What Went Wrong? A Look Back at the Collapse of a Billionaire-Funded Education Partnership

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It was lauded as a historic opportunity for Connecticut students. A public-private partnership between Dalio Philanthropies and the state of Connecticut, announced in April 2019, would provide $300 million for educational equity, targeting students in the state’s lowest-performing school districts.

Under the agreement, Dalio Philanthropies, created by hedge fund billionaire Ray Dalio and his wife Barbara, would contribute $100 million over five years, the state would invest another $100 million, and an additional $100 million would be raised from other funders. Connecticut Governor Ed Lamont was a champion of the Partnership for Connecticut, as it was called, and many in the education community applauded its ambitious vision. What could go wrong?

A year after it was created, the partnership collapsed. For months, Republican state legislators had been demanding more transparency in partnership operations. Then the partnership’s CEO was asked to resign after being on the job for just six weeks; she would later file a lawsuit. The Dalios withdrew from the agreement blaming “political fighting,” the partnership’s board voted for dissolution, and the governor declared it dissolved. We were not able to interview the Dalios for this article, but we did receive a comment from Barbara Dalio: “It’s unfortunate that the Partnership didn’t work out, but the Dalio Education team and I remain 100% committed to working with educators to do what we can to help improve educational outcomes in Connecticut.”

On the surface, the demise of the Partnership for Connecticut seems like a case study in philanthropic overreach — and that is how some observers have characterized it. But others, including some who participated in the partnership and were there from the beginning, say it’s more complicated than that. They defend the Dalios, and argue that the philanthropists were offering education support that was not forthcoming from state or federal government. We decided to look back at the Partnership for Connecticut, since the episode reflects persistent problems in our education system — and the often uneasy role education philanthropists play when they attempt to fix them. 

Humble and hands-on

Participants in the Partnership for Connecticut were keenly aware of education philanthropy’s go-to cautionary tale: Mark Zuckerberg’s $100 million investment in the Newark school system back in 2010, which is often invoked as an example of ed philanthropy gone wrong. Participants in the partnership were determined not to make the same mistakes. In fact, members of the board were each given a copy of The Prize, journalist Dale Russakoff’s close-up examination of what went wrong in Newark. (See IP’s alternative take on Newark).

One of the primary problems with the Newark project, according to Russakoff, was that it operated from the top down: Those closest to the issues weren’t included in the process. As Alex Kotlowitz wrote in a New York Times review of Russakoff’s book, “What ultimately derails this grand experiment is the unwillingness of the reformers to include parents and teachers in shaping the reforms.”

Would the Connecticut partnership be able to avoid the mistakes made in Newark? After all, it was starting off with some of the same ingredients — first among them, a billionaire funder with ideas of her own. The Dalios may have a lower profile than Mark Zuckerberg, but Ray and Barbara Dalio are worth over $16 billion, according to Bloomberg, and Bridgewater Associates is the largest hedge fund in the world (Fortune recently dubbed Ray Dalio “the uncrowned king of the hedge fund world”). Could heavy hitters like that avoid being heavy-handed?

Many educators who had worked with Barbara Dalio in the past believed she would play an active but not overbearing role in the new partnership. IP has characterized Barbara Dalio, who founded and heads Dalio Education, an arm of Dalio Philanthropies, as “humble” and “hands-on.” When she first started in on big-time education philanthropy after her sons left home, Dalio immersed herself in the issues and spent time on the ground, talking to teachers, administrators and students. “The relationships Dalio built while visiting schools and talking with district stakeholders have served her well and allowed her to take a deeply collaborative approach to grantmaking,” IP observed back in 2018. 

For his part, Ray Dalio — unlike many other billionaires we know — appears genuinely troubled by America’s extreme wealth inequality and its implications. The couple, who have signed the Giving Pledge, give generously to a broad range of causes. Moreover, the Dalios didn’t swoop in from out of state, as Zuckerberg did in Newark. The Dalios live in Connecticut, and while Dalio Philanthropies funds throughout the U.S. and abroad (causes include ocean conservation, mental and physical health, and the arts), Dalio Education keeps the focus tightly on education in Connecticut.

Sprinkling down dollars 

It turns out that the line between a hands-on approach and micromanagement can be blurry and subjective. Right from the start, the Dalios set firm conditions on the partnership. According to the Connecticut Mirror, which covered the partnership’s rise and fall in depth, one of those conditions was that the top two state legislators in each party would themselves serve on the partnership’s 13-member board, rather than appointing board members. The governor would also serve on the board, and both the governor and Dalio Education would be able to make additional board appointments. 

A bigger sticking point for Republican state legislators was transparency: The Dalios insisted that partnership be exempt from state disclosure and ethics rules. When he learned the exemption provision had been included in the state budget, Deputy House Minority Leader Vincent Candelora thundered, “These corporate board-holders are going to go up to the balcony and sprinkle down dollars on, I guess, the peasants of Connecticut, and we’re supposed to be happy about that?”

Defenders of the provision argued that discretion was necessary, since the partnership would be discussing potentially private information with and about students, teachers, parents and others. As columnist Dan Haar put it in the Connecticut Insider, “... ​​unlike a school board that hears parents and students as they come forward, the Dalio partnership aims to reach out aggressively and listen to stories — from people who would not talk in a fully open system.” Defenders also pointed out that the partnership would be initiating discussions with potential funders, who would presumably not want their email exchanges and other information made public. 

But Republican leaders rejected these explanations, and were so frustrated that they proposed legislation to force the partnership to operate openly, as Haar recounted. The Connecticut Parents Union also objected to the lack of transparency. “You don’t meet privately and tell us what you did afterward,” Gwen Samuel, the president of the Parents Union, told the CT Mirror. “You have to include us. There is no way around that.”

