Philadelphia Youth Network

NONPROFIT INVESTOR I N D E P E N D E N T R E S E A R C H F O R P H I L A N T H R O P Y

Nonprofit Investor Research | nonprofitinvestor.org

RECOMMENDATION: BUY

Since being founded in 1999 as a small non‐profit subsidiary, PYN has

grown into an independent, citywide organization with substantial support

within and recognition from the Philadelphia community. Having

developed relationships with key policymakers and stakeholders, the

company appears to be in a great position to continue to grow and create

opportunities for Philadelphia’s youth for years to come.

SUMMARY

Philadelphia Youth Network (“PYN”) provides college preparation

services, career training programs and employment and internship

opportunities by leveraging its relationships with local youth

organizations, community centers, secondary and post‐secondary

academic institutions and employers.

STRENGTHS

▲ Strong reputation within Philadelphia community. PYN has

grown from a small non‐profit subsidiary into an independent,

citywide organization serving thousands of local students.

▲ Growing and sticky partner network of employers, academic

institutions and youth organizations. Over 150 employers are

currently involved in WorkReady, PYNs largest school‐to‐career

initiative, up substantially from 50 employers six years ago.

▲ Number of students benefitting from PYN programs continues

to grow each year. WorkReady placed over 11,000 students in 2010,

compared to only 150 students in 2003.

▲ Strong financial performance and stable expense/revenue ratio.

15% revenue and support CAGR over the past three years, which has

funded an increase in the breadth and depth of program offerings.

CAUTIONS

▼ Funding Concentration. 85% of funding comes from six

government programs and loss of funding from any single program

will have a material (>10%) impact on total revenue and support.

● Long‐term evaluation horizon makes current performance

difficult to evaluate. Access to long‐term employment data among

PYN participants is not readily available.

Philadelphia Youth Network Nonprofit Investor Rating:

BUY

Vision Statement

All of Philadelphia’s young people will take their rightful places as full and contributing members of a world‐class workforce for the region.

Mission Statement

Serving as a catalyst for collective action, PYN

makes connections among individuals,

organizations and systems and increases

capacity and resources in order to provide

world‐class preparation so Philadelphia’s

youth can thrive in a regional and global

economy.

Financial Overview

$ in MM, Fiscal Year Ended June 30

2008 2009 2010

Revenue and Support $23.2 $29.5 $31.5

Operating Expenses $23.1 $29.5 $31.5

% of Total:

Program Expenses 93.5% 94.2% 95.1%

G&A 6.4% 5.7% 4.9%

Fundraising 0.1% 0.1% 0.0%

Year Founded: 1999

Contact Details

Philadelphia Youth Network 714 Market Street, Suite 304 Philadelphia, PA 19106 (267) 502‐3800 http://www.pyn.org EIN: 23‐2993155

Analyst: John Goldston

Peer Review: E. Wang, K. Chao

Publication Date

December 24, 2011

Philadelphia Youth Network | Nonprofit Investor Research 2

OVERVIEW OF PHILADELPHIA YOUTH NETWORK’S ACTIVITIES

Created in 1999 as a vehicle to sustain and extend the work of Philadelphia’s highly successful school‐to‐career system,

PYN has grown into a nationally‐recognized intermediary organization for public and private investments targeted

toward improving the educational and workforce development outcomes of the city’s youth.

Workforce Initiatives (75% of program expenses) Educational Initiatives (25% of program expenses)

PYN workforce initiatives focus on creating

opportunities for youth to gain work experience,

exposure to potential career opportunities and general

employment skills that are helpful over the long term.

WorkReady Philadelphia

Workforce opportunities are mainly offered through

WorkReady Philadelphia, a broad‐based partnership

program with local employers that places Philadelphia’s

low‐income students and out‐of‐school youth aged 14‐

24 in local jobs. WorkReady currently leverages a

partner network over 150 employers, up substantially

from only 50 employers in 2005.

E3 Centers (Empowerment, Education & Employment)

PYN also contracts with local youth‐serving

organizations to operate community centers serving

out‐of‐school youth returning from juvenile placement.

The centers offer activities that teach occupational and

life skills, and are supported by the Philadelphia

Department of Human Services and Juvenile Probation

Department. The effectiveness of these re‐integration

centers can be seen through lower recidivism rates

among those who attend.

Key educational programs include Project U‐Turn, the

Student Success Centers and Gear‐Up initiatives.

Project U‐Turn

Project U‐Turn is a collective effort to understand and

resolve Philadelphia’s dropout crisis, focusing on policy,

resources, stakeholder involvement and the quality and

quantity of educational opportunities. In 2010, the program

helped refer over 2,000 out‐of‐school youth to educational

options and enlisted over 1,350 adults to act as youth

mentors.

Student Success Centers

Student Success Centers have been established at eleven

high schools (up from eight schools in 2008) to offer college

and career information and a support system. Participation

in these centers has had a statistically significant impact on

student outcomes, including higher grades and lower

percentage of total school days missed from suspension.

