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

DelanceyStreetFoundation
NonprofitInvestorRating:

SUMMARY DelanceyStreetFoundation(DSF)providesresidential,educational andrehabilitationservicestoformerfelons.Vocationaltrainingis providedthroughnumerousenterprisesrunbyDSF. STRENGTHS Majorityofrevenueisgeneratedbyprogramsratherthan throughdonations.DSFrunsseveralsuccessfulenterpriseswhich provideDSFresidentswithvocationaltrainingandincome.In aggregate,theseenterprisesareprofitableonastandalonebasis. Lowcostperbeneficiary.Withanaverageof1,500residents, DSFsannualcostperdirectbeneficiaryisapproximately$12,000.If programrevenuesarededucted,thecostisapproximately$4,000. Systematicoutreachprogrambroadensimpact.DSF'sInstitute forSocialRenewaltrainsreplicatorsofthesuccessfulDSFmodel. Proventrackrecord.DSFhassuccessfullygraduated18,000 individualsover40yearsundertheleadershipofitscurrentCEO.

BUY

MissionStatement DelanceyStreetFoundationprovideslong termresidentialhousingandvocational training,educationandbasiclifeskillsto formerdrug/alcoholabusers,homelessand others.Residentsobtainaminimumofhigh schoolequivalencyandgainonthejobandlife skillsneededtoreturntovariouscommunities asdecent,lawabidingcitizens. FinancialOverview
$inMM,FiscalYearEndedDecember31
RevenueandSupport OperatingExpenses %ofTotal: ProgramExpenses G&A Fundraising 2007 $29.5 $24.3 98.7% 1.2% 0.1% 2008 $17.3 $22.8 98.2% 1.5% 0.2% 2009 $22.9 $19.6 98.2% 1.5% 0.3%

Executivemanagementanddirectorsdrawnocompensation. Onlyonedirectorreceivescompensationshereceives$30,000for herroleasprincipalofDSF'scharterschool,LifeLearningAcademy. Financiallysecure.DSFgenerates$3MMofcashfromoperations andhad$28.6MMofcashandcashequivalentsattheendof2009. CAUTIONS Impactmeasurement.DSFcitesmanysuccessstoriesbuthasnot performedanypubliclyavailableimpactstudies.

YearFounded:1971 ContactDetails DelanceyStreetFoundation 600Embarcadero SanFrancisco,CA94107 (415)9579800 http://www.delanceystreetfoundation.org/ EIN:237102690 Analyst:KentChao PeerReview:N.Anggraini,M.Kim PublicationDate December19,2011

DSFprogramrevenuesaresubjecttoeconomicvolatility.In2009,
DSFprogramrevenuesdeclinedby9%.

Untimelyfinancialreporting.DSFreportsresultsapproximately
12monthsafterthecloseofeachfiscalyear. RECOMMENDATION:BUY DSFispioneerofresidentialselfhelpforformerfelons.Theyhave developedamodelwhichrequiresasmallamountofpublicfundingto servealargenumberofbeneficiaries.Furthermore,DSFexpandsits impactbytrainingotherorganizationsintheprocessthattheyhave developedover40years.NPIrecommendsreplicatingtheDSFmodel, makingamonetarydonation,orpatronizingDSF'ssocialenterprises. NonprofitInvestorResearch|nonprofitinvestor.org

