Case
Teaching Notes
Supplementary Resources
Abstract
In 2000, Charles Best (Yale College ’98), a social studies teacher at an alternative public high school in the South Bronx, found himself frustrated because his school did not have access to many of the resources available in other New York City public schools. Best and his colleagues were able to secure basic materials, but they were unable to bring many creative classroom projects to fruition, because they lacked financial support.
Best believed that there were many people who would be willing to fund small projects that quickly improved classroom performance and educational opportunities; however, the challenge was to connect donors with appropriate projects.
In an attempt to solve this problem, Best founded DonorsChoose.org, a website that would match donors directly with New York City public school teachers who needed funding for classroom materials and activities. Simple in its conception, the DonorsChoose.org model actually required a number of systems to ensure that teachers posted good projects, that donors could easily choose among projects, and that a link was forged between the donors and students. Best believed that this direct link between donors and classrooms would address “the scarcity and inequitable distribution of learning materials and experiences in our public schools.”
After an auspicious start, Best and DonorsChoose.org set their sights on growing beyond New York City. The organization received national publicity and won a prestigious non-profit strategy award. Then in 2005, a group of Silicon Valley executives agreed to provide a $14 million grant to fund national expansion. DonorsChoose.org scaled up its organization and began a step-by-step expansion into various locales. It created an ambitious outreach program to encourage teachers to design projects and donors to visit the site and commit to funding projects.
At the beginning of 2009, as the grant money was coming to an end, the organization had made great strides toward completing its expansion. However, observers wondered whether DonorsChoose.org could reach its goal of providing $100 million per year in gifts to classrooms and whether it would have an impact on the fundamental inequities within the educational system.
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved
Resources
Exhibit 1: Number of Funded Projects by Teacher and School
Funded Projects Posted between November 5, 2007 and November 4, 2008 | ||
---|---|---|
Funded Projects per School | Number of Schools | Number of Teachers |
1 | 4,031 | 10,955 |
2 | 1,390 | 2,189 |
3 | 717 | 748 |
4 | 385 | 338 |
5 | 270 | 165 |
6 | 172 | 94 |
7 | 140 | 59 |
8 | 108 | 56 |
9 | 79 | 27 |
10 | 75 | 21 |
11 | 57 | 8 |
12 | 50 | 10 |
13 | 30 | 10 |
14 | 26 | 4 |
15 | 30 | 1 |
16 | 20 | 0 |
17 | 20 | 1 |
18 | 18 | 0 |
19 | 6 | 1 |
20 | 10 | 1 |
21 | 13 | 0 |
22 | 10 | 0 |
23 | 5 | 0 |
24 | 12 | 0 |
25 | 4 | 0 |
26 | 4 | 0 |
27 | 5 | 0 |
28 | 5 | 0 |
29 | 2 | 0 |
30 | 4 | 0 |
31 | 1 | 0 |
33 | 3 | 0 |
34 | 3 | 0 |
35 | 1 | 0 |
37 | 2 | 0 |
40 | 2 | 0 |
41 | 1 | 0 |
48 | 1 | 0 |
55 | 1 | 0 |
61 | 1 | 0 |
Total | 7,714 | 14,688 |
Note: “Schools” and “Teachers” refer to the number of schools or teachers for which X number of projects were funded. For example 10,955 teachers each had 1 project funded that was posted between 11/5/07 and 11/4/08.
Exhibit 2: Funded Project Cost and Donation Data
Funded Projects Posted between November 5, 2007 and November 4, 2008 |
---|
Average Cost for a Funded Project’s Materials: $337.15 |
Median Cost for a Funded Project’s Materials: $283.00 |
Average Number of Donations Required to Fund a Project: 3.29 |
Median Number of Donations Required to Fund a Project: 2 |
Maximum Number of Donations for a Funded Project: 68 |
Average Days to Fund a Project: 58 |
Median Days to Fund a Project: 38 |
Note: There is a long tail at the right end of the graph because during this period DonorsChoose.org instituted a time limit of five months for funding a project. The projects that exceed the five-month limit were grandfathered in.