Gear‐Up

Gear‐Up is a discretionary federal grant program designed to

increase the number of low‐income students who are

prepared for post‐secondary education by partnering with

students beginning in middle school. PYN has received a six‐

year grant to provide services at 18 high‐poverty middle

schools and 4 high schools.

PROGRAM RESULTS AND EFFECTIVENESS

PYN has provided local youth access to jobs and internships for over 10 years, and all indications conclude that the

organization has been successful to date. Since being founded in 1999 as a small non‐profit subsidiary, PYN has grown

into an independent, citywide organization with substantial support within and recognition from the Philadelphia

community. Having developed relationships with key policymakers and stakeholders, the company appears to be in a

great position to continue to grow and create opportunities for Philadelphia’s youth for years to come.


Early data indicates that youth supported by PYN programs have higher college and graduate school placement rates,

are more likely to be permanently employed post‐graduation and have lower recidivism rates. Year after year, 90% ‐

100% of employers submit evaluations saying they were satisfied with the work performance of their PYN‐placed

student, and would support taking on students in future years.

The company has shown a successful track record in increasing the breadth and depth of its employer partner network

that caters to job and internship‐seeking students, and as a result has been able to serve over 10,000 students each year.

PYN has shown the ability to convert an initial relationship into a long‐term partnership with a high retention rate year

after year.

On the educational initiatives side there is also evidence that PYN program services deliver superior student outcomes.

Students that participate in PYN’s Student Success Centers are more likely to be promoted to the next grade level,

receive higher grades and miss fewer days of school due to unexcused absences or suspension. All of PYN’s educational

programs continue to expand their reach to more students across a growing list of high schools, middle schools and

community centers.

PYN has a stable senior management team and strong board of directors that appears capable of guiding the non‐profit

as it continues to grow. The current CEO is a co‐founder and former COO of PYN, having been with PYN since inception

in 1999. Other key management and personnel have been employed by PYN for 5+ years, and the board has had

minimal turnover since 2009, suggesting that key decision makers are intimately familiar with the day‐to‐day operations

and understand the specific operations of the non‐profit that make it successful.

TRANSPARENCY

PYN is very transparent with its financial and operational reporting. Annual reports from 2002‐2010 containing

summary financial information and a list of program supporters (funders, partners and employers) are readily accessible

on the website. The annual report also provides contact information and instructions on how to obtain a detailed

company audit from the independent auditor. Form 990s through the year ended 6/30/10 are also available on

www.guidestar.org.

FINANCIAL OVERVIEW

REVENUE

PYN has achieved significant, consistent

revenue and support growth of 16% annually

since 2005 and has increased revenue and

support each year since being founded, with the

exception of 2004. 85% of revenue and support

comes from federal, state and city grants, with

the other 15% coming from foundations,

corporations and individuals. The increase in

funding over time is entirely from larger

government grants, while private donor

contributions have been lumpy and

unpredictable.

23.9%

18.5%

13.2%

12.3%

10.1%

9.1%

8.4%4.6%

Temporary Assistance forNeedy Families (TANF)

Workforce Investment Act(WIA)

School District of PHL

City of PHL

Foundations

American Recovery andReinvestment Act (ARRA)

Commonwealth of PA

Other

Funding Mix (2009 and 2010, cumulative)


EXPENSES

Program expenses account for 95% of total expenses. Of the $30mm in program expenses for 2010, approximately

$22mm was associated with workforce initiatives and $7mm was associated with educational initiatives, a split

consistent with prior years. Program expenses are primarily related to education and training services, as well as payroll

assistance for some employers participating in the WorkReady program.

PYN has held management and employee expenses relatively constant at ~ 5% of total revenues and support. CEO and

CFO compensation is clearly laid out in the Form 990, is comparable to what other similarly sized non‐profit peers pay

their executives.

NET ASSETS

PYN has historically put all of its annual revenue and support to work by funding its growing programs, and holds very

little cash in reserves. Total expenses have been 99% ‐ 100% of total revenues in each year since 2005, and the company

has maintained a net asset position of roughly $700k. While this does not indicate a higher ROI on each dollar invested,

it does show that PYN has made a concerted effort to not let funding sit idly, and is able to find uses for the money

provided by its benefactors. We would expect this to be the case given that demand for PYN services outstrips supply.

