A program of conscience

Startup seeks to measure nonprofits' success

July 10, 2008|By Tricia Bishop | Tricia Bishop,Sun reporter

Stephen Butz has a soft spot for people in trouble, reflecting a social conscience instilled by his mother.

It led him to spend years serving in nonprofits, focusing on kids in particular. It was satisfying work for the most part, but for this: There was too little accountability, he said. His supervisors just wanted to know the how-often and how-many of his cases; they had no real way of measuring whether any of that work was making a difference in any one life, much less the whole lot.

So Butz came up with a software program that could do just that, and in 2000 started a Baltimore business, Social Solutions Inc., based on it. More than 2,500 organizations now use his goods to manage their programs, including East Baltimore Development Inc., which is working to revitalize 88 acres on the city's east side, and the Harlem Children's Zone, a pioneering New York City experiment trying to fight urban problems through various classes and programs. Baltimore is studying the zone to see if it could work here.

FOR THE RECORD - An article in the July 10 Business section about Social Solutions Inc. misstated the post held by company founder Stephen Butz. He is the president.
THE SUN REGRETS THE ERROR.

Funders want to put their limited resources into programs that can prove impact, said Nancy Hall, a senior adviser at the Maryland Association of Nonprofit Organizations. She also teaches a nonprofit management course at the Johns Hopkins University.

"It's not enough to just do good work, you have to show results," she said. "The smart nonprofits and the smart funders have kind of jumped on this bandwagon."

It's a newer way of thinking. Traditionally, nonprofits have been satisfied to know they're working hard to do good work, but rarely set measures to determine what was good. Individual employees sometimes kept their own records, in logbooks or Excel files or - in one Minnesota organization's case - on recipe cards. But often, there is no entity-wide system, Hall said. That's where Social Solutions' ETO (efforts to outcomes) software comes in.

It's a Web-based system that can be customized for any kind of organization, with different goals and activities. Say you're working with a child in foster care and want to chart his progress, Butz says, calling up an example program on his office computer.

The caseworker just has to answer a few simple questions about the latest meeting - Did the child make eye contact? Is he skipping school? Attending workshops? - and any number of data charts can then be run, comparing the boy's behavior then and now. The questions can be weighted, and the analysis can determine whether the meetings or arranged activities are having an effect.

For the company's first six years, Butz designed the online program so the organizations could set it up themselves, but last year he realized they were often turning the system into a numbers-only tool. Now his team designs it with nonprofit leaders.

"Because there were no measures [before], people were kind of funding the activities rather than the outcomes," Hall said. "Both government funders and foundation folks are beginning to realize that the focus can't be on the activities that get us to the end, it has to be on what the results are at the end."

Technology companies often shy away from focusing on the nonprofit sector, worried that there isn't much of a market there or that organizations won't be able to afford their products (most have to write a grant proposal to get the funds to buy ETO Solutions, which starts at $7,500 for individual organizations and $60,000 for foundations that want to license it for their grantees). But that, too, is changing as charities develop a stronger role in the nation's economy.

According to a study published by Johns Hopkins in June, job growth in the Maryland nonprofit sector is outpacing that in the private: 2.9 percent in 2006, compared with 1.1 percent for business. The state's 26,000 nonprofit organizations employ about 243,000 people, making up nearly 10 percent of the work force.

Businesses are increasingly building their money-making models around nonprofits, some in the industry said.

Bethesda's JGS Performance Solutions LLC says it has helped nonprofit clients, including United Way and Habitat for Humanity, improve their accountability and budgeting processes. And BlueTree Marketing ( www.bluetreemarketing.com) - which is based in South Florida, but founded by two University of Maryland students - runs online fundraising auctions for nonprofits, including the National Multiple Sclerosis Society.

"The nonprofit scene is huge," said BlueTree's 21-year-old vice president, Kiel Chesley, who expects to graduate with an American studies degree in December. "When I first came into the company, as well as first established the idea of going toward nonprofits, I had no idea that the nonprofit sector was so huge. Religious organizations, schools, charitable foundations... It's really endless."

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