Exhibit 3: Funded Projects by Category
Funded Projects Posted between November 5, 2007 and November 4, 2008 | |||
---|---|---|---|
Resource Usage | Resource Type | Number of Projects | Percentage of all projects |
Basic | |||
Supplies | 5,062 | 22.91% | |
Books | 3,574 | 16.17% | |
Technology | 2,109 | 9.54% | |
Trips | 13 | 0.06% | |
Visitors | 2 | 0.01% | |
Other | 864 | 3.91% | |
Subtotal | 11,624 | 52.60% | |
Enrichment | |||
Supplies | 4,192 | 18.97% | |
Books | 2,780 | 12.58% | |
Technology | 2,318 | 10.49% | |
Trips | 102 | 0.46% | |
Visitors | 28 | 0.13% | |
Other | 1,053 | 4.77% | |
Subtotal | 10,473 | 47.40% | |
Total: | 22,097 | 100.00% |
School Poverty Rating | Number of Schools Applying for Funding | Percentage of All Schools Applying for Funding |
High | 18,027 | 81.57% |
Moderate | 2,761 | 12.49% |
Minimal | 552 | 2.50% |
Unknown | 760 | 3.44% |
Subject Area of Projects | Number of Projects |
Literacy | 7,093 |
Mathematics | 2,431 |
Literature/Creative Writing | 2,196 |
Special Needs | 1,305 |
Visual Arts | 1,069 |
Applied Science | 1,018 |
Health & Life Science | 935 |
Environmental Science | 927 |
History/Geography | 709 |
Music | 639 |
Social Sciences | 530 |
Other | 459 |
English as a Second Language | 430 |
Early Development | 406 |
Gym & Fitness | 260 |
Performing Arts | 238 |
Health & Wellness | 227 |
Foreign Languages | 218 |
Sports | 190 |
Character Education | 170 |
Extracurricular/After School | 127 |
College/Career Prep | 124 |
Civics/Government | 98 |
Student Rewards | 84 |
Parent/Community Involvement | 78 |
Community Service | 64 |
Nutrition | 43 |
Economics | 29 |
Exhibit 4: Screenshots of Donor Experience on DonorsChoose.org
“Visualizing Math” Project, Nov. 27, 2008, Project Proposal
“Visualizing Math” Project, Nov. 27, 2008, Project Added to Cart
“Visualizing Math” Project, Nov. 27, 2008, Donation Confirmation
Exhibit 5: Project Cost Report and Project Fulfillment Report
DonorsChoose.org Project Cost Report
Project: Visualizing Math: Batteries for Calculators (#216307)
Teacher Receiving Resources: Mr. L (abbreviated since this document is publicly available)
DonorsChoose.org Staffer Procuring Resources: Jenni D
This report is based on the price of materials when the teacher submitted his/her proposal. Actual expenditures may differ slightly from the above estimate due to items going on sale at time of purchase; the need to use alternate suppliers when the original items are out of stock; and/or the absence of payment processing charges for donations by check. If actual expenditures turn out to be more than the above estimate, DonorsChoose.org pays for the difference. If actual expenditures turn out to be less than the above estimate, DonorsChoose.org places the savings in a restricted account that is solely used to fund additional classroom project materials. In short, any savings go to students.
Materials Resources:
Item Vendor Unit Price Quantity Total Price | |
---|---|
RECHARGEABLE AAA BATTERIES4PK—Duracell Rechargeable “AAA” Batteries 4-Pack Quill | $10.79 13 $140.27 |
Resources Subtotal | $140.27 |
Vendor Shipping Charges*(10% of Materials Subtotal) | 14.03 |
Vendor Sales Tax Charges** (0.00% of Materials Subtotal) | 0.00 |
3rd Party Payment Processing Fee (2.5% of Resources Subtotal) | 3.51 |
Camera, Photo Development, and Postage for Donor Thank-You Package | 17.00 |
Project Subtotal | 174.80 |
Optional Donation to Cover Project Fulfillment Labor (15% of Total Project Cost – See Next Page) | 30.88 |
Total Project Cost | 205.69 |
*The shipping fee represents a net average of vendor shipping rates based on an annual evaluation conducted by DonorsChoose.org. Any savings are restricted to funding additional classroom project materials.
**The sales tax fee represents the state sales tax charged with one exception: a 15 percent charge is added by DonorsChoose.org to projects taking place in Hawaii and Alaska to cover the higher cost of shipping resources to these two states.
