The most famous philanthropic effort to improve K-12 schooling serves today as a cautionary tale. At a December 1993 White House ceremony, Ambassador Walter Annenberg pledged $500 million over five years to help improve the nation’s most troubled public school systems. The grant represented the single largest gift ever made to American public schooling. The gift would support reform efforts in 18 communities, including New York, Chicago, Philadelphia, Houston, and Los Angeles. Participating districts were required to secure matching funds, which ended up generating more than $600 million in additional giving.

At the launch, Annenberg explained, “I felt I had to drop a bomb on the situation to show the public what needs to be done.” Vartan Gregorian, then president of Brown University, home to the Annenberg Challenge, declared that the gift would help “rekindle the notion of school reform.”

Gail Levin, executive director of the Annenberg Foundation, recalls, “The Challenge’s approach was to support local innovation and ideas . . . [especially] teacher professional development.” Annenberg funds also supported community partnerships and leadership, new assessments and benchmarks, and enhanced curricula and instruction. In short, Levin notes that the grant funded “capacity building”--efforts to enhance the “capacity” of the district to improve teaching and learning.

A decade later, this ambitious effort had produced dismal results, casting a harsh light on conventional philanthropic efforts to improve schooling. Michael Casserly, executive director of the Council of Great City Schools, observes, “The best I can say about Annenberg was that it provided us a terrific bad example. The grants were poorly conceived, poorly managed, and...disconnected from any ability to drive any broader policy changes. The lesson is: Don’t do that again.”

Vartan Gregorian, once so optimistic about the Challenge, by 2002 wryly conceded, “Even if we learned how not to do things, that in itself is a necessary lesson.” Gail Levin acknowledges that in many sites, “The Challenge seriously underestimated district-level resistance to reform...[and] the depth of resistance from tough-minded, contract-dependent teacher unions and principal associations in the largest urban districts.”

Challenging the Status Quo

The Annenberg experience put an exclamation mark on longstanding frustrations regarding the results of philanthropic giving to public schooling, and its disappointing conclusion heralded the entry of a new generation of funders eager to try another tack. Bill Porter, executive director of Grantmakers for Education, says, “I think the whole understanding of the challenge has shifted. What we’re learning is that changing education systems is a lot harder than folks expected. These systems are largely driven by policy, politics, and public funding, so it’s not an area where you can wade in, make a few grants, and hope to change the world. Hoping to change public systems has been a knottier, thornier problem than funders expected even ten years ago.”

The transition has, in some ways, been sudden and dramatic. In 1998, the fifth-year anniversary of the launch of the Annenberg Challenge, the four foundations awarding the most grant money for elementary and secondary education were the Annenberg Foundation, the Lilly Endowment, the David and Lucile Packard Foundation, and the W.K. Kellogg Foundation. Emphasizing conventional school and district improvement, these four foundations accounted for about 30 percent of the grant money given by the top 50 education givers. And in the same year, four of the top five grant recipients were Annenberg Challenge affiliates, according to Foundation Center data.

Just four years later, in 2002, the top two givers were the Bill and Melinda Gates Foundation and the Walton Family Foundation. These two foundations gave $196 million to K-12 efforts, accounting for about 25 percent of all grant money given by the top 50 education funders. In 2002, the top recipient of foundation giving in K-12 philanthropy was the Children’s Scholarship Fund, an organization that helps provide private school tuition to low-income children.

Two things are notable about this shift. One is its abruptness. In 1998, Gates was not among the top 50 givers to K-12 education and Walton ranked twenty-sixth among education funders, giving less than $5 million. The other is that these foundations--launched by men who made their fortunes as entrepreneurs and hands-on corporate leaders in the new economy--have adopted a “muscular philanthropy” that promotes a focused vision of school reform and uses the foundation’s resources to promote it. Gates targets its money heavily on high school reform, especially on efforts to shape smaller and more intimate high schools. Walton has given extensively to private K-12 scholarship programs and to supporting and promoting school choice.

