In a political environment where every project is fighting for scarce ressources, trustworthy evaluations and convincing results are important. As an organization EW Denmark has always re-evaluated itself to try to improve year after year. In support of this strategy, the project has been evaluated 3 times over the last 6 years - in 2011, 2013 and 2015. In this paper we present the results from the evaluation in 2013.
In EW Europe evaluation and tangible results are a high priority as well. This is described in more detail in Work Package 6 led by CECOT - one of our Spanish partners, located in Barcelona.
Evaluation in 2011 and 2013
2013 was the 6th year for Early Warning Denmark, helping companies in distress. The project was evaluated for the first time in 2011, examining companies that went through EW in the period of 2007-2009. In 2013, the effects of EW were meassured again, this time for companies that went through EW in the period of 2010-2012. Below you will find an outline of the most important and remarkable results.
Economic benefits from the programme 2010-2011: 2,9 mio. Euro in reduced debt to the tax authorities
There is a long list of positive effects - hard and soft – as a result of helping people and companies in trouble that have been living on the edge for a long time. But at an economic level one figure is especially interesting, namely the amount of the companies’ total debt to the tax authorities, when they file for bankruptcy.
If we take a look at the companies that went bankrupt going through Early Warning and compare them to identical companies that went bankrupt without contacting EW, we find that the difference in debt to the public authorities is approximately 14.000 Euro per company. Non-viable companies in EW are closed down quicker, softer and with fewer negative side-effects than companies left to their own devices.
The economic results are a true business case: The companies in distress that received help and were closed down through EW have saved the tax departement 1,7 mio. Euro in 2010 and 1,2 mio. Euro in 2011. Bearing in mind that running the entire project in Denmark, including project management, business consultants, events and facilitating the work of 100 volunteer mentors costs less than 1,0 mio. Euro per year.
The volunteer mentors are a success
One of the most unique aspects of the Danish Early Warning organisation is the network of more than 100 volunteer mentors. The volunteer mentors are responsible for much of the work with companies in distress, making it possible to keep the costs relatively low.
In 2013 the effects of the volunteer mentors were measured specifically, showing that companies that were allocated a volunteer mentor had a 64 percent chance of survival, whilst companies without a volunteer mentor had a 55 percent chance of survival.
When we look at growth and employment, companies that were allocated a volunteer mentor are also better off. Going through a crisis, these companies were able to hold on to 72 percent of their revenues and 72 percent of their employment. Companies that did not have a volunteer mentor only managed to keep 57 percent of their employment and 64 percent of their revenues. Without the savings in employment caused by the volunteer mentors, 162 additional full time jobs would have been lost.
Revenues and Export are maintained to a higher degree than before
Compared to previous years, companies that go through the Early Warning procedure are now better able to maintain their revenues and their exports. The 2011 evaluation showed that the companies from the first years of the project were able to maintain approximately half of their revenues and less than 40 percent of the export. The companies in the evaluation from 2013 however, were able to maintain 66 percent of their revenues and nearly 80 percent of exports.
Professional counseling by lawyers contributes to lower debt
Companies in distress, facing bankruptcy, supported by profesional counseling in the form of a lawyer through Early Warning end up with a lower debt to the tax authorities than those companies in distress that are left to go bankrupt on their own.
In 2010 the companies that were helped by means of a lawyer on average decreased their debt to the tax authorities by 10.000 Euro. In 2011 and 2012 the difference was as high as 20.000 Euro. On top of that it is important to mention that almost half of the companies in distress that EW sent to a lawyer went thorugh a well structured procedure that ended up saving the company!
All in all, the 2013 evaluation shows a public program that steps in to help companies in distress at a point where nobody else is interested. Early Warning is a great example of a well-functioning public-private partnership with positive economic results for all parties involved.