DonorsChoose.org Project Fulfillment Report
Project: Visualizing Math: Batteries for Calculators (#216307)
Teacher Receiving Resources: Mr. L (Abbreviated since this document is publicly available)
Students Benefited: 60
Instructional and Homework Hours Supplied: 120.00
This report details the labor performed by DonorsChoose.org to turn your donation into a live project. The project fulfillment fee supports this work and ensures “end to end” integrity on every student project. While the cost of fulfilling a student project remains the same, DonorsChoose.org offers a “scholarship” to the highest-need schools. Depending on a school’s poverty level, the fulfillment fee is 25 percent, 20 percent, or 15 percent of the total project cost. The vast majority of schools using DonorsChoose.org have high rates of poverty, so most proposals carry the 15 percent fulfillment fee.
Sep 27, 2008 Mr. L completed the registration process at DonorsChoose.org and identified the school where any project would take place. DonorsChoose.org only lists schools which have been verified by the government, and staff members update school information (such as address and percent of students from low income families) every four months.
Sep 27, 2008 Mr. L submitted “Visualizing Math: Batteries for Calculators” at DonorsChoose.org.
Sep 28, 2008 Donorschoose.org volunteer Karen R reviewed the proposal essay to ensure that Mr. L fully explained the student learning that would take place, and emailed follow-up questions if anything was unclear.
Oct 2, 2008 DonorsChoose.org staff member John C verified the project resources and calculated the proposal price tag.
Nov 27, 2008 “Visualizing Math: Batteries for Calculators” was fully funded. Thank you!
Nov 28, 2008 DonorsChoose.org staff member Brandon C confirmed with Mr. L that the requested resources were still needed, forwarded Mr. L’s initial thank-you email, and established a thank-you package due date based on the project lifecycle.
Nov 30, 2008 Operations team staff with ordering privileges Jenni D purchased the project resources for Mr. L and had them sent.
Dec 29, 2008 When Mr. L returned the completed thank-you package to the DonorsChoose.org office,
DonorsChoose.org staff member Cheyenne J checked it in.
Dec 30, 2008 DonorsChoose.org staff member Di Z packaged the thank you letters, and sent this thank-you package to you. We hope it demonstrates the impact you’ve had on Mr. L’s students and illustrates what a difference you’ve made for this classroom.
Exhibit 6: Email Thank-You
“Visualizing Math” Project, Nov. 28, 2008
Exhibit 7: DonorsChoose.org Project Timeline
Activity | Time to Complete |
Classroom teacher posts project & materials list. | Process begins |
DonorsChoose.org volunteers screen project using eligibility criteria (resources to be used by students; project not discriminatory or political). →Project posted for public viewing/donations. | 2 weeks (1–15 business days) |
Project fully funded. →Donors immediately sent initial thank-you email, which also serves as a receipt for tax-deduction purposes. | 4 months (Maximum time allotted for funding is 5 months) |
Teacher contacted to confirm student need; teacher must respond in order for project to proceed. Once confirmation is received: →Email sent to school principal (and sometimes other administrators) to inform them of the project/donation. →Materials order sent to eSchoolMall for fulfillment. | 1 week |
Thank-you email sent from teacher to donors; includes teacher-selected date to expect thank-you package. | 1 week |
DonorsChoose.org sends thank-you kit to teacher. | 2 weeks |
Materials arrive at school. | 1 month* |
Teacher returns thank-you package with teacher letter, student letters, and used disposable camera to DonorsChoose.org. →DonorsChoose.org develops/prints pictures and forwards them, along with teacher and student letters, to donors. | 3–6 months after project is funded |
*Does not include delay if materials are held during the DonorsChoose.org winter/summer breaks, during which times no project materials or thank-you kits are mailed.