Bruno Manno, senior program associate at the Annie E. Casey Foundation, muses about this changing of the guard: “I think the change has been driven by people’s dissatisfaction with what their money has gotten them. If a foundation hopes it can just keep giving money to a district for professional development and produce improvement, and after ten or 15 years things look pretty much as they did before, frustration can lead them to try something else.”

Philanthropy’s Odd Role

Philanthropy plays a peculiar role in contemporary American education. In sheer size, K-12 philanthropy is dwarfed by state, local, and federal expenditure on public schooling. In 2003-04, U.S. taxpayers spent upwards of $440 billion on K-12 education. Meanwhile, in 2002, philanthropic foundations reported giving just $4.2 billion to educational institutions and activities of all kinds, with most directed at higher education and only about $1 billion explicitly targeted to K-12 schooling. In fact, even by the most generous estimate, no more than about 40 percent of the $4.2 billion in total giving can even be loosely linked to K-12 schooling (with the rest going to higher education, adult education, and so on). Dan Fallon, chair of the education division of the Carnegie Corporation, which gave away $26 million in education support in 2004, observes, “No one should be under the illusion that a foundation is going to create something remarkable in the shadow of a $440 billion enterprise. Our task is to help get good ideas into the marketplace so that society has good alternatives from which to choose.”

While it is vital to recognize how limited are foundation resources compared with the vast governmental expenditures on K-12 schooling, it would be a mistake to assume that education philanthropy is not influential. Given that the vast majority of education spending is tied up in personnel costs, schools and school districts actually control remarkably little discretionary revenue for substantial or sustained efforts to find new and better ways of educating. In this realm--promoting, piloting, and supporting change--even small grants can enjoy powerful leverage.

Education philanthropy plays out against a broader shift in school reform that has transpired in the two decades since the 1983 release of A Nation at Risk, the famed federal report that lambasted the state of K-12 schooling. Early reform efforts that attended to class scheduling, site-based councils, and course requirements have been superceded or abandoned in recent years as policymakers have increasingly focused on broader questions of accountability, governance, choice-based reform, expanding the talent pool of educators and administrators, and rethinking compensation.

A “New” Education Philanthropy?

The foundations long at the center of education reform, like Carnegie, Ford, and Annenberg, have tended to invest in enhancing curriculum and instruction, professional development, and tweaking school-site governance or the school schedule. This kind of “capacity building” presumes that the stumbling blocks to education improvement stem from a lack of expertise or resources. The lessons of recent decades, especially the Annenberg experience, highlight the limits of this giving strategy in a field where foundation efforts are only a tiny fraction of spending in troubled, stagnant systems.

Two distinctions are important when discussing the “new” educational philanthropy. The first recognizes the manner in which the focused and entrepreneurial bent of foundations like Walton and Gates contrasts with traditional educational giving. The second distinction recognizes that within the larger community of focused, “new” philanthropists, there is a critical difference between those givers who focus on driving structural change that will radically overhaul the provision of schooling and those givers who seek to promote a particular school environment or model of instruction.

In sorting through these two strands of the “new” giving, Chester E. Finn Jr., president of the Thomas B. Fordham Foundation, explains, “There is a distinction between helping the system try to improve and paying to either force the system to improve against its will or to give people alternatives to the system. Funding the current system or the experts working with the system is the old education philanthropy. On the other hand, giving to the standards movement or to choice--measures that don’t trust the existing system--creates pressure on the system or supports mechanisms to help kids escape it.”

There is a split, in other words, between those who would first focus on professional development, tweaking curricula, and refining instructional delivery versus those who want to more fundamentally re-imagine public schooling. I call this a conflict between “status quo” and “commonsense” reformers. Status quo reformers advocate providing more money, expertise, training, and support but steer away from radical changes in job security, accountability, compensation, or work conditions. Unwilling to consider fundamental change, they allow the status quo to define what is possible.

Commonsense reformers see a more profound need to overhaul and update the arrangements of public schooling by seeking out new talent and rewarding excellence, purging ineffective educators and shuttering ineffective schools, supporting entrepreneurship, harnessing competition and accountability, and insisting management be guided by clear goals and reliable data. They recognize the merit of many status quo suggestions, but believe that these are mostly distractions from the larger tasks at hand.

