Stephen Butz has a soft spot for people in trouble, reflecting a social conscience instilled by his mother.
It led him to spend years serving in nonprofits, focusing on kids in particular. It was satisfying work for the most part, but for this: There was too little accountability, he said. His supervisors just wanted to know the how-often and how-many of his cases; they had no real way of measuring whether any of that work was making a difference in any one life, much less the whole lot.
So Butz came up with a software program that could do just that, and in 2000 started a Baltimore business, Social Solutions Inc., based on it. More than 2,500 organizations now use his goods to manage their programs, including East Baltimore Development Inc., which is working to revitalize 88 acres on the city's east side, and the Harlem Children's Zone, a pioneering New York City experiment trying to fight urban problems through various classes and programs. Baltimore is studying the zone to see if it could work here.
Funders want to put their limited resources into programs that can prove impact, said Nancy Hall, a senior adviser at the Maryland Association of Nonprofit Organizations. She also teaches a nonprofit management course at the Johns Hopkins University.
"It's not enough to just do good work, you have to show results," she said. "The smart nonprofits and the smart funders have kind of jumped on this bandwagon."
It's a newer way of thinking. Traditionally, nonprofits have been satisfied to know they're working hard to do good work, but rarely set measures to determine what was good. Individual employees sometimes kept their own records, in logbooks or Excel files or - in one Minnesota organization's case - on recipe cards. But often, there is no entity-wide system, Hall said. That's where Social Solutions' ETO (efforts to outcomes) software comes in.
It's a Web-based system that can be customized for any kind of organization, with different goals and activities. Say you're working with a child in foster care and want to chart his progress, Butz says, calling up an example program on his office computer.
The caseworker just has to answer a few simple questions about the latest meeting - Did the child make eye contact? Is he skipping school? Attending workshops? - and any number of data charts can then be run, comparing the boy's behavior then and now. The questions can be weighted, and the analysis can determine whether the meetings or arranged activities are having an effect.
For the company's first six years, Butz designed the online program so the organizations could set it up themselves, but last year he realized they were often turning the system into a numbers-only tool. Now his team designs it with nonprofit leaders.
"Because there were no measures [before], people were kind of funding the activities rather than the outcomes," Hall said. "Both government funders and foundation folks are beginning to realize that the focus can't be on the activities that get us to the end, it has to be on what the results are at the end."
Technology companies often shy away from focusing on the nonprofit sector, worried that there isn't much of a market there or that organizations won't be able to afford their products (most have to write a grant proposal to get the funds to buy ETO Solutions, which starts at $7,500 for individual organizations and $60,000 for foundations that want to license it for their grantees). But that, too, is changing as charities develop a stronger role in the nation's economy.
According to a study published by Johns Hopkins in June, job growth in the Maryland nonprofit sector is outpacing that in the private: 2.9 percent in 2006, compared with 1.1 percent for business. The state's 26,000 nonprofit organizations employ about 243,000 people, making up nearly 10 percent of the work force.
Businesses are increasingly building their money-making models around nonprofits, some in the industry said.
Bethesda's JGS Performance Solutions LLC says it has helped nonprofit clients, including United Way and Habitat for Humanity, improve their accountability and budgeting processes. And BlueTree Marketing ( www.bluetreemarketing.com) - which is based in South Florida, but founded by two University of Maryland students - runs online fundraising auctions for nonprofits, including the National Multiple Sclerosis Society.
"The nonprofit scene is huge," said BlueTree's 21-year-old vice president, Kiel Chesley, who expects to graduate with an American studies degree in December. "When I first came into the company, as well as first established the idea of going toward nonprofits, I had no idea that the nonprofit sector was so huge. Religious organizations, schools, charitable foundations... It's really endless."
Social Solutions' list of clients includes Women Against Abuse, Latino Coalition, Capital Workforce Partners and Girl Scouts of the USA. In a testimonial, the House of Ruth Maryland, which works to prevent domestic abuse, said it's improved organizational efficiency through ETO Software, serving 15 percent more clients in its first year of use.
East Baltimore Development Inc. has been using ETO since 2006 to track all of its community human services programs, inputting data for families it's relocating, everything from employment history to age to education levels, along with individual goals, such as improving credit history or taking classes. The data are then used to target families for job training or to measure incremental progress toward their goals.
"We have so many funders at all different levels of government, and everybody wants to know what are the outcomes," said Cheryl Williams, EBDI's senior director for community and human services.
"It really helps us change our mindset so we're not just collecting data to collect it, we're collecting it to be useful," Williams said. "It gives us more credibility and it really allows us to relate to other organizations and compare."
Social Solutions, of which Butz is the chief executive, now has 70 employees, up from five in 2002, and Butz anticipates having 150 workers by 2009. It won't disclose revenue, but the business has raised nearly $3 million in venture capital and expects to soon raise $7 million more to fund its expansion. About 140 nonprofits use its software in the Baltimore area alone.
Still, Butz's mind is still very much focused on the not-for-profit side.
Last month, he formed his own charity, the Superstar Foundation, to financially reward outstanding service workers who can demonstrate, through analysis and anecdotes, their impact. He named the grant program Veronica, in memory of his mother, who passed away three years ago.
And as soon as he can get the business to a point where it doesn't need him any longer, he plans to go back to service work, he says, growing wistful.
"It was a very painful decision to leave working directly with young people," he said. "I want to return to that world, absolutely. ... Where I'm driven is to get back to youth."
Social Solutions Inc.
Founded: : July 2000
Leadership: : CEO Stephen Butz
Employees: : 70
Headquarters: : 2400 Boston St., Baltimore
Focus: : Providing performance measurement technology to nonprofits