NPI Evaluation of Project GRAD Houston
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  • 1. NONPROFIT INVESTORINDEPENDENT RESEARCH FOR PHILANTHROPYProject GRAD Houston SUMMARY Project GRAD Houston (GRAD) is an education reform model at workNonprofit Investor Rating: in five feeder patterns (Davis, Sam Houston, Reagan, Wheatley andNEUTRAL Yates) within Houston Independent School District (HISD), serving 64 schools and over 44,000 economically disadvantaged children – 23% of the school districts total school population and approximatelyMission Statement 24%of its total at-risk population.The mission of Project GRAD is to support aquality public education for all students in STRENGTHSeconomically disadvantaged communities sothat high school and college graduation rates ▲ 20+ year track record. GRAD has been providing low-income,increase. first-in-family-to-attend-college individuals with academic and social opportunities since 1994.Financial Overview ▲ Strong partnership with HISD. GRAD offers subject matter$ in MM, Fiscal Year Ended December 31 2008 2009 2010 expertise and economy of scale to help HISD schools to increaseRevenue and Support $5.7 $5.1 $5.5 college awareness.Operating Expenses $5.0 $5.0 $5.0 ▲ Robust program. GRAD covers all aspects of students’ growth% of Total: from elementary school through college, featuring scholarship, Program Expenses 86.1% 87.4% 85.8% summer institute, fine arts program, college mentorship, and parent G&A 12.3% 11.1% 12.4% involvement. Fundraising 1.5% 1.5% 1.9% CAUTIONSYear Founded: 1994 ● Key program metrics have been defined but specific data points have yet to be released. GRAD made certain statistics available butContact Details we would like to see (1) statistics on individual participants toProject GRAD Houston understand cost per beneficiary served and (2) detailed spending on3000 Richmond, Suite 400 Wages & Salaries (~$2MM).Houston, Texas 77098832-325-0325 ● Lack of detail regarding programs provided. NPI suggests that GRAD provides more detailed information regarding its programhttp://www.projectgradhouston.org/ activities on its website and/or through annual reports.EIN: 76-0450397 RECOMMENDATION: NEUTRALAnalyst: Sheng Xu Project GRAD has a longstanding history with HISD, providingPeer Review: Kent Chao, Ruth Yen programs such as scholarship, mentoring, and education. While a small sample of results provided by GRAD indicates increasedPublication Date graduation rates and decreased dropout rates, lack of broaderSeptember 27, 2012 disclosures of results and lack of detail regarding program services provided by GRAD limit the ability to draw a causal link between programs provided and results achieved. Nonprofit Investor Research | nonprofitinvestor.org
  • 2. OVERVIEW OF GRAD ACTIVITIESGRAD provides college awareness and readiness programs for HISD schools. The charity leverage community networkand subject matter expertise to address its mission. The following are GRAD’s main programs: • Scholarship: o The Project GRAD Houston Scholarship Program provides financial assistance toward a college education to eligible high school seniors in Houston, Texas. Each qualifying student is awarded up to $1,000 annually, for a total of four years. The scholarship is intended to be used continuously over four consecutive years. o GRAD students must attend two College Institutes while in high school to receive their $4,000 Scholarship. The College Institute offers the uniqueness of being their first college experience. • Service: o Walk for Success utilizes thousands of volunteers on a Saturday morning each fall to conduct a door-to- door campaign visiting the homes of every new ninth grade students family in GRAD-partnering high schools. Volunteers inform parents of college access opportunities while encouraging their involvement with each childs school. o College Success Programs through support systems that network mentors and peer leaders with college freshmen.  College Access is a library of materials and resources to better prepare students for college.  Mentorship programs support entering freshmen and upper classmen, including face-to-face meetings and connecting students to on-campus resources.  