The New Givers

The new educational givers have increasingly adopted a hands-on approach in which foundation personnel develop a well-defined theory of change and tend to regard grant recipients more as partners or investments. Most, such as the four discussed below, have targeted particular niches where they believe they can make a difference. The new givers share a common commitment to entrepreneurial and focused social philanthropy. The larger question is whether even the most innovative “new” givers will prove willing to fundamentally challenge a status quo resistant to competition, performance-based pay, educational leaders with new skill sets, and an emphasis on efficiency and productivity.

The Bill and Melinda Gates Foundation has rocketed into education as the proverbial 800-pound gorilla, and its largesse has rapidly made its emphasis on high school improvement and the need for smaller schools an organizing principle of school reform in districts across the nation. Tom Vander Ark, the foundation’s executive director for education, has consistently pointed out that the foundation does not see small schools as a silver bullet but simply as one piece of school improvement. For instance, the Gates Foundation has taken care to explicate some commonsense steps that make successful high school reform possible, officially proclaiming that “certain Ômission critical’ policy conditions must be in place for large-scale success: standards and assessments, accountability, need-based funding, school choice, college access.” Still, the foundation’s emphasis on school size and on increasing the number of small schools has sometimes overshadowed the reality that today’s small schools are frequently successful as boutique institutions that (A) have students and faculty who have chosen to be there and (B) receive extensive exemptions from onerous regulations and staffing rules.

The Walton Family Foundation is unapologetic about its emphasis on expanding parental choice. In 2003, close to 60 percent of Walton grants for K-12 education were to charter schools, scholarship programs, or advocacy related to choice issues. That year, the foundation’s biggest single grant was to the Children’s Scholarship Fund, which provides financial support to help poor children attend private schools, and its second largest grant was the Children’s Educational Opportunity Foundation of America, which funds local scholarship programs across the country. These two grants alone accounted for 25 percent of the foundation’s total giving in 2003. John Walton explains, “We have enthusiastically supported the charter movement--as well as vouchers and scholarships to private schools--because we believe empowering parents to choose among competing schools will catalyze improvement across the entire K-12 education system.” The foundation’s emphasis on supporting school choice typically leaves unaddressed just how increased opportunities for private school attendance, unaccompanied by changes in how public schools are funded or regulated, will compel public schools to improve.

The Milken Family Foundation, launched by Lowell and Michael Milken in 1982, has focused its efforts on the area of teacher quality and pioneering new models of teacher pay and evaluation. The foundation has sought to establish schools that employ market-sensitive pay and offer teachers career advancement options that keep them in the classroom, out of administration, and paid according to performance rather than the traditional, seniority-driven district salary scale. Its signature Teacher Advancement Program (TAP), launched in four Arizona schools in 2000, provided a $100,000 grant to each participating school on the condition that districts introduce merit pay and performance-based accountability for teachers in participating schools. At the time the program was launched, Pennsylvania’s then-Secretary of Education Eugene Hickok said the foundation’s plans to soon introduce a version of the TAP program in eight states was “really a chance to redefine the profession.” By summer 2004, the program had been instituted in over 70 schools across eight states. TAP achieved this growth in large part, however, by compromising on the principle of radically overhauling compensation and evaluation, and instead settling for having the program play the role of a performance-linked bonus. As Lew Solmon, senior vice president of the Milken Family Foundation, explains, “For the performance rewards, we originally had hoped it would become part of the salary schedule and replace the standard salary schedule. It’s not happening like that except in one place [Eagle, Colorado]. It’s not happening because it was more politically viable to sell the performance-based bonuses. So, because TAP is an add-on, nobody does worse.”

