Client Orientation is Good for Profit—Social Profit Especially. A case study.

Note: Client is used to refer to individuals receiving non-profit services as well as donors supporting the organization providing these services.

Rubicon Programs Inc. is a social entrepreneurship combining three profitable enterprises with various non-profit services (Emerson 2003). The latter include behavioral health services, housing and case management services, legal services, and job trainings (Rubicon Programs Inc., 2009). In short, Rubicon gives second chances to people who are struggling living their lives. The now 35 year old incorporation is located in the Bay Area in San Francisco and was founded by community members concerned with individuals reporting behavioral disorders. Today clients entering Rubicon's programs are helped with unemployment (85%), homelessness, including those at risk (74%) and reported psychological disabilities (24%) (Rubicon Programs Inc., 2009) The profit-making activities include a high-end bakery, a landscaping enterprise and home health care services. They are connected with the non-profit activities in providing financing and opportunities for employment and job training. Moreover, Rubicon distinguishes itself in the non-profit sector through its innovative social impact measurement system CICERO that allows for client-orientation and efficient management (Twersky, BTW Consultants, 2002).

Strong client orientation is probably also the thread explaining the history and overall composition of Rubicon Programs most easily. Rubicon started as a counseling service to clients with behavioral disorders. Soon it was clear, however, that counseling alone was not enough; affordable housing and regular employment were recognized as critical to the clients' stability (Andrews, The Low Income Housing Fund, 2001). A solution to the clients' housing was sought through buying houses and renting them out at affordable prices; in 2001 for example Rubicon owned about 100 houses and had more houses under construction (Andrews, The Low Income Housing Fund, 2001). Afterward, once it was seen that housing alone did not make for a stable life either, employment opportunities became an issue. Especially preparations for application interviews and training on the job was needed. The landscaping services, the bakery and the home health care services were initiated (Andrews, The Low Income Housing Fund, 2001). Besides providing a work-environment in which essential job skills are taught, these business became profitable and in 2007-2008 their revenue contributed almost 40% of the overall income of the organization (Rubicon Programs Inc., 2009). Thus, the non-profit as well as the for-profit activities of Rubicon came into being as direct responses to its clients' needs.

Rubicon shows strong client orientation also towards its donors, meaning it cares about what their donors want. Besides the 40% income through their businesses, Rubicon's funding consists of government contracts (40%), grants and contributions (8%), service fees (7%), and rental income (6%) (Rubicon Programs Inc., 2009). As many non-profit organizations do, Rubicon suffered from increasingly sophisticated reporting requirements imposed by donors. The man-hours consumed by filing this variety of reports not only became increasingly burdensome but despite all the reporting the organization did not gain an overview of its own activities. Constantly information was compiled, analyzed and composed into reports but nevertheless a basis for an overall controlling was lacking (Twersky, BTW Consultants, 2002). To phrase it briefly, from the management's point of view, there was too much information gathered and, yet, too little known. Until CICERO. CICERO (Consumer Information Collection, Entry and Reporting for Organizations) is a computer based, automated data processing system designed to measure Rubicon's social impact. The management took a proactive stance implementing this system to ensure that it would not only meet the donors' reporting expectations but also the management's ones.

CICERO was developed in cooperation with The Roberts Enterprise Development Fund (REDF) as pioneering work in measuring social impact due to its thorough integration into the organization. After having established the overall information needs of the organization through looking at contracts and reporting forms, the then tracking system was checked for completeness and opportunities for improvement (Twersky, BTW Consultants, 2002). Thereafter the software and hardware capacities were adjusted to attain a fully automated data acquisition and processing system (Twersky, BTW Consultants, 2002). At every step the management was heavily involved to ensure its full implementation and utility for donors and controlling. This striving for accountability was done very successfully and resulted in two major benefits. Firstly, a mess of reporting forms could be abandoned and, yet, the organization satisfies donors' requests. Secondly, being able to measure social impact in real-time the management was much more able to attain efficiency in terms of Social Return on Investment.

The management was able to use CICERO to increase the overall efficiency of Rubicon. The organizational core of around 150 (Twersky, BTW Consultants, 2002) are concerned with keeping the three revenue making enterprises profitable, while immediately distributing this income to the non-profit activities. This task of “immediate redistribution” is the more difficult because the financial markets are rather reluctant towards lending to an organization such as Rubicon (Andrews, The Low Income Housing Fund, 2001). Therefore the management is short on cash at hand. In 2001 for example, the cash at hand was only $ 150,000 at $ 14 million annual budget (Andrews, The Low Income Housing Fund, 2001). Thus, the managers face very little liquidity. CICERO at least partially helps remedying this problem by telling the management how to allocate money most efficiently. Measuring overall efficiency and social impact of Rubicon CICERO ensures a maximum of client satisfaction on both sides: Donors receive comprehensive and informative reports and individuals receive a maximum of services. In comparison to other social entrepreneurship Rubicon's centralized and sophisticated medium-size management is distinguished through this pioneering work in social impact measurement (Andrews, The Low Income Housing Fund, 2001). It makes Rubicon a transparent and efficient fit between donors' money and individuals' needs. The management succeeds at efficiently connecting the clients on both ends of the organization.

Caesar crossed the Rubicon river in 49 BC—a life-changing experience for himself. Today Rubicon helps many individuals at risk to cross their own personal Rubicon. From psychological counseling to training on the job, there is truly a wholesome offer to be found with Rubicon. Curiously, this comprehensiveness did not come at the cost of efficiency. On the contrary, Rubicon is a splendid example of entrepreneurial genius: Client-orientation at its best. When the client needed not only counseling but also housing and employment, the houses and the businesses followed. When donors, the other “clients”, asked for their part they got it as well—through CICERO. Finally, the management took this progressive step with CICERO to also provide for the organization itself, recognizing that donors simply wanted to know the same as the management did—whether Rubicon was doing its job.

References

Andrews, N.O., The Low Income Housing Fund (2001). Equity with a Twist:The Changing Capital Needs of the Community Development Field. Retrieved from http://www.brookings.edu/es/urban/capitalxchange/andrews.pdf

Emerson, J. (2003). The blended Value Proposition: Integrating Social and Financial Returns. California Management Review, 45(4), 35-51.

Twersky, F., BTW Consultants (2002). An Information OASIS. Retrieved from http://www.redf.org/system/files/OASIS.pdf

Rubicon Programs Incorporated (2009). Annual Report 2007-2008; Retrieved from http://www.rubiconprograms.org/2007-2008_Rubicon_Annual_Report_and_Program_Information.pdf, Accessed 16:41, 14th April, 2010.

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