Education

Billionaires in the Classroom

Bill Gates and other philanthropists are reshaping public education policy with private cash. Can they succeed at making schools perform to their liking?
by | October 2011

Jeffrey Butts had a problem. In his first year as superintendent of Indianapolis’ Wayne Township schools, he faced a pressing need. Wayne Township, like most other districts, was on the hunt for more science teachers.

A solution for that problem was soon at hand. With the guidance of the Woodrow Wilson National Fellowship Foundation, Indiana was one of three states running a program to train scientists to serve as public school teachers. Butts was able to hire seven to start teaching this fall. The training program has the support not only of Indiana, Michigan and Ohio and their university systems, but also counts on millions of dollars from foundations such as the Lilly Endowment and W.K. Kellogg Foundation.

This is far from the only investment in science education that philanthropists are making. The Carnegie Corp. is underwriting a National Research Council panel that is drawing up a new set of science education standards for release next year.

The Carnegie effort follows on the successful launch of a set of “common core” standards in math and language that more than 40 states have pledged to adopt. Standards are the basic set of skills and information that students are expected to master at each grade level. The common core standards were developed by the National Governors Association and the Council of Chief State School Officers -- with heavy financial support from foundations, notably the Bill & Melinda Gates Foundation.

“Gates has managed to get 40-odd states to pledge to adopt national standards,” says Jay Greene, who chairs the Department of Education Reform at the University of Arkansas. “That would not have happened if not for Gates’ efforts. There have been lots of previous efforts at national standards and none have gotten this far.”

Gates has bought itself a big megaphone. The foundation now spends nearly $400 million on various education initiatives around the country and is having a profound effect on education policy, particularly at the federal level.

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in education from 2000 to 2008

Foundation Investments 2000-2008

Gates is the largest foundation playing in the education arena, but it’s not alone. Others -- notably the Broad and the Walton Family foundations -- are having a major influence on education policy as well, with Broad pushing changes in school leadership training and personnel policies, and Walton supporting charter schools and other choice initiatives. There are many more foundations -- Hewlett, Ford, Dell, Lumina, Arnold, Packard and Robertson, among others -- spending tens or hundreds of millions of dollars annually in support of education.

Foundation support for education is nothing new. Old-school foundations have long been happy to underwrite educational institutions that they felt were doing good work. “Philanthropies in the past in education were essentially do-gooders,” says Tom Loveless, a senior fellow in education policy at the Brookings Institution. “They gave money to people to do good things, and they didn’t exercise a whole lot of control over what happened to it.”

That’s what dominates foundation giving in education, in terms of where most dollars go. What’s different today is that a cadre of foundations and their leaders are not content with this role. Relative newcomers like the Gates, Broad and Walton foundations are actively seeking to influence policy at all levels—district, state and national. Foundations used to try to “make bigger and better the practices that were already there,” says Richard Lee Colvin, executive director of Education Sector, a think tank. “Today foundations are working in a very different way. They’re trying to affect systems because they’re trying to make longer-term change.”

These foundations have clear agendas and are using their money to enlist allies in their causes, whether it’s through funding advocacy groups (they’re mostly blocked from direct lobbying due to their nonprofit status) or by tying their dollars directly to desired changes in policy and personnel. “If you are a foundation like ours, with a mission to support dramatic improvements in student achievement, then you have to dig deeper sometimes to get at the core causes of why we haven’t seen improvements,” says Erica Lepping, communications director for the Broad Foundation. “Efforts to help even district by district haven’t yielded dramatic enough gains.”

Not all the foundations are pushing the same set of ideas, by any means. But sometimes they are able to work in a coordinated fashion. The fact that there are foundations with huge endowments openly advocating certain policy ideas -- with notable success -- has elicited complaints from some quarters about a “billionaire boys club” hijacking public education and directing it on a course of its own choosing. “Given that billions of dollars are being disbursed,” says Dennis Van Roekel, president of the National Education Association, the country’s largest teachers union, “it is reasonable that people are starting to raise concerns about how this flow of money is shaping our political debate about education reform and to ask if a handful of individuals are having undue influence in one of our nation’s most important institutions.”

There’s no question that foundations are having a profound impact. Whether they can ultimately succeed in making most schools perform to their liking, however, remains a matter for debate.

Many iconic ideas in education, from Sesame Street to the National Assessment of Educational Progress benchmark tests, grew from foundation-planted seeds. A basic measure of how much time is spent on subject matter, also known as Carnegie units, takes its name from the foundation that underwrote the widespread adoption of the idea, which standardized course credit hours roughly a century ago.

Think about any of today’s prominent ideas for “reforming” education -- whether it’s the spread of charter schools, attempts to tie teacher pay to test score improvements or bringing in teachers without traditional degrees in education -- and you’ll find one or more of the big money foundations behind it. “These ideas have all prospered with philanthropic support and clearly would not have gotten as far or grown as big without philanthropy,” says Greene, the University of Arkansas professor.