GRAD Ambassador Program allows successful upperclassmen to serve as college peers. They meet with lower classmen for at least once a month to advise them through experience and resources. • Parent Involvement o Parent University is a series of workshops developed by GRAD to help parents become knowledgeable about the academic, financial, social and emotional aspects of preparing for, applying to and succeeding in college. o Parent Convention is an annual event held on a different Houston area college campus each year offers parents an array of sessions on college preparation, admission, financial aid as well as new and emerging career opportunities.PROGRAM RESULTS AND EFFECTIVENESSIn the first four high schools with GRAD programs, school dropout rates decreased by about 9% from 2006 to 2009,compared to 5% for schools without GRAD programs. From 1997 to 2009, the first four GRAD high schools increasedgraduation rates from 42.5% to 66.6% while other high schools remained flat at 55.1%. In 2010, GRAD served ~1,700students, 91% of which were first generation College bound. However, since GRAD does not comment on the statisticalsignificance of the results of the four schools with GRAD programs vs. the 66 schools currently served by GRAD, it is notpossible to understand whether these results are representative of GRAD’s overall effectiveness. Additionally, due tolack of detail on specific program offerings, it is unclear whether the programs services provided to the first four GRADprograms function similarly to other schools served by GRAD. Project GRAD Houston | Nonprofit Investor Research 2
  • 3. TRANSPARENCYThe programs of GRAD are determined by the Board of Directors and developed and managed by the directors of thesenior management. Therefore, transparency into the GRAD activities and successes is available at the website withspecific program results via the website, including high school graduation rates, dropout rates, college acceptances andgraduation rates. GRAD made available 2010 annual reports directly on its website which were helpful in communicatingnotable contracts with HISD and government grants. The charity has also filed its Form 990s on a regular basis. Tofurther increase transparency, we would like to see statistics on individual participants in various programs and moredetailed expense breakouts for employee salaries. Project GRAD Houston | Nonprofit Investor Research 3
  • 4. FINANCIAL OVERVIEWRevenuesGRAD generates the majority of its revenue from service contracts, which are contracts with HISD schools, making upapproximately 68% of total revenue in 2010. The contract is a six year GEAR UP grant awarded to HISD from the U.S.Department of Education. The grant award is $3,122,400 per year for the period 2005-2011. In 2010, GRAD also enteredinto a one-year agreement with HISD to provide program service to 66 campuses. The contract is expected to berenewed in 2011. In 2008, U.S. Department of Education awarded GRAD a four year Federal grant (FAME) to continuefunding certain fine arts programs. The award is $252,363 per year. While revenue decreased 10.5% in 2009, the servicecontracts helped GRAD to grow 7.8% in 2010 with $5.5MM in revenue.ExpensesApproximately 86% of GRAD’s total expenses is spent on Program Services. 12% of total expenses is spent on G&A, and1.5% is spent on fundraising. The low percentage spent on fundraising is a result of multi-year contracts with HISD andgovernment grants mentioned in the revenue section. The large percentage of program expense is primarily comprisedof wages and salaries (~$2MM) for staff, teachers, and mentors. GRAD prides itself in recruiting excellent talent,leveraging its expansive community outreach and network. Human capital is considered to be the backbone of GRAD’ssuccess and therefore making up a large portion of its expense. However, GRAD does not disclose the specific allocationof the $2MM of wages and salaries on a per program basis. NPI recommends that GRAD track and disclose thisallocation in order to provide donors with an understanding of how program costs relate to program services delivered.In the Program Services numbers, grants and summer institute program expense increased slightly while other programexpense remained flat. The increase of grants to $1MM from $0.87MM is the result of growth due to the addition of agovernment grant. Revenue Mix Over Time 2010 Revenue Mix$ in MM $6.0 $5.7 0% $5.5 $5.1 $5.0 27% $4.0 $3.0 $2.0 5% 68% $1.0 $0.0 2008 2009 2010 Contributions Government Grants Service Contracts Investment Income Service Contracts Government Grants Contributions Investment Income Other Other Project GRAD Houston | Nonprofit Investor Research 4