OVERVIEWOFDELANCEYSTREETFOUNDATION'SACTIVITIES DSFisaleadingresidentialselfhelporganizationforsubstanceabusers,exconvictsandhomelesspeople.Delancey StreetresidentsareprimarilyreferredbytheCourts(85%)butalsoincludewalkins. TheminimumstayatDelanceyStreetistwoyearswhiletheaverageresidentremainsforalmostfouryears.Duringtheir timeatDelanceyStreet,residentslearntolivedrug,alcoholandcrimefreelives.Additionally,residentsreceive academicandvocationaltraining.AnyactorthreatofviolenceiscauseforimmediateremovalfromDelanceyStreet. DSFcurrentlyhasoperationsinSanFrancisco,LosAngeles,NewMexico,NorthCarolinaandNewYork.Additionally,DSF promotesadaptationandreplicationoftheorganization'smodelthroughtheInstituteofSocialRenewalandother initiatives. SocialEnterprises DSF'soperationsprimarilyconsistofenterpriseswhich provideservicestothepublicasawaytoprovideDSF residentswithvocationaltrainingandemployment. TheseenterpriseshelpDSFresidentsdevelop marketableskillswhilecreatingpositiveinteractions betweenresidentsandcustomersinthecommunity. Enterprisesinclude: CrossroadsCaf,Bookstore&ArtGallery Catering&EventPlanning DelanceyCoach(CorporatePrivateCarService) DigitalPrintShop HandcraftedFurniture,Ironworks,Plants& Glass,Ceramics Landscaping MovingandTrucking ParatransitVan&BusServices Restaurant ScreeningRoom SpecialtyAdvertisingSales XmasTreeSalesandDecorating VocationalTrainingPrograms EachresidentatDelanceyStreetlearns3marketableskills byworkinginDelanceyStreettrainingschools.Theseinclude atleastonemanualskill,oneclerical/computerskill,and oneinterpersonal/salesskill.Thevocationaltrainingschools, managedandtaughtbyresidentsthemselves,areaccredited bythestateandawardcertificatesforskillslearned.Current vocationalprogramsinclude: Accountingandbookkeeping Automotive&truckmechanicalrepairandpainting Christmastreesalesandcommercialdecorating Coach&paratransittransportationservices Coffeehouse,artgallery&bookstore Constructionandpropertymanagement Digitalprintingandbanners,silkscreen,andframing Filmscreening Handcraftedwood,terrarium,ironworksand furniture Movingandtrucking Retailandadvertisingspecialtiessales Restaurant,catering,eventandweddingplanning Upholstery/sewing Warehousing Welding

LifeLearningAcademy(5.8%ofExpenses) DSFfoundedtheLifeLearningAcademy("LLA")charterschoolin1998.LLAserveshighschoolagedyouthsthatare involvedinthejuvenilejusticesystemand/orhaveproblemsincludingseriousschoolfailure,familyproblems,gang involvement,poverty,abuseandsubstanceabuse.BasedonLLA'swebsite,onaverage,LLAstudentswhomissedan averageof38daysintheirpriorsemesteratotherschoolsmissedanaverageofonly5daysintheirfirsttermatLLA, andimprovedtheirgradepointaveragefrom0.7(F)to2.5(C")onaverage.LLAsaverageattendancerateis90%, anditsgraduationrateaverages92%.LLAcurrentlyrepresentsasmallportionofDSF'sactivities. DelanceyStreetFoundation|NonprofitInvestorResearch 2

PROGRAMRESULTSANDEFFECTIVENESS DSF'swebsiteprovidesextensiveinformationaboutthe numberoflivestheorganizationhasimpacted.Thewebsite alsoincludesmanycasestudiesofindividualsbeing successfullyrehabilitatedthroughDSF'sprograms. WhileDSFstatesthatover18,000individualshavegraduate fromunderclassintosocietyassuccessful,taxpayingcitizens leadingdecent,legitimateandproductivelives,itisunclear howtheorganizationtracksoutcomesofitsgraduatesover time. Additionally,basedonpubliclyavailableinformation,itisnot possibletocalculatethegraduationrateofDSFresidents (whiletheorganizationstatesithasgraduated18,000 individualsandcurrentlyhas1,500residents,historicaldata fornumberofresidentsisnotreadilyavailable). DSFAccomplishments Graduated18,000individuals Over10,000formerlyilliteratepeoplehave receivedhighschoolequivalencydegrees Over1,000havegraduatedwithadiplomafrom DSF'sstateaccreditedpostsecondarythreeyear program 50studentshavereceivedanaccreditedBA throughGoldenGateUniversityorSanFrancisco StateUniversity Over100atriskstudentshavegraduatedfrom theLifeLearningAcademy(graduationrateof 90%,with88%goingontohighereducation)

