Strategic Grantmaking Foundations and the School Privatization Movement Rick Cohen STAFF Meredith Brodbeck COMMUNICATIONS/DEVELOPMENT ASSISTANT Julia Craig PROGRAM ASSISTANT Aaron Dorfman EXECUTIVE DIRECTOR Kevin Faria DEVELOPMENT DIRECTOR Melissa Johnson FIELD DIRECTOR Anna Kristina ("Yna") C. Moore COMMUNICATIONS DIRECTOR BOARD OFFICERS David R. Jones (CHAIR) COMMUNITY SERVICE SOCIETY OF NEW YORK Diane Feeney (VICE CHAIR) FRENCH AMERICAN CHARITABLE TRUST Lana Cowell (SECRETARY) OUR GIVING COMMUNITY Rhoda Karpatkin (TREASURER) CONSUMERS UNION DIRECTORS Marilyn Aguirre-Molina LEHMAN COLLEGE, CITY UNIVERSITY OF NEW YORK Christine Ahn KOREA POLICY INSTITUTE Andrea Alexander CHINOOK WIND ENTERPRISES Dave Beckwith NEEDMOR FUND Louis Delgado Richard Farias TEJANO CENTER FOR COMMUNITY CONCERNS Deborah Felder MAINE CENTER FOR ECONOMIC POLICY Marjorie Fine CENTER FOR COMMUNITY CHANGE Cynthia Guyer SAN FRANCISCO SCHOOLS ALLIANCE Judy Hatcher ENVIRONMENTAL SUPPORT CENTER Larry Kressley Pete Manzo THE ADVANCEMENT PROJECT Nadia Moritz THE YOUNG WOMEN’S PROJECT Russell Roybal NATIONAL GAY AND LESBIAN TASK FORCE Gary Snyder NONPROFIT IMPERATIVE Helen Vinton SOUTHERN MUTUAL HELP ASSOCIATION Jodi Williams COMMUNITY SHARES OF MINNESOTA PAST BOARD CHAIRS Paul Castro JEWISH FAMILY SERVICE OF LOS ANGELEs John Echohawk NATIVE AMERICAN RIGHTS FUND Pablo Eisenberg PUBLIC POLICY INSTITUTE, GEORGETOWN UNIVERSITY Terry Odendahl NEW MEXICO ASSOCIATION OF GRANTMAKERS Board member organization affiliations listed for identification purposes only. Strategic Grantmaking Foundations and the School Privatization Movement TABLE OF CONTENTS Acknowledgements ............................................................................................................ii Foreword ..........................................................................................................................iii Executive Summary ............................................................................................................v I. Introduction ....................................................................................................................1 II. Methodology..................................................................................................................9 III. Discussion of Findings ................................................................................................11 IV. Impact of Privatization on Public Policy......................................................................27 V. Conclusion ..................................................................................................................31 Appendix: 132 Organizations in Support of School Vouchers or Tax Credits ....................33 STRATEGIC GRANTMAKING: FOUNDATIONS AND THE SCHOOL PRIVATIZATION MOVEMENT i ACKNOWLEDGEMENTS My sincere appreciation to the many people who helped make this report possible: Denice Stephenson, who provided excellent assistance in making sense of complex databases and spreadsheets; Sean Bowie and Joy Rothman for their help with data gathering; and Henry Allen, Lori Bezahler, Chris Brown, Leigh Dingerson, Richard Farias, Cynthia Guyer, Julie K. Kohler, Regina McGraw, Wendy Puriefoy and Gordon Whitman, for sharing their expertise as members of the project’s advisory committee. Special thanks to the Dyson Foundation, the Edward W. Hazen Foundation and other support- ers of this project. Rick Cohen, November 2007 Foreword n my years as a community organizer, I have found that no issue touches the hearts of peo- Iple from all walks of life the way education does. People care passionately about the qual- ity of education their children or grandchildren receive. They care about the impact school quality has on community life. And they care about the role of the public education system in supporting our democracy. Education touches the core of people’s hopes and dreams for themselves and their communities. This report builds on a series of NCRP studies examining the grantmaking practices of conservative foundations. We chose to focus this report on a single issue—education—to understand better the grantmaking strategies that move a particular issue agenda over time. We also chose to focus on education because of the immense implications that privatizing public education has on our democracy. For most children, public education is their first interaction with a democratic institution. Privatizing public education transforms the edu- cational environment from one that builds a sense of collective purpose and nurtures dem- ocratic ideals to one that emphasizes individual choice and makes education a commodity to be produced and consumed in the marketplace. Those who advocate for and fund the education privatization