Total Expense Breakdown (GAAP Basis) Program Expense Breakdown (GAAP Basis)

$ in MM

$ in MM

94% 93% 94% 95%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0

$5

$10

$15

$20

$25

$30

$35

2007 2008 2009 2010

Program Expense % of Total

Expenses

Program Expenses Fund‐Raising

Management and General Program Expense % of Total

$21

$23

$29 $32

$10 $10 $12

$16

$5 $7

$7

$8

$3

$4

$5

$6

$6

$0

$5

$10

$15

$20

$25

$30

$35

2007 2008 2009 2010

Expenses

Contracted Provider Services Youth Wages, Stipends & Benefits

In‐kind Expenses Direct Services

$19

$22

$28

$30


Detailed Financial Statement

Fiscal Year Ended June 30 2008 2009 2010 CAGR Source:

Revenue and Expenses (GAAP Accounting Basis)

Support and Revenue:

Contracts $22,445,221 $25,587,850 $30,716,525 Annual Report (GAAP)

Contributions 67,515 268,308 246,630 Annual Report (GAAP)

Other Fees 623,149 765,294 506,266 Annual Report (GAAP)

In‐Kind Contributions 270 2,841,079 71,012 Annual Report (GAAP)

Interest and Other 55,886 23,620 5,127 Annual Report (GAAP)

Total Support and Revenues $23,192,041 $29,486,151 $31,545,560 16.6%

% Growth 12.3% 27.1% 7.0%

Expenses:

Contracted Provider Services $9,968,096 $12,173,252 $16,143,000 Annual Report (GAAP)

Youth Wages, Stipends & Fringe Benefits 6,817,214 6,928,139 7,800,065 Annual Report (GAAP)

In‐kind Expenses ‐ 2,841,079 7,012 Annual Report (GAAP)

Direct Services 4,843,735 5,828,902 6,048,501 Annual Report (GAAP)

Total Program Services $21,629,045 $27,771,372 $29,998,578 17.8%

Management and General $1,490,379 $1,681,415 $1,531,642 Annual Report (GAAP)

Fundraising 19,273 13,706 9,363 Annual Report (GAAP)

Total Expenses $23,138,697 $29,466,493 $31,539,583 16.8%

% Total Support and Revenue 99.8% 99.9% 100.0%

Change in Net Assets $53,344 $19,658 $5,977

Net Assets, Beginning of Year $632,549 $685,893 $705,551

Net Assets, End of Year $685,893 $705,551 $711,528

Program Services as % of Total Expenses 93.5% 94.2% 95.1%

Management & General as % of Total Expenses 6.4% 5.7% 4.9%

Fundraising as % of Total Expenses 0.1% 0.0% 0.0%

Cost Per Beneficiary

# of Youth Served Through PYN Programs 16,544 20,000 '08 Annual Report, estimate

Total Expenses $29,466,493 $31,539,583

Total Expense Per Youth $1,781 $1,577

Total Program Services Expenses $27,771,372 $29,998,578

Program Service Expense Per Youth $1,679 $1,500

GROWTH OPPORTUNITIES

Fundraising and Support. Increasing funding from non‐governmental agencies has not been a core focus for PYN to

date. Although a relatively small part of the overall funding pie, a dedicated effort to reach out to more foundations,

businesses and wealthy individuals could drive revenue and support growth and would help protect PYN from the

downside risk of losing funding from government budget cuts. PYN already has full‐time employees handling fundraising,

but the staff may need to be augmented for PYN to achieve meaningful scale with private donors.


Demand for Services. There remains a substantial underserved population that demands PYN services. Of the 21,000

students who applied for WorkReady programs in FY10, only 11,000 were able to be placed by PYN. PYN can address

the shortfall by either raising additional funding to help cover payroll costs for employers, or growing the employer base

as it has done historically.

ADDITIONAL DILIGENCE AREAS

Funding sources. A better understanding of the policy landscape and the outlook for public funding is critical to

developing an opinion on PYNs ability to scale going forward. The reliability of government funding has not been a

problem for PYN to date; however, the possibility of losing funding is a real risk today that must be considered. PYN

noted in its 2010 Annual Report that several funding streams were reduced due to the recession, but the gap was more

than filled by additional support from the American Recovery and Reinvestment Act, which supported an additional

2,600 summer jobs.

While the federal programs supporting PYN (Temporary Assistance for Needy Families [TANF], Workforce Investment

Act [WIA], American Recovery and Investment Act [ARRA]) are less likely to be eliminated, marginal cuts across the

board will also hinder PYN’s efforts to carry out its programs at current levels.

THIRD PARTY RATINGS

Philadelphia Youth Network has not been rated by other major non‐profit evaluation groups, including Charity Navigator,

GiveWell, GreatNonprofits and GuideStar.

GET INVOLVED

Become a WorkReady employer – hire an intern and/or offer work opportunities to Philadelphia’s youth

Join the Young Friends of PYN and support PYN programs through fundraising, events and networking

Sign up to be a Graduation Coach to guide students through secondary and post‐secondary education

Join the Project U‐Turn Collaborative to help identify solutions to keep students in school

Donate: http://www.pyninc.org/donate.php

DISCLOSURES

John does not have any affiliation with Philadelphia Youth Network and has never made a donation to the organization.

NPI analysts and NPI as an organization do not receive any form of compensation from reviewed charities.

Philadelphia Youth Network

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