WhilethepositiveimpactofDSF'sactivitieshasbeenreflectedthroughcountlesscasestudies,commendationsand awards,NPIwouldliketoseeacontrolledstudyoftheorganization'simpactratherthanrelyingondiscreteexamplesof success.Asaleaderinresidentialrehabilitationprograms,adetailedstudyofDSF'seffectivenesswouldbegreatly beneficialtothefield. Despitethelackofdetailedstudiesonprogramefficacy,NPIfeelsthatdetailsofDSFprogramsprovideprimafacie evidenceofsocialbenefit.Giventhedearthofrehabilitativeprogramsforformerfelons,DSFappearstobealeaderin residentialeducationprograms.Additionally,whileDSFdoesnotreceiveanygovernmentfunding,theorganization wouldbewellservedbybettermeasuringitsimpactinordertojustifyfundingforreplicationsoftheDSFmodel. InadditiontomeasuringtheoveralleffectivenessofDSF,detailedrecordingandanalysisofoutcomedatawouldhelp DSFhoneitsprogramsformaximumeffectiveness.Forexample,whileresidentsreceivevocationaltraininginavariety offields,itisunclearwhichtrainingprogramsresultinsuccessfuljobplacementsaftergraduatingfromDSF,especiallyin challengingeconomicconditions. TRANSPARENCY DSFfilesitsForm990withtheIRSeachyearanditsfinancialstatementsareauditedregularlyauditedbytheaccounting firmDeloitte&ToucheLLP. Historically,DSFhasfileditsForm990withtheIRSapproximately12monthsafterthecloseofeachfiscalyear.NPI suggeststhatDSFshouldfileitsformwiththeIRSmorepromptlysothatprospectivedonorshaveamorecurrentview ofthestateoftheorganization.

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FINANCIALOVERVIEW REVENUE ApproximatelyhalfofDSF'ssupportandrevenues comefromretailsalesandservicesperformedby theorganization'ssocialenterprises.Additionally, anotherquarterofDSF'ssupportandrevenues comefromdonatedprofessionalservices.

8%

2009RevenueMix
Program Revenues

5%5% 8% 49%

Donations In-Kind Investment Income Contributions Net Gain (Loss) on Investments Net Assets Released from Restrictions

Byminimizingrelianceonpurelyfinancialdonations, webelievethatDSFiswellpositionedtowithstand aprotractedeconomicrecession.Withlessthan 10%offundingcomingfrommonetary contributions,DSFmitigatestheriskofadebilitating reductionoffundingfromalargedonor.

25%

RevenueMixOverTime
$inMM

$35.0 $30.0 $25.0 $20.0 $15.0 $10.0 $5.0 $0.0 2007 ($5.0) ($10.0)
Program Revenues Investment Income Net Gain (Loss) on Investments Donations In-Kind Contributions Net Assets Released from Restrictions $29.5 $17.3 $22.9

2008

2009

WhileTotalSupportandRevenueshasfluctuatedgreatlyoverthepastthreeyears,muchofthisisduetorealizedand unrealizedinvestmentperformance.Whennormalizedforinvestmentperformance,TotalSupportandRevenueshas declinedby13%ayear,inlinewithothercharitiesevaluatedbyNPI.