The Broad Foundation first got involved in K-12 education in 1992. In 2002, the foundation pledged $12 million in grants to K-12 schooling. About 25 percent of the giving was directed to accountability, another 25 percent to district governance and management, and 21 percent to choice-based reform. The foundation has focused on helping promote the ability of educational leaders to make decisions based on performance. Broad’s efforts have been particularly focused on bringing new leaders into districts, improving board governance, and highlighting systemic excellence. Broad Foundation founder Eli Broad explains, “I believe the infusion of a new generation of leadership from outside the overly bureaucratic environment of public schools will bring marked improvement in student achievement. . . . We are responding to the fact that 98 percent of superintendents are trained as teachers--not managers and leaders--and typically have little background in complex financial, labor relations, system management, personnel and capital resource decision-making.” Consequently, the Broad Urban Superintendents Academy and the Broad Institute for Schools Boards are intended to help attract talent, build a critical mass of understanding that extends beyond the narrow confines of school governance or administration, and disseminate the material. What’s notable about these Broad efforts is their educative role and policy implications--the manner in which they provide policymakers with entrepreneurs, programs, and successes to highlight. A critical challenge, however, is whether Broad will promote these programs as boutique efforts relevant only for hand-picked, specially trained cohorts, or as models of a more flexible approach to solving systemic problems.

Some Strings Attached

One element of the focus that characterizes the “new” giving has been the attachment of strings that try to ensure K-12 grantees stay on course. In fall 2002, the Broad Foundation provided a $2 million comprehensive planning grant to the New York City Schools. The grant came with a caveat: Broad retained the right to retract its gift if Schools Chancellor Joel Klein steps down from his position early. Broad’s managing director Dan Katzir explains, “This is an insurance policy. If a key player is removed or leaves, we think it’s important to put a grant on hold and take a closer look.”

Similarly, the Gates Foundation has suspended a number of grants in the last several years due to excessive administration turnover. The longest suspension was of a $3 million grant to Coventry, Rhode Island, that was supporting the development of small schools. Gates suspended the grant for ten months in 2002 following the departure of district superintendent John Deasy. Tom Vander Ark says, “It appeared that the work, particularly at the high school level, had slowed.” Funding resumed in November 2002, after a new superintendent was hired and Gates was reassured that the district remained committed to the small schools initiative.

The Temptations of the Status Quo

Philanthropists give to K-12 education for the best of reasons: to be good citizens and give our children a more promising future. For many givers, the last thing they want such efforts to do is provoke controversy. The frequent result is that most have deferred over time to status quo experts full of expertise, good intentions, and promise, and shied away from edgy measures.

The mere act of giving large sums can raise concerns among vocal elements of the community, and the stakes rise even higher when one is giving to support reforms like accountability, nontraditional educators, or choice-based reform. The public relations perils for foundations committed to change-focused giving were made clear in a 1999 Chronicle of Philanthropy article by Barbara Dudley, former executive director of Greenpeace USA. Dudley attacked the Gates Foundation’s educational efforts, complaining, “What offends is the fact that [Gates] gets to decide what the schools’ priorities should be without having to churn his billions through a democratic process the way the rest of us churn our thousands.” Faced with the possibility that they will be assaulted for their civic efforts, it is easy for philanthropies to soft-pedal their efforts to promote significant change in the public schools or to give in conventional, inconspicuous, educator-directed ways that don’t provoke criticism.

This has resulted in what Robin Pasquarella, president and CEO of the Seattle Alliance for Education, has called “Band-aid giving.” Referring to efforts to patch a broken system or make feel-good contributions of computers even though teachers may not use them effectively, Pasquarella has observed, “They’re random acts of kindness. There’s nothing wrong with that. . . . It just doesn’t change anything.”

These Band-aids can sometimes prove worse than pointless; they can drain energy from more useful efforts, allow leaders to hold off on tough-minded measures, or undermine coherence and focus. Michael Casserly of the Council for Great City Schools believes that “The Annenberg effort set back reform in the [participating] systems . . . it stalled the effort to build districts and sent the instructional programs into a place that was so fractured and incoherent that it may have done as much harm as good.”

Schoolhouse Lessons

The philanthropic community is in the midst of a slow, difficult evolution from the earnest efforts epitomized by the Annenberg Challenge to a savvier, more politically aware approach. As Raymond Domanico, author of a Fordham Foundation study of the Annenberg Challenge effort in New York, concluded, “This was a non-confrontational approach to reform. The Annenberg Challenge was not set up to challenge the status quo; rather it relied upon much the same set of relationships and processes that had yielded the status quo in large public school systems.” Eli Broad has observed, “As long-established institutions, public schools are often reluctant to take risks that will bring about real change.”

