OCTOBER 2OO4 Public Allies Building the Infrastructure for Growth Copyright ©2005 The Bridgespan Group, Inc

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OCTOBER 2OO4 Public Allies Building the Infrastructure for Growth Copyright ©2005 The Bridgespan Group, Inc. Bridgespan is a registered trademark of The Bridgespan Group, Inc. All rights reserved. 2 Summary Strong support from AmeriCorps, fees from organizations who sponsor “Allies,” and clearly documented program results have propelled Public Allies’ growth. Over the years, Public Allies has worked hard to find the appropriate level of control and decentralization with its branches, and the organization recently decided to migrate all of its sites to a licensee model in which organizations or universities manage local programs, relieving some of the administrative and financial burden on local sites. Public Allies also is planning future growth with a new, lower cost model and a more targeted approach to site development. Organizational Snapshot Organization: Public Allies Year founded: 1992 Headquarters: Milwaukee, Wisconsin Mission: “Public Allies advances diverse young leaders to strengthen communities, nonprofits, and civic participation.” Program: Public Allies identifies talented young adults (known as “Allies”) ages 18 to 30 from diverse and underrepresented backgrounds and develops their leadership potential through a 10-month program of full-time, paid apprenticeships in nonprofit organizations, weekly leadership trainings, and team service projects. The organization aims to change community leadership with a new generation of young adults from diverse and underrepresented backgrounds committed to careers working for community and social change and with practices emphasizing collaboration, diversity and inclusion, identifying assets, continuous learning and integrity. Public Allies believes such leadership will unite people and groups together, create more effective and responsive organizations, engage the assets of more citizens, and ultimately build a more just and equitable society. In 2004, 203 Allies served nonprofit organizations and local communities in 11 sites. Over the 3 organization’s history, over 600 nonprofits have been served and 1,523 Allies have graduated from the program. Eighty-two percent of Ally graduates continue careers in community and public service with very high levels of civic engagement. Ninetysix percent of partner organizations report that their Ally’s impact met or exceeded their expectations and 83 percent reported that they would sustain the services expanded and enhanced by their Allies. Size: $7.3 million in revenue; 12 employees in the national headquarters, and 55 employees across the entire organization (as of 2003). Revenue growth rate: Compound annual growth rate (1999-2003): 9 percent; highest annual growth rate (1999-2003): 39 percent in 2001. Funding sources: In 2003, more than 70 percent of Public Allies’ network revenues come from an almost even split of government funding (AmeriCorps) and earned-income fees that it charges partners for employing an Ally. In previous years, foundations, corporations and individuals played a larger role than they did in 2003. The national office receives about 20 percent of its funding from AmeriCorps. Organizational structure: Public Allies started with a branch structure, with all sites operating under one 501(c)(3), but it is now in the process of transitioning to a licensee structure, with each site operating under a host organization’s 501(c)(3). It operates in 10 locations: Milwaukee, Wisconsin; Chicago, Illinois; Cincinnati, Ohio; New York City, New York; Los Angeles, California; Wilmington, Delaware; RaleighDurham, North Carolina; Bridgeport, Connecticut; Milpitas, California (Silicon Valley); and Estes Park, Colorado (Eagle Rock). Leadership: Paul Schmitz, president and CEO, was the first leader of the Public Allies Milwaukee site and is the third leader of the organization. More information: www.publicallies.org 4 Key Milestones x 1992: Founded; launched its first apprenticeship program in Washington, D.C. x 1993: Expanded to Chicago with a National Service demonstration grant from President Bush’s Commission on National and Community Service x 1994: Received funding from the new AmeriCorps program; expanded to Milwaukee, Wisconsin; Raleigh-Durham, North Carolina; and Wilmington, Delaware x 1995: Expanded to Silicon Valley, California x 1998: Expanded to Cincinnati, Ohio x 1999: Expanded to Los Angeles, California and New York City, New York x 2000: Schmitz became CEO; expanded to Taos, New Mexico through a partnership with the Rocky Mountain Youth Corps’ Public Allies Delaware affiliates with the University of Delaware’s Center for Community Research and Service x 2001: Public Allies North Carolina paused due to a financial struggles; created program baselines and standards, and completed strategic plan to strengthen and grow the program model and to mobilize alumni through new programs x 2002: Expanded to Eagle Rock; introduced online evaluation tools; began alumni programming x 2003: Closed Taos site x 2004: Opened Connecticut site; closed Washington, D.C. site 5 Growth Story In 1992 Vanessa Kirsch and Katrina Browne, at the time two recent college graduates, founded Public Allies with the aim of correcting stereotypes about “slacker” GenXers. They saw that many talented young people were committed to active citizenship and community change, but that nonprofits had a hard time meaningfully tapping into this talent pool of emerging leaders. With help from hundreds of volunteers, Kirsch and Browne created Public Allies to recruit, train, and support diverse young leaders, and to prepare them to assume national and community leadership on pressing public issues. The organization launched its first apprenticeship program in Washington, D.C., placing 15 young people in positions of influence in the city’s nonprofit sector. The following year, Public Allies Chicago began with 30 more Allies. In 1994, people like current Public Allies President and CEO Paul Schmitz lobbied Public Allies to create sites in their cities, and so Public Allies helped them start local chapters in Milwaukee, Wisconsin; Raleigh-Durham, North Carolina; and Wilmington, Delaware. The organization opened in San Jose/Silicon Valley, California in 1995; Cincinnati, Ohio in 1998; Los Angeles, California and New York City, New York in 1999; Taos, New Mexico in 2000; and Estes Park, Colorado in 2002. Public Allies has explored other sites over the past decade with the availability of AmeriCorps and private funds often driving final decisions. The organization always intended to be national, but between 1992 and 1996 growth was opportunistic, often resulting from partners asking to replicate Public Allies’ program in their communities or from Kirsch or Browne expressing interest in a specific location. In fact, Schmitz recalls that when he was head of the Milwaukee office, he did not have the support of the national board which did not wish to expand there or in Delaware. “The ironic thing is that Milwaukee and Delaware are two of the strongest sites, because the challenges they put up to us in the beginning forced us to build something stronger than perhaps anyone else in the network had built.” 