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EXPENSES DSFisaveryleanorganization,withminimalamountsofexpensesspentongeneralandadministrativeexpenses.In 2009,of$16.9MMofexpenses(taxaccountingbasis),$16.6MMwasspentonprograms,whileonly$258Kand$47K werespentonmanagement/generalexpensesandfundraisingexpenses,respectively. ExpenseBreakdown(TaxBasis)

$inMM
$25.0 98.7%
$21.1

ExpenseBreakdown(GAAPBasis)
100.0% 90.0%

98.2%

98.2%

$30.0

$20.0

$19.8 $16.9

80.0% 70.0% 60.0% 50.0%

$25.0

$24.3 $22.8 $19.6

$20.0

$15.0

$15.0

$10.0

40.0% 30.0%

$10.0

$5.0

20.0% 10.0%

$5.0

$0.0 2007 2008 2009

0.0%

$0.0 2007 2008 Program Costs Donated Goods and Services Occupancy Costs Cost of Sales for Training Schools Life Learning Academy Other Program expenses 2009

Residential Housing, Vocational Training, Education Expenses Life Learning Academy Program Expenses Management and General Expenses Fundraising Expenses Other Program expenses Program Expense % of Total

Whilecertainexpenses,suchasfacilityoperations,depreciationandamortizationhavenotbeenallocatedamong programandsupportservices,DeloitteandTouchehasdeemedtheamountallocatabletosupportservicestobe immaterial. Asapercentageofrevenue,excludinggain/lossoninvestments,DSF'sexpenseshaveremainedrelativelyflatfrom2007 2009(fluctuatingbetween83%and90%),indicatingalowfixedcoststructurethatshouldbewellsuitedtocopewitha weakeconomy. Withanaverageof1,500residentsatDSFthroughouttheyear,theorganization'sallincostperresidentis approximately$12,000.However,giventhatresidentsgenerate$11MMayearofrevenueforDSF,wefeelthatprogram revenuesshouldbetakenintoaccountwhenevaluatingcostperresident.Doingsoreducesthecostperresident dramatically,toapproximately$4,000. AlsoofnoteisthatDSFgeneratessignificantcashflowsfromoperationsandmaintainsahighcashbalance,supporting theviabilityoftheorganization.

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 DetailedFinancialStatement

FiscalYearEndedDecember31

2007

2008

2009

Source:

RevenueandExpenses(GAAPAccountingBasis) Support: DonationsInKind Contributions Revenue ProgramRevenues InvestmentIncome NetRealizedandUnrealizedGain(Loss)onInvestments NetAssetsReleasedfromRestrictions TotalSupportandRevenues %Growth %Growth,ExcludingInvestmentPerformance Expenses: ProgramCosts OccupancyCosts DonatedGoodsandServices CostofSalesforTrainingSchools DelanceyCIRCLE'sLifeLearningAcademyExpenses OtherProgramexpenses TotalExpenses: %ofRevenue,ExcludingInvestmentPerformance RevenueLessExpenses OTHERGAINEmbarcaderoTriangleSanFranciscoFacility ChangeinAssets CashFlowsfromOperatingActivities ExpensesbyFunction(TaxAccountingBasis) ResidentialHousing,VocationalTraining,EducationExpenses LifeLearningAcademyProgramExpenses ManagementandGeneralExpenses FundraisingExpenses TotalExpenses ProgramCostsasa%ofTotalExpenses G&Aasa%ofTotalExpenses Fundraisingasa%ofTotalExpenses CostperBeneficiary AverageResidents TotalExpenses,ExcludingLifeLearningAcademy CostperResident TotalExpenses,LessProgramRevenues CostperResident,LessProgramRevenues

$7,073,411 3,746,282

$7,078,584 2,016,853

$5,641,280 1,831,930

AuditedFinancialStatements(GAAP) AuditedFinancialStatements(GAAP)

14,172,345 12,392,493 11,256,235 3,014,882 2,536,662 1,877,330 164,381 (7,957,944) 1,201,627 1,305,288 1,204,897 1,137,151 $29,476,589 $17,271,545 $22,945,553
(41.4%) (13.9%) 32.9% (13.8%)

AuditedFinancialStatements(GAAP) AuditedFinancialStatements(GAAP) AuditedFinancialStatements(GAAP) AuditedFinancialStatements(GAAP)