Critically, the new givers--including all of the new givers discussed above--have learned the importance of focus and attending to the sustained, lasting results of their generosity. Bill Porter of Grantmakers for Education points out that high-impact givers are starting to focus upon “using the resources at your disposal to build the public will for change and the will to sustain the change. The sustainability issue is: Once your grant dollars are done how do you sustain the change? Whose dollars are going to fill the vacuum--other funders, public dollars, a partner who’s going to redirect support? The ultimate in sustainability is changing the policy. We can build some interesting teacher training programs, for instance, or we can try to change licensing programs for all teachers in the state.” Or, in the words of Dan Fallon of the Carnegie Corporation, “We’re an incubator and not an oxygen tent. At some point the market has to take over and these organizations have to find a way to support themselves. We know we cannot provide support indefinitely.”

There are three keys to driving sustained improvement: programs, people, and policy. Because policymakers and officials have trouble imagining that which they have never seen, and are understandably hesitant to advocate for brand-new measures, foundations can play the critical role of modeling programs that would otherwise remain unexplored. And it’s vital to bring new and entrepreneurial individuals into school improvement. But these people and programs risk dying like beached whales if the larger environment isn’t changed.

Second, it’s crucial that education philanthropists understand the difference between focused, sustained efforts that fundamentally challenge or overhaul a lethargic, outdated system and those that merely represent one more attempt to help the status quo limp along. There is an enormous difference between simply being focused versus being focused on levers that will change behaviors in a way that will drive systemic improvement. Questions about the Gates Foundation’s efforts to promote small schools or the Walton Foundation’s efforts to expand parental choice, for example, are not about these foundations’ admirable focus but whether these reforms will drive large-scale, systemic excellence.

A final caution is that increasingly hands-on and focused givers may be tempted to dismiss as naysayers those critics who point out potential flaws in their theory of action. Barbara Kibbe, former program director at the David and Lucile Packard Foundation, notes, “Holding on to your humility when you occupy a grantmaker’s chair takes ongoing effort because there is a real power differential. . . . It is a rare grantee who will give a funder honest feedback.” Since staff are routinely courted by those seeking funds and may find that potential skeptics are hesitant to speak up for fear of offending a large and influential source of support, it is imperative that those funders interested in high-impact giving invite cold-eyed appraisals of their efforts to leverage sustained, systemic improvement.

Ultimately, education philanthropy drives broader change by modeling new paths and convincing private actors or public officials to change policies or leverage larger resources. Whereas the old model of education giving did little along these lines, and instead focused on pouring resources into the maw of enormous public systems, the new model of giving has taken pains to highlight practices such as small schools, school choice, or recruiting nontraditional leaders. In a sector where even the most generous gifts are no match for the money routinely spent on outdated and outmoded systems, the “new” education philanthropy’s influence will ultimately turn on its ability to change politics and policy.

Gisele Huff of the Jaquelin Hume Foundation, where the emphasis is on supporting high-impact policy research and advocacy, explains, “No matter how much philanthropists are willing to invest in programs that skirt the major issues of education reform, they will never be able to compete with the public sector’s spending. The only way philanthropists can leverage their investment is to tackle public policy directly, bringing about meaningful change at the core rather than on the edges.”

For taking bold steps in areas where school districts are ill-equipped to lead and where caution stays the hand of public officials, the new givers are to be lauded. But the lessons they take from their efforts, and the policies they then champion, may matter more than the programs themselves.

The new philanthropists have a choice as to what message they wish to send. In the short term, they may find it politically advantageous to play down the degree to which their efforts imply a radical rethinking of the status quo or threaten comfortable routines. In the long term, however, rhetoric matters. If public officials and private citizens are allowed to imagine that a small coterie of nontraditional superintendents, smaller schools, add-on pay-for-performance systems, or limited choice programs alone will yield dramatic improvement, and the promised results don’t materialize, then even the most muscular of philanthropists may find they have wedged themselves into a box that they are too weak to escape.

Frederick M. Hess is director of education policy studies at the American Enterprise Institute.