Today, no one wields influence quite like the Gates Foundation. In May, The New York Times portrayed the foundation as a many-headed hydra influencing every aspect of policy formulation. Not only is it spending more than $75 million a year on advocacy, but it is also simultaneously bankrolling the development of policy by funding academic researchers and district data specialists and giving money to think tanks and media organizations that examine their handiwork.

Many of the foundation’s core ideas -- which revolve, among other things, around figuring out the best way to evaluate teachers and reward them for success in boosting student achievement -- have been embraced by the U.S. Department of Education and its secretary, Arne Duncan. Many of the ideas Duncan pushed states to adopt through Race to the Top, the $4 billion grant fund created by the 2009 federal stimulus law, come straight out of playbooks developed by Gates and other foundations. Top officials are now shuttling back and forth between the department and the Gates Foundation. Some critics say it’s not too great a stretch to say that the Gates Foundation is, in effect, running the Department of Education. “You have a lot of power centralized in the Gates Foundation,” says Loveless. “They have their fingers in every pie.”

New-school foundation officials are fond of talking about measurements and outcomes. Their insistence on exercising control not only about where their dollars go and what goals they are used to achieve is very much in keeping with the more hands-on fashion in philanthropy today. Seeking to control the flow of dollars is a must in education, they argue. Too many billions have gone down various rabbit holes without leading to any noticeable improvement.

Exhibit A for this argument is always the Annenberg Challenge. In 1993, Walter Annenberg, who made his fortune publishing TV Guide, announced at the White House that he would give $500 million for urban and rural schools. His largesse was more than matched by other donors. But even a billion dollars, spread between 18 projects in 35 states, made barely a dent in how the schools operate or perform.

The sense that spreading money too thinly and without any notable strings can be a waste -- that even a billion dollars can fall into a black hole -- has had an influence on education philanthropy in general. That’s why even the biggest foundations are seeking to leverage their funds by getting governments to change their ways, whether it’s a school board’s hiring practices, a state’s funding formula for pre-kindergarten instruction or a national push for building data systems and changing basic standards. “Foundations have moved in considerable measure from adding to what schools do, to trying to transform schools and what they’re doing,” says Chester Finn Jr., a former federal education official who is now president of the Thomas B. Fordham Institute. They’re a necessary prod, he adds, because schools aren’t delivering.

Officials with the foundations complain that education spending has nearly tripled over the last three decades, yet student achievement remains flat. Lepping, the Broad Foundation spokeswoman, argues that it’s impossible to achieve the kinds of changes needed on a school-by-school or even district-by-district basis, because there are 150,000 schools nationwide overseen by 15,000 different districts. Changes at the scale needed will have to happen at the state and perhaps even federal level. “Even with all these very well intentioned efforts over the decades, they’re still hitting a bit of a wall,” Lepping says. “The whole system has to be rebuilt.”

The notion that a small group of well-heeled businessmen want to tear the nation’s education system up by its roots makes many people in the education field nervous. They worry that the foundations are both insular -- funding programs and program evaluators alike -- and unaccountable. The biggest foundations have billions of dollars at their disposal and no need to justify their policy positions to a wider constituency beyond their own board members. “There is something fundamentally antidemocratic about relinquishing control of the public education policy agenda to private foundations run by society’s wealthiest people,” Diane Ravitch, a prominent education historian and analyst, wrote in The Death and Life of the Great American School System, a recent book that criticizes many currently influential education ideas.

Foundation officials will tell you that there is nothing secretive about their aims. Their grants can be examined through tax filings, while the largest projects are touted quite proudly in news releases and press conferences. “It’s not a conspiracy in the sense that it’s secret,” says Greene. “Everyone can see that they’re coordinating their actions in public.”

Greene is referring to the coordination between the Gates Foundation and the Obama administration. In prior Democratic administrations, he notes, the same sort of swapping of ideas and personnel took place, only it involved teachers unions rather than a foundation. It sometimes does seem as if the people most ready to criticize foundations such as Gates for big-footing the policy process are those unhappy about not receiving funding from them. Or who simply disapprove not so much of the idea of activist foundations but the particular policy prescriptions that contemporary foundations are pushing. “Most of the complaints about the foundations are coming from teachers unions or education professors who happen, in this case, to disagree with their preferred strategies,” says Frederick Hess, education policy director at the American Enterprise Institute.

The Gates, Broad and Walton foundations may be more aggressive about trying to direct a policy course, but they didn’t invent the idea of meddling in the political process. For the past decade, the Pew Center on the States has championed increased funding for pre-kindergarten education. Those who are critical of foundations today, Hess notes, raised nary a peep during the 1980s when the Ford Foundation was funding lawsuits challenging the adequacy of school spending levels, leading to billions of additional dollars from states.

But if foundations have as much right to try to shape policy as any other interest group, it’s still worth asking whether they are well equipped to do so. They have access to the best researchers through the simple act of putting them on the payroll, and they have adopted mantras about judging results according to rigorous, ongoing research. Their own structures, however, may not lead them to make the right judgment calls about which directions to pursue.