  • 5. Expense Breakout Over Time$ in MM $5.2 100% $5.0 $5.0 $5.0 90% $5.0 86.1% 87.4% 85.8% 80% $4.8 70% $4.6 60% 50% $4.4 40% $4.2 30% 20% $4.0 10% $3.8 0% 2008 2009 2010 Total Program Expense Total G&A Expense Total fundraising expense Program Expense % of TotalGRAD’s ability to leverage its network and expertise to maintain the relationship with HISD will be critical to its success.Approximately 68% of GRAD’s revenues is on a termed contract basis and has provided stability for the past three years.GRAD needs to maintain the contract revenue stream (~$3.5mm) in order to support the large portion of expenses(~$2MM) allocated to the program staff. After the expiration of the contracts, fundraising expenses at $95,000mayincrease if existing contracts are not renewed. Project GRAD Houston | Nonprofit Investor Research 5
  • 6. Detailed Financial Information$ in MMFiscal Year Ended December 31 2008 2009 2010Operating Revenue: Contributions $1,759,163 $1,233,336 $1,483,883 Government Grants 280,434 287,438 267,343 Service Contracts 3,351,202 3,547,386 3,738,633 Investment Income 3,224 63 44 Other 268,069 - -Total Support and Revenues $5,662,092 $5,068,223 $5,489,903 % Growth -10% 8%Expenses: Program expenses Grants and other assistance $781,500 $867,751 $1,008,102 Summer Institute Program 355,386 571,062 563,031 Other Salaries and wages 2,075,088 2,052,118 1,937,407 Service Fees 324,709 272,804 252,573 Office Expenses 545,747 388,917 400,510 Other 185,578 241,001 167,156 Total Program Expense $4,268,008 $4,393,653 $4,328,779 General and Administrative expense Compensation $208,201 $203,106 $207,059 Other Salaries and wages 228,384 250,942 272,964 Service Fees 49,979 40,396 46,083 Office Expenses 38,795 28,258 44,926 Other 86,213 35,565 52,888 Total G&A Expense $611,572 $558,267 $623,920 Fundraising expenses Other Salaries and wages $66,057 $70,816 $77,286 Service Fees 2,476 100 - Office Expenses 5,041 5,140 14,791 Other 1,159 1,429 3,217 Total fundraising expense $74,733 $77,485 $95,294Total Expenses: $4,954,313 $5,029,405 $5,047,993 % of Revenue 87% 99% 92%Revenue Less Expenses $707,779 $38,818 $441,910 Program Costs as a % of Total Expenses 86% 87% 86% G&A as a % of Total Expenses 12% 11% 12% Fundraising as a % of Total Expenses 2% 2% 2%Source: IRS Forms 990 Project GRAD Houston | Nonprofit Investor Research 6
  • 7. THIRD PARTY RATINGSCharity Navigator rates the organization 3 out of 4 stars, receiving a 66 out of 70 score for accountability andtransparency. GRAD receives a 48.04 out of 70 for financial and has an official representative registered with CharityNavigator.Guide Star has awarded GRAD with the Guide Star Exchange Seal for commitment to transparency.(http://www.guidestar.org/organizations/76-0450397/project-grad-houston.aspx)Project GRAD Houston is not currently reviewed on Great Nonprofits.GET INVOLVEDDonate: https://npo.networkforgood.org/Donate/Donate.aspx?npoSubscriptionId=1000791Volunteer: http://www.projectgradhouston.org/pace/walk-for-success.phpDISCLOSURESSheng Xu certifies that she does not have any affiliation with Project Grad Houston and has never made a donation to theorganization. Additionally, Sheng has not supported directly competing organizations in a greater capacity than a nominal donation.NPI analysts 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.ABOUT NONPROFIT INVESTORNonprofit Investor is a nonprofit organization with the mission of improving philanthropic capital allocation and nonprofiteffectiveness through research and analysis. NPI brings together volunteers with professional due diligence skills to produceindependent, in-depth evaluations of nonprofits. NPI research is available for free, public downloadhere: www.nonprofitinvestor.org/research. To suggest a charity for NPI to review or to apply as a volunteer, please contactus: www.nonprofitinvestor.org/contact. NPI is a tax-exempt charity under section 501(c)(3) of the Internal Revenue Code (EIN: 45-3627609). Follow Nonprofit Investor on Twitter: @nonprofitinvest Project GRAD Houston | Nonprofit Investor Research 7