Silver bullets and 10,000 coats

Then there was the matter of Mary Anne Schmitt-Carey, who was hired as the partnership’s CEO in March of 2020 (and following controversy around the position’s proposed salary). But just six weeks after Schmitt-Carey was hired, she was asked to resign. The request for her resignation came during a phone call with Barbara Dalio. Also on the call were Erik Clemons, the chair of the partnership, and Dalio Philanthropies’ chief education officer, Andrew Ferguson, who was senior advisor to the partnership. After the phone call, Schmitt-Carey immediately shot back, referring to the call as an “ambush” and accusing Dalio and the others of making “false and defamatory” allegations against her. The partnership was dissolved shortly after this, and Schmitt-Carey’s was the single vote against dissolution. 

Schmitt-Carey later filed a $2.5 million lawsuit against Dalio Philanthropies. She also sued Say Yes to Education, the organization she had headed before joining the partnership, and two people who worked there, claiming they had spread “malicious lies” about her. In the suit, Schmitt-Carey claimed that the Dalios turned against her because she had strong views and wasn’t willing to do things exactly as they wanted. According to the suit, as reported by the Hartford Courant, “[Schmitt-Carey] had been hired to rubberstamp the silver-bullet programs chosen unilaterally by Dalio Philanthropies figureheads Ray and Barbara Dalio — despite those policies’ dubious efficacy.”

The lawsuit alleged that Ray Dalio joined one routine partnership conference call shortly before Schmitt-Carey was asked to resign. It claimed that during the call, Dalio “instruct[ed] Ms. Schmitt-Carey that her job was not to draw on the experience and knowledge she had accumulated during her long career, but to take direction from Ms. [Barbara] Dalio regarding which programs should be implemented.” Dalio also “informed Ms. Schmitt-Carey, ‘If my wife wants to distribute 10,000 coats, your job is to figure out how to do that,’” according to the suit. 

Dalio Philanthropies responded with a statement issued after the lawsuit was filed: “Anyone can make outlandish accusations,” it read. “The evidence will be presented and judged fairly following the legal process. That is when the truth will come out.”

Lawsuits typically feature he-said, she-said-style accusations, and it’s difficult for an outside observer to piece together exactly how events unfolded, or precisely who was at fault. Dalio Philanthropies didn’t respond for interview requests in time for publication. What is clear is that the Dalios are continuing to support education in their home state, partnership or not. The Dalios promised that would be the case following the partnership’s final meltdown in June of 2020, and Barbara Dalio reaffirmed that commitment in a recent comment to IP, included above.

During the pandemic, Dalio Education provided 60,000 laptops to students in low-income Connecticut school districts, and it is working with city leaders in Hartford and Norwalk to enable 124,000 people to connect to high-speed internet. The foundation co-founded the Connecticut Rise Network, which promotes collaboration between teachers to ensure student success. Its Opportunity Project supports organizations working with disengaged youth to help steer them to graduation and college or job opportunities. Finally, Dalio Education supports educators through partnerships with Fund for Teachers and Lincoln Center Education. From 2016 to 2020, Dalio’s education funding totaled over $106 million, according to Candid. (We reached out to Dalio Education about its funding plans and priorities, but the organization didn’t respond to our requests in time for publication.)

“Philanthropic funding or nothing”

After the partnership dissolved, Barbara Dalio was blunt about what she believed went wrong. “It has become clear that it’s not working because of political fighting,” she said in a statement. On Twitter, Ray Dalio blamed the collapse on “dysfunction and damage that is coming from politicians and the media.”

But Mike Savino, a journalist and president of the Connecticut Council on Freedom of Information, pointed to lack of transparency, not politics, as the cause of the partnership’s collapse, and called the Dalios’ insistence on the Freedom of Information exemption “… the latest in an alarming trend of business leaders who demand secrecy while wading into public affairs,” in a CT Mirror commentary.

For Connecticut Sen. Chris Murphy, the partnership’s failure prompted questions about the outsized influence of the ultra-rich. Instead of depending on billionaires to support the public good, Murphy said, we should be taxing them instead. ​​“No matter how good-hearted the goals are on behalf of a wealthy donor, does it make sense for one person or one family to have more influence over the expenditure of taxpayer dollars than any other voter?” Murphy asked in an interview with the CT Mirror. “I didn’t have any beef with what the partnership was trying to do. I just think that … it’s better for us to get public wealth into good causes through taxes instead of through donations.”

Murphy makes an important point. But given that government shows little willingness to impose proportionate taxes on the wealthy, what are cash-strapped school districts supposed to do in the meantime? This was the question posed by Jan Hochadel, president of AFT Connecticut, and educator Sheena Graham, who both served on the board of the Partnership for Connecticut. In commentary for the CT Mirror, Hochadel and Graham, who worked with Barbara Dalio before the partnership, disputed the notion that she dictated the terms of her foundation’s donations. “Barbara listens to everyone in the education community with a big heart and open mind. Not once — let us repeat, not once — has Barbara told us what to do with her generous philanthropic dollars,” they wrote. 

The educators are clearly discouraged by the current education funding situation in their state, and the legislative paralysis that perpetuates it. They pointed out that, like Sen. Murphy, they would welcome more government funding for education. However, “The current legislature too often refuses to even bring the issue of fuller and fairer funding to a vote,” they write. “The unwillingness of lawmakers to address educational funding has left us with the option of accepting philanthropic funding or nothing.” 

For these educators, funding from the Dalios was worth taking a chance on, since it was that or nothing — and many school districts around the country face the same unrelenting scarcity. As Hochadel and Graham put it, “The reality is with the current funding and taxation structure, both from Hartford and Washington, our poorest constituent has no chance to have the education that our richest constituent does.”

Note: This post has been updated with a comment from Barbara Dalio.