’s and audits are also readily available through the website.FINANCIAL OVERVIEW Revenue Breakdown Expense Breakdown $ in MM $ in MM 35.0 25.0 81% 30.0 80% 20.0 25.0 79% 15.0 78% 20.0 15.0 10.0 77% 10.0 76% 5.0 5.0 75% 0.0 0.0 74% 2009 2010 2011 2009 2010 2011 Fundraising Management & General Program Service & Other Contributions & Grants Program Service Program Service as a % of TotalRevenues: In fiscal 2011, College Summit reported $13.8MM in revenue, down 53% from $29.6MM in fiscal 2010, butdown just 1% from 2009. As previously noted, 2010 revenues were elevated due to several one-time extraordinarycontributions that resulted from the organization’s seed funding initiatives during that year. College Summit | Nonprofit Investor Research 4
FINANCIAL OVERVIEW (CONTINUED)Expenses: Total expenses stayed relatively flat between 2009 and 2011. 2009 expenses were $18.7MM while 2010 and2011 expenses came in at $18.9MM and $19.1MM, respectively.Operating expenses in fiscal 2009 and 2011 exceeded revenues by 33% and 38%, respectively. In 2010, several, one-time,non-recurring revenue contributions boosted revenue to levels well above expenses, but as operated in the last severalyears, we believe our estimated recurring annual revenue run rate of $13.0 -$15.0MM is inadequate to cover estimatedexpenses of approximately $19.0 - $20.0MM per year.Budget Reconciliation: Encouragingly, College Summit’s senior leadership has recognized this situation and has recentlyundergone a “right-sizing” of leadership and further expense rationalization to bring expenses below revenues in thenear-term. While the effects of this program will likely not be fully felt until 2013, this is surely a step in the rightdirection. Current asset levels look to be sufficient to bridge College Summit in this transition period. It is important tonote that a financial transition of this nature is very commonplace for non-profit organizations as they mature.Balance Sheet/Reserves: As of April 30, 2011, College Summit had total assets of $16.2MM, down from $22.3MM in2011. The organization’s cash balance declined from $1.9MM at the end of fiscal 2010 to $0.3MM at the end of 2011.Liabilities at the end of fiscal 2011 were $1.1MM, also down from $2.0MM at the end of 2010. A reduction in accountspayable of $0.7MM accounted for nearly 80% in the year over year reduction in liabilities on the balance sheet. Seniorleadership is aware of the current balance sheet and has adopted a budgetary plan aimed at increasing the organizationsreserves beyond 6 months of operating expenses ($4.8MM at the fiscal 2011 run rate of $19.1MM in annual expenses). Summary Balance Sheet (as of April 30, 2011) $ in MM 2010 2011 Current Assets Cash & Equivalents $ 1.9 $ 0.3 Other 8.0 4.6 Total Current Assets 9.8 4.9 Total Noncurent Assets 12.5 11.4 TOTAL ASSETS 22.3 16.2 TOTAL LIABILITIES $ 2.0 $ 1.1 NET ASSETS $ 20.4 $ 15.1Related Party Transactions: The only related party transaction disclosed by College Summit is related to a consultingagreement the organization has with an individual that serves on College Summit’s Board of Directors. In fiscal 2011,College Summit paid this individual $43,000 for their services, down from $80,000 in fiscal 2010.Conditional Grants: Since 2008, College Summit has received a significant amount of conditional grants that arecontingent upon a variety of quantitative and qualitative criteria. While management is confident that these conditionswill all be met, it is important to note that if these conditions are not met, College Summit may not receive somepledged funds. College Summit has recognized portions of each of the conditional grants as ongoing conditions havebeen met and will continue to recognize additional portions from the remaining balances. The organization currently hasconditional grants from The Bill and Melinda Gates Foundation, an unnamed foundation, Barclay’s Global Investors, TheStavros Niarchos Foundation, SeaChange Capital Partners and New Profit Inc. College Summit | Nonprofit Investor Research 5