Some are smart about placing their bets on good organizations or innovative ideas. But they have a tendency toward groupthink, with a fondness for embracing ideas that have become trendy mainly because other foundations are funding them. As organizations, some are nimble and able to adjust according to the import of the data they’re always collecting. Others are nearly as ossified as the school bureaucracies they’re challenging. Many are guided heavily by the whims of those in charge, whether it’s a living donor who set the foundation on its feet, or the presidents and program officers who currently rule the roost. “Foundations do shift,” says Ellen Condliffe Lagemann, an education professor at Bard College and former president of the Spencer Foundation. “But more often than not, shifts in foundation policy have to do with a change in foundation leadership, rather than something having to do with a course evaluation.”

The most widely cited example of a foundation changing course involves Gates. Its first major initiative in the education arena was an attempt to boost high school graduation rates by promoting the idea of smaller schools. High schools with 3,000 or more students couldn’t give the kind of individual attention struggling students often needed, or so it was thought. Gates gave some $2 billion over the course of several years in order to help districts break up 2,600 schools in all but a handful of states.

But the idea didn’t work. It turned out that instruction trumps structure and that students ended up being divided into some small schools that worked well and other small schools that were, in effect, dumping grounds. What’s more, the smaller schools couldn’t offer the same range of courses. The bottom line was that academic achievement didn’t get any better. Gates dropped the idea in 2008.

That’s not a happy precedent for the idea that foundations know best. The fact that the Gates Foundation fired its executive director for education and other ranking staff presented an object lesson to those charged with pushing its new set of ideas. They can easily lose their jobs, so admitting failure and pointing out that a policy idea won’t pay off as intended is, professionally speaking, a risky business.

The smaller schools initiative offered up another moral. Namely, that districts are happy to take a foundation’s money, but they won’t always follow its program. Lots of schools accepted multimillion-dollar grants to go small, but many did so on paper only. Assistant principals became principals of “learning academies,” all housed on the same campus of what had once been a solitary high school.

Any offer of money is going to be welcome, especially in an era of budget cuts. There have been examples of foundations giving money to districts based on conditions such as hiring or retaining a favored superintendent. But most districts insist that they welcome foundation support simply as a means of trying out or perfecting ideas they were pursuing anyway.

The schools in Tampa, Fla., are among the largest recipients of outside help, having won sizable grants from the Walton and Wallace foundations, as well as $100 million over seven years from Gates. The centerpiece of the Gates project in Tampa is a new evaluation system for teachers, which ditches the old model of relying solely on the principal’s opinion in setting salary levels. Instead, it takes into account other factors such as peer evaluation and test scores. The district had already been pursuing ways of basing teacher pay on performance, says Stephen Hegarty, spokesman for the Hillsborough County district. “We don’t pursue grants just for the dollar signs,” he says. “If you look at our history, these are things we have wanted to do for some time.”

It may be no trick to get schools and states to accept money to help pay for things they want to do anyway. But what about getting them to do things that wouldn’t otherwise come naturally­ -- in other words, to have a truly transformative effect by convincing state or school leaders to try out a new course that the policy team at your foundation is really excited about?

Money clearly matters. Even if there’s sometimes insufficient diversity of opinion within an individual foundation, there are enough foundations pursuing enough different notions that anyone with a legitimate idea -- whether conservative or liberal or anywhere on the political spectrum -- is likely to be able to find backing.

But foundations all totaled up may not have enough money to alter education to the extent that their annual statements suggest they would like. Public education is a $600 billion enterprise in the United States. All the private money that goes to support it, from bake sales to the Gates Foundation, represents less than 1 percent of that amount.

Foundations are attempting to leverage their few billion in annual giving into ongoing government programs and funding, but they will not always succeed. Even the Department of Education, which supplies well under 10 percent of the K-12 dollars in this country, ultimately has limited influence over the 50 states and tens of thousands of districts that all have their own ways of doing things. “The big players at the state level remain state legislatures, the governor, his department of education and the teachers’ unions,” says Loveless, the Brookings scholar. “It’s not as if we have just turned it over to the foundations.”

States are willing to take federal or foundation money when it doesn’t cost them anything. They’ll apply for help in implementing the common core standards when Gates and Race to the Top funds will pay for their applications. And saying that they’ll adopt standards that didn’t cost them anything to design doesn’t seem like such a bad deal either.

Many of them will even make real changes in large part due to foundation prodding, whether it’s altering tenure or teacher compensation. But the larger vision promoted by the foundations and the feds -- the holy grail of finding the best ways to evaluate teachers and improve their performance through scientific research, and then having those findings adopted by states and districts through limited financial incentives -- is likely to go at least partially unfulfilled.

There are just too many districts and states used to doing things their own way. “It’s impressive how far Gates and Duncan have gotten,” says Greene. But he sees them as coming up short. “In the end,” Greene says, “even Gates in coordination with the Department of Education doesn’t have enough money to coerce the states to change what they’re doing.”

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