6 In 1992, President Bush named the group one his “Demonstration Projects for National Service,” and in 1994 it was one of the initial organizations that received funding from the newly created AmeriCorps program. Presidents Bill Clinton and George W. Bush have both honored the group’s work over the years. All the attention led to strong interest from funders, and with it, strong pressure to grow. Public Allies made Schmitz vice president of strategy and expansion in 1997, and Schmitz met with leaders in six communities who had contacted Public Allies about expansion. His uncle, then the president of Xavier University in Cincinnati, had invited him to explore opening a site there. After gaining the support of dozens of community organizations and leaders, Public Allies received multi-year gifts from Procter & Gamble and its chairman. The organization also created a binder that included detailed information on program methods and best practices to share with the new site. “We felt like it was our first time doing things right — all of our sites were struggling financially, but we saw Cincinnati and were like, ‘Wow! This is how it could be done.’” The CEO and the board decided New York and Los Angeles were the next logical cities for expansion, due to the amount of national funding coming from New York and the presence of two board members in Los Angeles. “At that time we decided if we were going to be truly national, we needed the two biggest cities,” he says. (See Figure 1 for the growth in Allies graduating from the program.) But with limited standards and management, sites evolved in their own directions, starting additional programs and making operating decisions without consulting with the national office even though the national office was ultimately liable. Despite inconsistencies in their program models, local sites achieved positive results and were championed in their communities, which made national interventions more difficult. Monitoring sites was also challenging due to the lack of national infrastructure. One local director, after a review that noted her lack of compliance with organizational policies, said that she thought she was running a local organization not a national program. “We grew the idea of Public Allies before we grew a clearly defined program or organizational model,” added Schmitz. 7 Figure 1 Number of Allies 300 238 201 200 148 127 142 214 203 203 147 124 100 Nongraduates Graduates 54 16 0 Graduation rate Number of sites 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 88% 89% 83% 89% 87% 80% 87% 73% 77% 86% 85% 88% 2 5 6 6 6 7 9 10 9 11 11 11 Source: Organization internal data This information is confidential and was prepared by The Bridgespan Group solely for the use of our client; it is not to be relied on by any 3rd party without The Bridgespan Group’s prior written consent. In 2001, growth paused as the organization conducted a strategic plan. “We ran out of money,” Schmitz explains, referring to Public Allies’ financial crisis in 2000 (see Capital section). No one would help fund the planning process, so Public Allies surveyed 170 stakeholders on its own. It learned that alumni were an undertapped and under-developed resource, so the organization developed a plan to continue supporting the leadership development of alumni. The study also revealed that the organization needed to raise its profile and better report the results stakeholders saw from the program. The plan called for expanding to 20 cities by 2006, primarily through “franchiselike” affiliations. Under this arrangement, the Public Allies national office would license other nonprofit organizations to run Public Allies sites under the umbrella of the licensee’s 501(c)(3). Public Allies would provide the program, training, technical assistance, and assessment tools and processes. The Delaware site was the first licensee created under the new plan, operating out of the University of Delaware starting in September 2000. 8 The plan helped further efforts over time to more clearly define the Public Allies model and organizational structure. Public Allies sites had created their own vision and mission statements until 1996. Program methods and best practices were first pulled together into a handbook in 1998 by a team of program staff representing each site. Program baselines and standards for each component of the program and a process for monitoring site quality were established in 2000. Financial policies were established in 2001, common program evaluation tools and systems were established in 2002, and site operating standards were created in 2003. With hindsight, Schmitz recognizes that more clearly defined program and management systems would have helped when he was running the Milwaukee office. “Early in our history, we had to seize the opportunity that existed for us to grow or we wouldn’t be in many of our sites. Having a consistent program model at that time would have been great, but the experimentation that came from these new sites are what developed the successful model we have today.” “I think there was a lot of work in making sure we had a very firm foundation on which to build things, but we’ve been building it and trying to live in it at the same time with very limited capacity until recently,” says Dawn Hutchison, vice president for marketing and development. “As we start expanding [again, we need to] have our program and management expectations clearly defined with the right support to help people successfully implement them from day one.” Schmitz believes that capacity and culture are important considerations in growth. “The problem was that over time, we developed this very decentralized culture with very limited national management either from lack of experience or from lack of capacity. For instance, in 1995 when there were five Public Allies sites, we had 13 national office staff and they