Evaluating Community Development Outcomes: Insights from Urban Markets

1. Innovation Headaches: Evaluating Community Development Outcomes and Impacts Exploring Innovation Conference Session on Urban Information and Markets May 3, 2007 St. Louis, MO Nancy Pindus The Urban Institute www.urban.org

2. Introduction • Communities are complex systems. • Interventions don’t occur in a vacuum. • So, evaluating community development outcomes and impactsis not simple. • Using examples, this presentation will help to address the tough questions and offer some promising approaches.

3. Program Evaluation Terms • Logic Model • Describes theory, operation, and performance • Inputs ActivitiesOutputs Intermediate outcomes End outcomes • Process Evaluation • Documents inputs, outputs, and implementation • Assesses program activities • Outcome Evaluation • Measures purported effects of completed activities: outcomes; effectiveness; costs and benefits • Impact Evaluation • Attempts to show that the outcome observed was caused by the program

4. Sample Studies • Small Business Administration (SBA) Program Evaluation • Assess agency progress in meeting objectives • Inform agency goal and target setting • Businesses are the focus of the evaluation • New Markets Tax Credit (NMTC) Program Preliminary Evaluation Activities (CDFI Fund, Dept. of the Treasury) • Relatively new program with broad goals • Interest in community impacts • Capital Access for Women: Profile of U.S. Best Practice Programs (Kauffman Foundation) • Interest in business outcomes and individual outcomes

5. Why are you doing this? • Federal performance reporting • Required by funder • To obtain more funds/expand program (apply for grants; lobby legislature) • To improve program • To compare and select best approaches or methods There may be more than one reason--the main thing is to know the purpose of the evaluation.

6. What do you want to know? • What is your unit of analysis - household or firm vs. geographic? • What is your timeframe? • Do you have clearly stated objectives? • Do you have specific outcomes in mind? • # of jobs created, quality of jobs, minority ownership of businesses • financing for building rehabilitation, new construction, reduced vacancy rate • increase in neighborhood services and businesses

7. Relief is on the way....

8. Sample Study: SBA Loan Programs Purpose: • To enable SBA to assess its progress in meeting agency objectives Research questions: • Does SBA assistance help the firms that receive it? • To what extent does SBA assistance serve its market and produce some effect on it? • Do SBA programs duplicate or overlap with other private and public sector programs?

9. SBA Performance Analysis • Approach: estimate performance of assisted businesses over time, controlling for key business characteristics • Go beyond previous studies of program effectiveness in four respects: • Use of better-quality data on firm outcomes (Dun & Bradstreet data) • Larger sample sizes -- allows for more precise estimates • More closely matched comparison groups • Explore multivariate analyses that take into account levels and trends of outcome indicators before and after SBA assistance

10. Evaluation of NMTC • Program purpose:to attract capital to low-income communities by providing a credit against Federal income taxes for qualified investments. • Evaluation purpose:articulate the benefits that the NMTC Program may bring to low-income communities. • Program evaluation in the aggregate --not evaluation of individual projects. • Requires multiple methods and data sources (qualitative and qualitative).

11. NMTC: challenges and approaches • Diversity of Programs and Outcomes • Outcomes will vary by type of project • Using data reported to the CDFI fund and qualitative data collection, develop typologies of programs and logic models by project type/purpose • Select key outcome indicators and apply using the typology

12. NMTC: Process Evaluation • It’s a fairly new program that has not yet been evaluated • Describe operating procedures and how they evolve over time • Record all significant development activities over the period of study • Ask respondents why they selected a project • Ask respondents to about how the deal came together • Use project data to quantify intermediate and short-term outcomes

13. NMTC Community/Social Outcomes • Use qualitative and quantitative data to address role of NMTC, choices and trade-offs, project context, projected community effects. Possible components: • Financial analysis--compare to other financing • In-depth discussions with key stakeholders • Site visits • Independent review of portfolios of selected projects • Quantify range of costs and benefits to the extent possible • But, what are suitable comparisons?

14. Access to Capital for Women • Study of best practice programs providing capital access to women • At the program level, is the goal financial health/sustainability or mission-oriented outcomes? • Should program outcomes measure individual self-sufficiency or economic development?

15. Diversity of programs requires a range of evaluation metrics • Organization type • Client population • Types of businesses funded • Program goals • Client goals • Services provided Evaluate effectiveness and efficiency, not program self sufficiency

16. Evaluation Challenges • Data sources • Measures • Place-based vs.people-based strategies--unit of analysis • Time period • Cost • Identifying a suitable comparison group • Causality

17. Causality??? The real headache • Counterfactual = what would have occurred in the absence of the intervention • Random assignment provides a reliable counterfactual, but is rarely feasible in community development programs, especially in evaluating broad interventions • You can’t “prove” that a program works when there is no method to provide sufficiently rigorous estimates -- what is the standard of proof?

18. What will you do with the information? • The findings might surprise you. • The findings might be inconclusive. • Others may use/interpret the findings differently. • Expectations about the magnitude of change may be unrealistic - most programs do not have sufficient resources to have a measurable impact on the problem.

19. Summing Up • Innovation is messy and it’s very hard to evaluate. • Understand the limitations at the outset. • Educate your audience • Don’t be fooled by flawed estimates offered as “proof” • Do you really mean “impact” (e.g., implying causality)? • The lack of evidence does not mean that the program “doesn’t work” -- may need more information or more time • Use the information for program improvement.