Pound-Wise

Earlier this week I came across an article in the New York Times on a third option for resolving the fiscal cliff in the United States, though in my opinion they could have been talking about any financial challenge, be it individual, organizational, or communal. When there’s a shortfall, the solutions tend to be framed in one of two ways, cutting back spending or bringing in more income (through taxes in a government scenario): article author David Bornstein suggests that investing in programs that pay long-term dividends to society is the better approach. He provides the example of the Transitional Care Model (TCM), developed at the University of Pennsylvania School of Nursing over the past two decades, that supports chronically-ill older patients after leaving the hospital. These patients and their families face a plethora of challenges when returning home: following medication regimes, accessing local services, watching out for (and interpreting) potential warning signs of complications or relapse. Evaluation evidence cited by Bornstein suggests that the planning and followup support provided through TCM reduced re-hospitalization rates by 30 to 50%, saved $4,000 per patient after program costs, and if replicated across US would save Medicare $10 billion a year without any reduction in benefits.

I can think of two similar examples from my own experiences. Pathways to Education, a national program that provides support to high school students at risk of dropping out of school, was independently evaluated by the Boston Consulting Group to determine the program’s impact and effectiveness. The report found a number of benefits, but the one that stood out for me was the return on investment for the program: for every dollar put in, society received a “return” of twenty-four dollars, based on higher education leading to better paying jobs (and therefore more income tax collected) and lower usage of social assistance (reduced cost) – and that estimate doesn’t include other benefits like better health (strongly correlated with education) and reduced crime rates. Pathways to Education is therefore an example of a both-and solution.

My second example comes from Cambridge (Ontario). During my Masters program, I participated in a tour of a converted social housing unit that played host to youth programs run by a local community health centre. The program served approximately 200 youth per year, with the cost for the space and programming (including staff time) running about $100,000 a year. The representative of the health centre made an apt comparison about value: to keep a youth in the justice system through sentencing and incarceration costs society on average about $100,000 a year, the same annual costs for the youth space. So, if this initiative prevents just one youth a year from entering the justice system, it’s already paid for itself – and again, this analysis ignores any other benefits to health, education, quality of life, and future potential.

Lessons Learned

For non-profits, these three examples demonstrates the importance of collecting evidence for your program and sharing those successes. Crunching these numbers may seem daunting, but fortunately there are partners out there willing to help. Cultivating relationships with universities, research institutions and consultants with a research background can lead to joint projects for assessing broader impact. It doesn’t necessarily need to cost a bundle either: as an example, the assessment of Pathways to Education was provided pro-bono by the Boston Consulting Group.

When looking at impact, consider the big picture in addition to the local. The number that strikes me the most from the New York Times piece was $10 billion – the “what-if” amount if similar programs were implemented across the United States. Although scaling up presents its own challenges, think about the potential and more importantly, communicate them!

For funders, politicians, and other key decision makers, look beyond the immediate dollar cost and consider longer-term savings. Give programs some flexibility in implementation to better account for local conditions: for example, Bornstein in his Times article suggests a federal voucher system so that states can take an adaptive approach in encouraging new programs. Finally, help non-profits and social innovators by providing them the resources to learn more about the issues at hand, the tools to assess what’s happenning locally, and the support to continually develop the program.

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