$8,041,303 $7,370,646 $6,165,920 4,708,344 4,491,989 4,300,023 7,073,410 7,078,584 5,641,281 3,160,241 2,687,409 2,361,763 1,305,288 1,204,897 1,137,151 (32,454) 12,751 10,824 $24,256,132 $22,846,276 $19,616,962
82.8% 90.6% 90.2%

AuditedFinancialStatements(GAAP) AuditedFinancialStatements(GAAP) AuditedFinancialStatements(GAAP) AuditedFinancialStatements(GAAP) AuditedFinancialStatements(GAAP) AuditedFinancialStatements(GAAP)

$5,220,457 ($5,574,731) $3,328,591 $0 $10,176,458 $0 $5,220,457 $4,601,727 $3,328,591 $6,504,020 $3,761,369 $3,252,811

AuditedFinancialStatements(GAAP)

AuditedFinancialStatements(GAAP)

20,815,944 n.a. 261,043 18,904 21,095,891 98.7% 1.2% 0.1%

18,252,999 1,172,390 303,970 48,585 19,777,944 98.2% 1.5% 0.2%

15,530,889 1,103,036 258,632 47,315 16,939,872 98.2% 1.5% 0.3%

IRSForm990(Tax) IRSForm990(Tax) IRSForm990(Tax) IRSForm990(Tax)

1,500 $18,479,811 $12,320 $5,683,637 $3,789

Website

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THIRDPARTYRATINGS CharityNavigatorratestheorganization3outof4stars(NotethatDSF'swebsitecurrentlyindicatesa4outof4 starratingwhichlikelyhasnotbeenupdatedsinceCharityNavigatorupdateditsmethodologyandratings). DeductionsintheCharityNavigatorcalculationinclude: o Nodisclosedwhistleblowerpolicy o NodisclosedprocessfordeterminingCEOcompensationNPI:giventhattheCEOforthepast40years hasnevertakenasalary,thisdoesnotseemtoposeanimmediateconcern.However,NPIwould suggestthatDSFdiscloseapolicyfordeterminingCEOcompensationtoallayfuturedonorconcerns. o CNindicatesthattheDSFwebsitedoesnotincludereadilyaccessibleinformationabout: AuditedFinancialsNPI:AuditedfinancialsarenotpublishedontheDSFwebsitebutare includedwiththeirIRSfilingsandfreelyaccessible Form990NPI:DSFForm990sarereadilyaccessiblethroughwww.guidestar.org KeyStaffListedNPI:WhileDSF'swebsiteincludesalargeamountofcontentthatisnotall intuitivelyplaced,NPIfoundofficeranddirectorbioslinkedontheirFAQpageaswellassite map:http://www.delanceystreetfoundation.org/dsfboard.php Greatnonprofits.org:22userreviewswithanaverageratingof5outof5stars: http://greatnonprofits.org/reviews/profile2/delanceystreetfoundation Yelp.ManyofDSF'ssocialenterprisesareratedonYelp: o DelanceyStreetRestaurant:4/5stars o CrossroadsCafe:4/5stars o DelanceyStreetMoving&Trucking:5/5stars o DelanceyStreetChristmasTreeLot:4.5/5stars

GETINVOLVED Beacustomer:http://www.delanceystreetfoundation.org/enterprises.php Donate:http://www.delanceystreetfoundation.org/support.php StartanorganizationlikeDSF.DSFInstituteforSocialRenewal: http://www.delanceystreetfoundation.org/circle_rep_socrenew.php

DISCLOSURES KentdoesnothaveanyaffiliationwithDelanceyStreetFoundationandhasnevermadeadonationtotheorganization. NPIanalystsandNPIasanorganizationdonotreceiveanyformofcompensationfromreviewedcharities. NPIhasnotreachedouttoDSFforcommentonthisreportbutwillplantodosoinQ1of2012.

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