Becoming a Money Magnet: Lessons of the D.C. Ed Philanthropy Boom

Reform-oriented approaches to K-12 education, such as charter schools and alternatives to the traditional teacher pipeline, are the key to attracting large gifts from funders, according to an analysis of education philanthropy by Michigan State University researchers.

Is that a surprising finding? Not at all, but it's super-helpful to see concrete numbers that document just how much reform funders dominate ed philanthropy. 

The experience of Washington, D.C., is especially instructive for urban areas that are wondering what might bring funder support to their communities. The nation's capital became a money magnet for philanthropy in 2007, after then-Mayor Adrian Fenty appointed Michelle Rhee chancellor of the D.C. Public Schools. Rhee drew national acclaim from supporters — and harsh criticism from opponents — for her reforms to the city's school system, which included a new teacher evaluation system that could mean big bonuses for top teachers and the risk of termination for ineffective ones. The costs associated with the new system were funded by a three-year grant worth nearly $65 million from a group of foundations, including the Walton Family Foundation and the Eli and Edythe Broad Foundation.

The Michigan State analysis examined K-12 education giving in 2000, 2005, and 2010 by the 15 largest funders. That year, D.C. brought in more than $31 million from national funders, far more than any other urban area in the country. The millions in philanthropy dollars amount to $705 per student in D.C. Only five years earlier, funder dollars in the nation's capital amounted to less than $100 per student. More than two-thirds of the funds went to the D.C. Public Education Fund, an organization created in 2007 to support reforms in the public school system. Another $7 million went to charter schools and pro-charter organizations, such as the New Schools Venture Fund.

Second place among urban areas went to Newark, N.J., largely on the strength of the millions given to the school system by Facebook founder Mark Zuckerberg that stands as a textbook example of ed philanthropy gone wrong. Meanwhile, urban areas such as Denver, Detroit, New Orleans, Los Angeles, and Chicago, received far less. Even Milwaukee, once a favorite site among reform-minded funders for its voucher program, received less than $100 per student in foundation dollars.

The analysis by Michigan State found reform-oriented policies to be a key factor in attracting support from funders such as Walton, Gates and Broad. Cities that have a Teach For America chapter or support the growth of charter schools were more likely to receive funder support. One of the report's co-authors, political scientist Sarah Reckhow, stated that funders are considering national policy priorities when deciding on local areas to support. Many of these foundations are interested in policies that challenge the K-12 status quo, such as growing charter schools and teacher evaluation systems that emphasize student achievement, as measured by test scores, over traditional factors such as seniority.

The Michigan State study is yet not published, but its findings were reported in the Washington Post.

The study does raise some cautionary notes. What happens, for example, when a reformer enacts sweeping and expensive changes, only to leave the system? Again, the D.C. case is instructive. Rhee resigned as chancellor of the D.C. Public Schools in 2010, after Mayor Fenty was defeated for a reelection, a vote seen by many political observers as a referendum on Rhee's tenure.

D.C. school officials reported a drop in funder dollars after 2010. The D.C. Education Fund raised only $5.7 million in 2014, down from $17 million in 2012 and $24 million in 2010. There are, however, signs that the decline is turning around. The fund has reportedly raised $11 million so far in 2015, according to the Washington Post. Current D.C. Chancellor Kaya Henderson may not command media attention as Rhee was able to do, but she has pro-reform credentials of her own, as a former TFA executive director. Henderson was head of the D.C. schools' Human Capital department under Rhee, and was a chief negotiator of the 2010 contract that put the teacher evaluation system in place.

Henderson also has ambitious fundraising goals. She hopes to attract $20 million in private funding for her Empowering Males of Color initiative, a series of programs aimed at greater supports for African-American and Hispanic male students. Plans include a college preparatory high school for boys slated to open in 2016. This is an area of keen funder interest, as we've reported. 

Market-oriented reforms such as charter schools and new approaches to teacher evaluation continue to be magnets for funder dollars. Quite apart from the merits of these reforms, though, an important consideration is a school system's ability to sustain such changes in low funding cycles or after the loss of the reforms' champion. 

By the way, we wrote last year about another study out of Michigan State by Sarah Reckhow and Jeffrey Snyder, which offered a big-picture look at philanthropic funding trends in recent years. 

Reckhow also is the author of the book, Follow the Money: How Foundation Dollars Change Public School Politics

Related: What a New Study Says About K-12 Funding Trends