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The following is a guest post from Sacha Litman, Founder and CEO of Measuring Success, Inc.

David Smith* is an active Board member in his community foundation as well as the Board Chair of one of its major grantees, a local school named Springfield Academy*. Due to the continuing challenges of the economy, the foundation’s fundraising was down nearly 25% over the past 2 years. David knew that Springfield Academy, which depends on the community foundation for nearly 40% of their non-tuition income, was going to feel a heavy pinch again. For its part, the community foundation was frustrated not only by its own fundraising challenges, but also by their feeling that Springfield Academy seemed to be in a vicious cycle whereby it came to the foundation for financial support each year to close its deficits and keep its doors open, yet the enrollment at the school continued to drop and its deficits continued to grow. Some of David’s peers on the foundation board argued they should stop supporting the school altogether.

David was deeply concerned. The school had already over the past few years frozen teacher salaries, restructured contracts with vendors and utilities, and laid off some staff. He felt trapped: were continued budget cuts the right decision, or was that just going to perpetuate the vicious cycle the school was in? Or, were his fellow community foundation board members right that the school was not sustainable and perhaps closing the school was the responsible thing to do? Around this time, Springfield Academy and the Community Foundation applied for and were chosen to participate in a program with Measuring Success using our Strategic Financial Modeling and Parent Feedback processes.

Our first step was to work with Springfield on its financial projections using the Peer Yardstick Strategic Financial Modeling Tool. Given the status quo, we learned that over the next 5 years enrollment would continue to trend down, the school’s enrollment would continue to teeter between needing one or two classrooms per grade, financial aid needs would keep growing, and tuition was too low relative to other area schools.

Next, the school had ideas of where they wanted to cut back – but we knew from our experience that across-the-board cuts were going to demoralize staff and lead more families to leave the school. We needed to know what parents valued so the school could maintain and invest in those areas, while making cuts in arenas that were of lower priority. We conducted our Peer Yardstick Parent Survey to accomplish just that. 85% of families participated in the survey; we were able to learn that most parents did not feel that Springfield Academy gave them good quality for their tuition dollar (despite a fairly low tuition dollar), and the school was shrinking because few parents were likely to promote the school to their friends. We learned that many parents would pay a higher tuition if the quality of the school were better. One negative was that parents did not feel sufficiently part of the social fabric of the school. On the positive end, parents felt the school did an excellent job of understanding their child’s individual needs relative to the public and private school competition.

Triangulating the financial and parent feedback data we had collected, we worked with the school to explore a few key strategic possibilities. We played out several scenarios, and ultimately the school board settled on investing money in improving the social fabric (costing only $10,000 but having a lot of impact), marketing their strong individualized teaching scores to attract new students, and educating parents on the true cost of the education. Conversely, the school put off a desired curriculum overhaul in a few subject areas not only because it was expensive but because the parents did not highly value it. They chose to increase tuition, thus capturing more revenues from families that could afford it while concomitantly awarding more in financial aid for those families in need.

David, given his role both in the school and the foundation board, made a presentation to the foundation showing the school’s plan to improve quality while also improving financial sustainability. The foundation, confident that their grants to the school were now going to lead to greater sustainability, voted to set their allocation differently. They agreed to limit their funding decreases to the school to a more predictable level provided that the school met their own stated improvement goals in several key financial and parent survey metrics identified through the project. Springfield Academy implemented the plan over the next several years so that instead of reacting to the crisis du jour, they were able to keep their eyes on the prize and hit their improvement goals around enrollment, tuition, and expenditures.

Looking back on the past few years, David was excited but also relieved – instead of the school’s closing or the foundation pulling its funding, he had successfully steered Springfield Academy and his Community Foundation to a “win-win” by using parent and financial data, using “if then” thinking to explore several scenarios, and generating a data-driven strategy that provided a blueprint for success.

To learn more about how Measuring Success can help your school or organization’s management team and board make smarter decisions using data instead of anecdotes to improve strategic and financial sustainability, please contact me at sacha-newsletter@measuring-success.com.

* Client names changed