agenda, as you will see in this report, have been thoughtful in their approach and have met with some significant suc- cess. The strategic grantmaking shown by funders in this report easily could be mimicked by other grantmakers hoping to have an impact on education policy or other issues. Aaron Dorfman NCRP Executive Director STRATEGIC GRANTMAKING: FOUNDATIONS AND THE SCHOOL PRIVATIZATION MOVEMENT III IV NATIONAL COMMITTEE FOR RESPONSIVE PHILANTHROPY Executive Summary revious research reports by the National Committee er than most foundations. This approach allows flexibil- Pfor Responsive Philanthropy have shown how con- ity for organizations on the ground to adjust strategies servative foundations have used strategic grantmaking and tactics to changing conditions and trusts those successfully to further their agenda. Strategic organizations to put the funding to its best use. The Grantmaking: Foundations and the School Privatization funders in this study also tend to pay out in grants sig- Movement takes a look at an issue central to American nificantly more than the federally mandated 5 percent democracy—the public education system—and asks: of assets, recognizing that advancing an agenda What have conservative foundations done with their requires getting money “into the streets” and into the grant dollars to promote concepts of privatizing public hands of organizations moving the agenda. education through “school choice,” primarily linked to In addition to funding tax-exempt 501(c)(3) organiza- school vouchers? What were their strategies in provid- tions with foundation dollars, leaders of foundations that ing resources to an array of conservative education fund the privatization movement also support their cause think tanks, public policy advocates and organizers? by funding candidates, political parties, political action Our research examined 132 organizations—think committees (PACs) and 501(c)(4) organizations with per- tanks, advocacy organizations, parent organizations sonal contributions. These foundation leaders gave over- and education scholarship organizations—that provid- whelmingly to Republican candidates and causes. ed research and promoted support for school choice in This report shows how philanthropic capital from the form of school vouchers or education tax credits. small and large foundations has helped build political These groups range from small organizations to institu- support for the school privatization agenda. It can serve tions that operate at the national level and have multi- as a case study for other foundation and nonprofit lead- million dollar annual budgets. ers who are interested in effective, strategic movement- From 2002 to 2006, we found 1,212 distinct founda- building grantmaking. tions giving grants to 104 of the 132 identified school choice organizations, with total grants exceeding $100 million in some years. The Walton Family Foundation dwarfed all other foundation funders of this movement, providing more than $25 million in 2005 for organiza- tions that promote school choice. They are joined by 29 other foundations—some not known as ideologically conservative—each of which provided more than half a million dollars for the cause during that year. We found that funders of the privatization move- ment use particular strategies that differ from more tra- ditional grantmaking practices. In particular, the fun- ders in this study provided unrestricted general operat- ing support to their grantees at rates significantly high- STRATEGIC GRANTMAKING: FOUNDATIONS AND THE SCHOOL PRIVATIZATION MOVEMENT V VI NATIONAL COMMITTEE FOR RESPONSIVE PHILANTHROPY I. Introduction ike many political issues dividing the American • The importance that conservative foundations attach Lpublic, the notion of “school choice” through to the provision of general operating support, essen- school vouchers provokes visceral responses from tially providing their grantees with flexible working adherents and opponents alike. This report examines a capital to respond to short-term opportunities and to relatively simple but little researched aspect of U.S. tackle longer run systemic issues; philanthropy on this issue: What have conservative • The ability of conservative foundations to get their foundations done with their grant dollars to promote money “into the street” and into the hands or oper- concepts of privatizing public education through ating budgets of activist organizations, and distribut- “school choice,” primarily linked to school vouchers? ing grant funds significantly above the federally man- What was their strategy in providing resources to an dated private foundation “payout” rate of 5 percent array of conservative education think tanks, public of assets per year, realizing that to move