My Second Bottom Line

This is the second installment in this year’s Bernie memorial series. Remembering Bernie, the lessons of social entrepreneurship are so fresh. Approaching “the double bottom line,” profit and social benefit, most business people struggle with “doing good for others.” My journey took me in the opposite direction. Profit, the traditional first bottom line of business, was hardly on my radar until we were about to open our first school. That was the moment when a friendly authorizer at the NYC Department of Education warned me, “Most charter schools fail as businesses not as instructional enterprises.”

I was shocked. We’d been focused on our educational objective. Writing our first charter, we came across this mind-boggling factoid: Students living with emotional disabilities have the highest school dropout rate of any disability group. We knew from our work in mental health that many of the dropouts had the smarts for college, if only they could survive high school: that was the challenge. Teasing and bullying pushed these students out of school. The stigma of “special education” fed the bullying and amplified the hopelessness. We designed a school that would fully integrate “students with disabilities” with their “normal,” undiagnosed peers. All our kids would graduate from high school college-ready. At the time, this was an unheard-of proposal.

It was a big challenge. Our original plan was for a high school – that’s where the dropout problem peaked – until a psychiatrist at the Center for the Advancement of Children’s Mental Health at Columbia warned us, “If you wait until the students are entering high school, you’ll fail. By then, your students will be so far behind that you’ll miss the five-year graduation benchmark by which high school success is measured.” And he added, “What you’re trying to do it too important. If you fail, you’ll set the movement for integrated education back ten years.” We modified our design to begin with 6^th graders. It still took us three years to get out first charter.

What a shock when our authorizer told me we were more likely to fail as a business. Bernie didn’t teach me how to succeed in business, but he had laid the groundwork, had prepared me to learn. Without this preparation, I likely would have fallen back on my radical rebel stance: “We’re doing good for others; we shouldn’t have to deal with this business bullshit.”

Bernie didn’t give me the details. Fortunately, Shelly Blackman, our first treasurer and later, long-time board chair, taught me some of the most important lessons. Conservative budgeting was crucial. The biggest danger in enterprises like our schools was overestimating revenue. Shelly taught me, “Never include your fund-raising hopes in your revenue projections.” We never did. Another important trick: Always budget conservatively. As we built our budgets, we used our target enrollment to project expenses, while in projecting revenue, we assumed enrollment would fall short by at least 10%.

We never failed to end the year in the black, usually with a decent surplus so that over twelve years, we’d built the reserve which our authorizers expected. Along the way, we discovered our third bottom line. We’ll get to that next time.