Exhibit 8: DonorsChoose.org Financials
DonorsChoose.org STATEMENTS OF FINANCIAL POSITION June 30, 2008 AND 2007 | ||
Assets | 2008 | 2007* |
Cash and cash equivalents (Notes 1b and 3) | $7,163,959 | $7,387,919 |
Certificates of deposit and accrued interest (Notes 1d and 5) | 5,292,614 | |
Unconditional promises to give (Notes 1c and 4) | ||
Unrestricted | 10,400 | 75,000 |
Board designated to national expansion activities | 2,387,500 | 4,250,000 |
Temporarily restricted, net of allowance for uncollectible | ||
amounts of $500,000 (2008) | 798,455 | 857,205 |
Prepaid expenses and other current assets | 35,504 | 2,308 |
Property and equipment, at cost, net of accumulated | ||
depreciation (Notes 1e and 6) | 1318193 | 1,201,316 |
Security deposits | 44782 | 29,653 |
Total Assets | $17,051,407 | $13,803,401 |
Liabilities and Net Assets | ||
Liabilities | ||
Accounts payable and accrued expenses | $307,974 | $178,450 |
Salaries and payroll taxes payable | 200,552 | 119,131 |
Accrued vacation liability | 84,539 | 35,130 |
Total Liabilities | 593,065 | 332,711 |
Commitments (Note 8) | ||
Net Assets | ||
Unrestricted (Note 2a) | ||
Operating | 1,839,105 | 1,972,228 |
Designated for national expansion activities | 8,568,086 | 6,414,803 |
Designated for classroom projects | 338,990 | 413,766 |
Total Unrestricted | 10,746,181 | 8,800,797 |
Temporarily restricted (Note 2b) | 5,712,161 | 4,669,893 |
Total Net Assets | 16,458,342 | 13,470,690 |
Total Liabilities and Net Assets | $17,051,407 | $13,803,401 |
*Certain amounts have been reclassified for comparative purposes. | ||
See notes to financial statements. |
DonorsChoose.org STATEMENTS OF ACTIVITES YEARS ENDED June 30, 2008 AND 2007 | ||||||
2008 | 2007 | |||||
Unrestricted | Temporarily Restricted | Total | Unrestricted | Temporarily Restricted | Total | |
Changes in Net Assets | ||||||
Revenue | ||||||
Contributions for classroom projects | - | $9,996,644 | $9,996,644 | $28,215 | $5,774,936 | $5,803,151 |
Contributions for program services and supporting services | 1,343,824 | 1,307,716 | 2,651,540 | 1,001,736 | 1,004,423 | 2,006,159 |
Contributions for national expansion (Note 2a) | 5,800,000 | - | 5,800,000 | 7,950,000 | - | 7,650,000 |
Provision for uncollectable unconditional promises to give | - | (500,000) | (500,000) | - | - | - |
Donated services and facilities (Note 7) | 262,842 | - | 262,842 | 498,275 | - | 498,275 |
Investment income (Note 5) | 351,263 | - | 351,263 | 239,465 | - | 239,465 |
Net assets released from restriction | 9,762,092 | (9,762,092) | - | 6,196,386 | (6,196,386) | - |
Total Revenue | 17,520,021 | 1,042,268 | 18,562,289 | 15,914,077 | 582,973 | 16,497,050 |
Expenses | ||||||
Program Services | ||||||
Classroom projects | 10,731,667 | - | 10,731,667 | 6,303,729 | - | 6,303,729 |
Classroom projects advocacy | 3,166,531 | - | 3,166,531 | 1,597,959 | - | 1,597,959 |
Total Program Services | 13,898,198 | - | 13,898,198 | 7,901,688 | - | 7,901,688 |
Supporting Services | ||||||
General and administrative | 963,516 | 963,516 | 951,905 | 951,905 | ||
Fundraising | 712,923 | - | 712,923 | 552,320 | - | 552,320 |
Total Supporting Services | 1,676,439 | - | 1,676,439 | 1,504,225 | - | 1,504,225 |
Total Expenses | 15,574,637 | - | 1,574,637 | 9,405,913 | - | 9,405,913 |
Increase in net assets | 1,945,384 | 1,042,268 | 2,987,652 | 6,508,164 | 582,973 | 7,091,137 |
Net assets, beginning of year | 8,800,797 | 4,669,893 | 13,470,690 | 2,292,633 | 4,086,920 | 6,379,553 |
Net Assets, End of Year | $10,746,181 | $5,712,161 | $16,458,342 | $8,800,797 | $4,669,893 | $13,470,690 |
Exhibit 9: Conversion From Site Visit to “Add to Cart” Action
Notes
Date | Note on Data |
November 1–14 | Site release corrupted Google Analytics tracking, causing a two-week absence in data. |
November–December | Typical increase for holiday season peaking in December and then again at end of year for tax redemptions. |
February 26–March 2 | Major site change broke Google Analytics code again. |
March 25 | Twitter campaign by Tim Ferris: http://www.fourhourworkweek.com/blog/2009/03/09/tweet-to-beat/ |
April 8–10 | Major GivingCard campaign drop supported by Crate & Barrel (approx. 100K GivingCards distributed via email) |
Exhibit 10: Screenshot Showing Bill & Melinda Gates Foundation “Double Your Impact” Donation