were all young people who were new to the field. And in 2000, we had grown to 10 sites, but we only had seven national office staff. The culture that evolved and the lack of standard management systems conflicted with our structure as a single 501(c)(3). As we sought to build our national office infrastructure, standards, and management systems, there was great resistance from sites who wanted more support but wanted to retain control.” While building standards and systems in recent years, Public Allies has worked hard to address the underlying structural issues and to become more strategic 9 about growth. The Monitor Group recently led the creation of a new Public Allies strategic plan, and the organization has met with leaders from McKinsey, Bridgespan, YouthBuild, Teach for America, City Year, City Cares, Jumpstart and others to learn more about national-local structures and growth-related operational issues. As a result, Public Allies chose to migrate all of its sites to the licensee structure, and to grow its impact through new licensee sites and through dissemination of its leadership development approach to other organizations. Another recent change is that Public Allies now uses a more rigorous way of evaluating new geographic opportunities. Potential sites apply through an extensive, albeit collaborative, process with Public Allies. The organization received three detailed applications for new sites from a 2003 nationwide call for proposals, and selected only one. The first site developed through this method was recently launched through a licensee relationship with a group in Connecticut. One of Public Allies’ key assets in growing its model has been its efforts to track Allies’ outcomes. It does so with three tools, all of which collect data electronically via the organization’s intranet: The Personal Impact Service Documentation (PISD) system; 360 Degree Feedback Assessments; and frequent surveys of both Allies and partner organizations. In addition to the electronic tools, Allies participate in Presentations of Learning at the end of the year when they defend how they have achieved the organization’s outcomes. Public Allies commissions an annual “Year End Evaluation Report,” written by the University of Wisconsin at Milwaukee using the data collected through these tools. Public Allies also actively tracks the performance of its alumni through annual surveys. Public Allies developed their current online evaluation system with the help of a few “Cisco Fellows”, employees Cisco Systems, Inc. “loaned” to the organization. Claire Thompson, director of continuous learning, says, “The Cisco fellows were the impetus for this electronic system. They piloted an online system at the Silicon Valley site, helped us find the consultants, planted the seeds of change, and we took it from there and ran with it … The idea was that we needed to measure and report impact better, share information among sites, and streamline administrative processes.” Paul Schmitz credits the Cisco Fellows with keeping the costs manageable: “Our process was very inexpensive. We could not have had it done 10 anywhere else.” Public Allies has documented its technology transformation in a case study called “Recipe for Replication,” which is available on the organization’s website along with a presentation on its PISD and other evaluation tools. Hutchison, vice president for marketing and development, says the outcome measurement has been valuable in sustaining and growing funding from AmeriCorps and other sources, at the national and site levels: “The PISD is an incredible, powerful tool … The sector is asking for that information, and we are able to deliver it.” CONFIGURATION Public Allies started as a branch organization, with each site operating under the 501(c)(3) of the national office. Lack of experience and capacity among national staff members early on and Public Allies’ mission of developing local community leadership, however, created a culture that gave sites a great deal of control. “If your culture is all about local leadership, it is tough to have one centralized organization,” says Schmitz. Local sites had an independent local advisory board, which the local site director chose but which shared with national the hiring and firing authority over the director. The program model was not codified in detail before the initial expansion, enabling local sites to vary the program model, which several did to a significant degree. Despite the inconsistencies in their program models, local sites achieved positive results which fueled their continued growth. AmeriCorps funding led to some shifts in the model. “Initial program offerings were more advocacy oriented, but as Public Allies began receiving AmeriCorps funding, it became direct service oriented and more outcome directed,” says Schmitz. Further, the reporting structure between the local sites and national office was unclear, and the national office had little control over “rogue” sites that developed program priorities or operating decisions which diverged from the national organization. For example, one local site decided it would be more cost effective to share space with other nonprofit organizations, so it leased office space large enough to hold three organizations and planned to sublet the space to other 11 nonprofits. When the national office finally learned of this, it was unhappy that it would have to bear the liability of excess real estate if the local site were unable to lease the space. Public Allies eventually found its relationship with local sites unsustainable. “Our model was flawed,” says Hutchison. “We have a very decentralized culture.” Not only was the national office unable to control local programs, but it was also liable for the local sites’ persistent budget deficits. Local site directors have minimal accountability to national because “[the national office] can always bail local sites out,” says Schmitz. “The home office has all of the responsibility and none of the control.” The organization recently announced it would close its Washington, D.C., office, the site of Public Allies’ first program. “We have come to the conclusion, that even under the best local leadership, we will struggle locally to raise the necessary dollars,” said Schmitz in an announcement about the closure. “Our program achieves great outcomes, but is fairly expensive and too small in scale locally to justify the infrastructure that would allow us to raise more funds. The struggles we have faced are structural.” Public Allies is currently working with D.C. alumni to identify a partn.