A Marginal Cost Analysis of the Bbbs Youth Mentoring Program: New Evidence Using Statistical Methods

Program costing analyses are essential for planning the development and sustainability of programs as well as ensuring cost-effective use of public scarce resources. We are the first study to our knowledge to use statistical regression techniques to estimate the marginal (unit) cost of the Big Brothers Big Sisters (BBBS) program. Marginal cost analysis provides estimates that help decision makers understand the cost of expanding the scale of their local program by one more unit. This is not the same as knowing average cost which is simply the total program cost divided by the total number of units. The difference occurs because average costs assume all of the fixed costs need to be apportioned to every new unit. In reality, fixed costs are typically already spent, and it is often possible to expand scale without a proportional expansion of fixed costs like office space and administration.

The data consisted of eight years of monthly records from January 2008 to August 2015 from program administrators from one BBBS site in the state of Maryland. Data included program total expenditure and new youth-mentor matches by month and type of mentoring program. Multivariate regression analysis was applied to 92 monthly data records.

Results show that the BBBS marginal youth cost (irrespective of program type) was $64 (p-value<0.01) per mentor-month of BBBS mentoring provided to the community, or for the average match length of 19 months was $1,202. For community-based mentoring (CBM) programs the marginal cost was $186 (p-value<0.01) per mentor-month of BBBS mentoring, or for the average match length of 20 months was $3,708. For school-based mentoring (SBM) data was insufficient for estimating the marginal cost but assuming at least the overall BBBS marginal cost for the average match length of 11 months was $696.

The largest portion of total costs throughout the study the period, 80%, were wages. Total expenditures change over time in line with changes in the total number of youth but often did not change at the same rate over time. Data suggests there are opportunities for cost saving by employing strategies that reduce the staff time needed to make to make youth-mentor matches. For instance, outsourcing mentor recruitment tasks to specialized human resources firms that may reduce the 1.7 interview-to-match ratio, particularly for CBM matches which have a 1.9 interview-to-match ratio.

The marginal cost estimate is in the range of mentoring programs costs with significant returns on investment but is substantially higher than prior BBBS unit cost estimates reported using less robust unit cost methods. This cost analysis can better inform policy makers and donors on the marginal cost of expanding the scale of local BBBS programs and opportunities for cost savings.