Exhibit 11: Sample Screenshots Showing Fulfillment Fees
Exhibit 13: National Board of Directors
Jonathan Alter, Senior Editor and Columnist, Newsweek
Charles Best, Chief Executive Officer and Founder, DonorsChoose.org
Jonathan Beyman, Former Global Head of Operations and Technology, Lehman Brothers
Peter Bloom, Board Chair, Managing Director, General Atlantic, LLC
Michael Brader-Araje, Managing Partner and Founder, SunPocket
Bill Bradley, Former U.S. Senator and Presidential Candidate
Stephen Colbert, Satirist, Actor, Writer, and Host of Comedy Central’s The Colbert Report
Cheryl Dorsey, President, Echoing Green
Edwin A. Goodman, General Partner, Milestone Venture Partners
Dena Jones Trujillo, Investment Manager, Omidyar Network
Joshua Levine, Managing Director, Kita Capital Management
Michael Lynton, Chairman and CEO, Sony Pictures International
Trabian Shorters, Vice President of Community Programs, Knight Foundation
Jeff Weiner, Executive in Residence, Accel Partners & Greylock Partners
Anthony Yoseloff, Partner, Davidson Kempner Partners
Dewey & LeBoeuf LLP, Pro Bono Legal Counsel
Exhibit 14: National Advisory Council
Kevin K. Albert, Managing Director, Elevation Partners
Chuck Beck, Former Chairman and CEO of Fiduciary Trust International of California
J.B. Buxton, Deputy State Superintendent, North Carolina Department of Public Instruction
Bob Daly, Los Angeles Founding Partner, Former Head of Warner Brothers and CEO, Rulemaker, Inc.
Ruthanne Feinberg, Managing Director, Glocap Search
Donna Golkin, Perry & Donna Golkin Foundation
Steve Jones, Market President, Eastern NC/VA, RBC Centura
John Keller, CEO, Keller Group, Inc.
Neeru Khosla, Amar Foundation
Sherry Lansing, Former Head of Paramount Pictures
Dagny Maidman, Managing Director, Lehman Brothers
Lenny Mendonca, Director, McKinsey & Company
Tom Miglis, CIO, Citadel Investment Group
Craig Newmark, Founder, Craigslist
Jeffrey Patchen, President & CEO, Children’s Museum of Indianapolis
Dr. John J. Ramos, Superintendent of Schools, Bridgeport Board of Education (Connecticut)
Dan Rosensweig, Operating Principal, Quadrangle
Carole Bayer Sager, Los Angeles Founding Partner, Singer and Songwriter
Anne K. Shane, Vice President, BioCrossroads
James Slavet, Partner, Greylock Partners
David Snelling, Principal Architect, Walt Disney Interactive Media Group
Dana Stalder, Senior Vice President, eBay
John E. Thompson, Jr. Author
Tom Uhlman, Managing Partner, New Venture Partner
Exhibit 15: Social Return on Investment
(Source: DonorsChoose.org National Expansion Plan)
Over the expansion period, DonorsChoose anticipates delivering well over $60 million worth of materials and experiences to 4,000,000 students in need. Excluding the value added by DonorsChoose and strictly measuring the pass-through, $14 million in national expansion funding will generate a 350 percent social return on investment. Details on the ROI are as follows:
Student Resources Delivered reflects actual purchases, after discounts that DonorsChoose negotiates with vendors. To arrive at the true market value of the student resources delivered, one should increase the number above by 15 percent, the average discount.
# of Students Benefiting studiously avoids double counting. For example, and elementary school teacher who has funded 15 projects (each listed as benefiting 25 students) only contributes 25 students to the number above—not 15 times 25—because it is assumed that elementary school teachers do not teach more than one group of kids. The number above also does not account for the fact that 80 percent of resources funded through DonorsChoose are re-used by future students. Assuming an average shelf-life of 3 years, one would calculate that the education of 10,000,000 students will ultimately be enriched through DonorsChoose.
High Poverty Schools are those where 65 percent or more of students receive free lunch, for which a student’s family must live near or below the poverty line to qualify.
The federal government classifies a school as “high need” if the free lunch rate is 40 percent+.
Exhibit 16: Map of Funded Projects
Funded Projects Posted Between Nov. 5, 2007 and Nov. 4, 2008
Exhibit 17: Funded Projects and Project Giving, 2002–2008
This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2024 Sage Publications, Inc. All Rights Reserved