Credit Where Credit’s Due
The Knowledge Is Power Pro-gram’s ambitious expansion plan in Houston got a big leg up in November 2009, when the Bill & Melinda Gates Foundation made a $10 million program-related investment to help KIPP secure a $62 million bond. “It allows us to fight another day,” KIPP co-founder Mike Feinberg told the Houston Chronicle.
The bond financing will help KIPP advance its plan to double its Houston enrollment to 11,500 in five years and grow to 21,000 students in 42 public charter schools in 10 years. KIPP’s $100 million expansion plan was first announced in March 2007 (please see Philanthropy, March/April 2008), but as the economy contracted, KIPP had difficulties securing financing. “A year, even six months ago, trying to do a bond on our own was virtually impossible. The credit market was frozen,” Feinberg told the Chronicle in November. “We’re Kipsters; we say nothing is impossible. We could have done it, but it would have been a lot more expensive.” According to the Chronicle, the Gates Foundation’s support is expected to save KIPP an additional $10 million in interest.
Gates is making $30 million total available to high-performing charter management organizations (CMOs). Other CMOs in Houston, such as YES Prep Public Schools, are expected to take advantage of this source of funding. YES is beginning its own $34 million expansion effort, with plans to boost enrollment to 10,000 by 2020.
“While charter schools have proven to be extremely effective at improving access to quality education, they face unique challenges with respect to expansion,” Vicki Phillips, director of education at the Gates Foundation, told the Chronicle. “Innovative approaches to financing are critical to addressing the funding gaps that result as successful programs like charter schools endeavor to scale.”
The Gates grant takes advantage of a financing program recently established by the Texas legislature that provides a public match for a percentage of private funding to enhance charter schools’ access to credit.
The Wall Street Journal recently reported that, in order to save on administrative costs in a time of pinched endowments, some philanthropists are closing their foundations and opening donor-advised funds. According to the National Philanthropic Trust, at the end of 2008, there were 148,588 accounts open at donor-advised funds—up 11 percent from the previous year, which itself was up 13 percent from the end of 2006.
Donors who convert their foundations’ assets into donor-advised funds report enjoying lower administrative and investment fees. Raymond Kurlak, who opened an account with the Schwab Charitable Fund, told the Journal he was able to cut his expenses by 10 percent. According to the Schwab Fund’s president, Kim Wright-Violich, it has fielded so many queries about converting foundations that it has allocated more staff to help donors in this area and composed a questionnaire to help philanthropists make their decision.
Donor-advised funds pool philanthropic dollars, offering donors lower costs for investment management and administration than those for maintaining a small foundation. A donor-advised fund also enjoys greater freedom from federal reporting rules, compliance with which can increase administrative costs to foundations. Contributions to and from donor-advised funds can be made anonymously, and there is no minimum annual payout, though most donor-advised accounts make annual contributions far exceeding the 5 percent minimum for foundations.
One of the drawbacks of a donor-advised fund can be a loss of total control over giving. Funds usually make disbursements in line with donors’ wishes, but they are not legally bound to do so.
The Cleveland Museum of Art may redirect $75 million in funds originally donated for the purchase of art to an ongoing construction project, according to an October 7, 2009, Cuyahoga County probate court ruling. Judge Anthony Russo limited the museum to using no more than 49.99 percent of the annual draw from the funds on the construction project. The remaining 50.01 percent will remain designated for art acquisitions.
The construction project, which will increase the museum’s size by half, is projected to cost $350 million—but the museum is $138 million short of the goal. Thus, it sought to tap four funds donated expressly for art purchases: the J. H. Wade Trust, established in 1920; the John L. Severance Trust, set up in 1935; the Mr. and Mrs. William H. Marlatt Fund, created in 1939; and the Leonard C. Hanna Jr. Purchase Fund, established in 1952.
While the Association of Art Museum Directors prohibits museums from selling artworks for any purpose other than acquiring others, outgoing Cleveland museum director Timothy Rub told the Plain Dealer that using funds designated for acquisition for other purposes does not violate the organization’s ethical guidelines.
Precedent seems to support the Cleveland Museum of Art’s argument. In 1955, Judge Donald Lybarger ruled that the museum could use artwork purchase funds to pay for a museum expansion. The acquisition trusts were established so that the museum could become a prestigious institution, Lybarger reasoned, and expansion was part of that process.
Museum chairman Michael J. Horvitz told the Wall Street Journal that one of the acquisition donors, Leonard C. Hanna Jr., supported the 1955 ruling as a museum trustee. If Hanna had intended that his gift never be used for expansion, “we believe that the terms of his trust would have reflected that, but they did not,” Horvits said. “So we believe that he envisioned that possibility and that it was OK with him.”
Eric Gibson, the Wall Street Journal’s Leisure and Arts features editor, countered that “Mr. Horvitz’s Hanna example could just as easily be used to argue the opposite case: that having been around in 1955 Hanna deliberately created a restrictive endowment with no provisions for other uses of the money because he wanted the trust used for art acquisitions and nothing else.”
Columbus, Indiana, a town of 39,000 people about an hour south of Indianapolis, is one of the world’s greatest troves of modern and contemporary architecture. It is ranked by the American Institute of Architects as the sixth most architecturally innovative American city—behind only Chicago, New York, Washington, Boston, and San Francisco.
The city is home to dozens of notable buildings, sculptures, and landmarks, including a public library by
I. M. Pei; Eliel Saarinen’s First Christian Church; North Christian Church and Irwin Union Bank, by Eliel’s son Eero; a downtown shopping center by Cesar Pelli; Harry Weese’s First Baptist Church; and a firehouse by Robert Venturi. Other architects and artists who have designed projects in Columbus include Henry Moore, Richard Meier, and Gunnar Birkets.
What brought these architectural giants to little Columbus was private philanthropy. As Radley Balko reports in the October 2009 issue of Reason magazine, “little Columbus became an architectural magnet because J. Irwin Miller, a wealthy industrialist and philanthropist, decided 50 years ago to use his fortune to make his hometown a visually interesting place to live.”
Miller was the chairman of the Columbus-based Cummins Engine Company—and he was also an architecture enthusiast. In 1942, he commissioned a new design for his home church (First Christian) from the elder Saarinen. The church became an instant landmark, and Miller saw a role for philanthropy in beautifying his hometown and raising its worldwide profile. He became a major patron of civic architecture in 1954, when he struck an innovative deal with the city of Columbus: the Cummins Engine Foundation would pay the commission for a world-class architect selected from its own list, and the city would pay for construction costs.
Miller later expanded his program to private buildings with public purposes, such as churches, banks, and malls. And his own house, designed by Eero Saarinen, is a National Historic Landmark. “By the 1960s,” Balko writes, “Columbus had become a world-renowned magnet for privately financed modernist design.” Miller’s vision continues today: architectural grantmaking in Columbus and its surrounding area remains a core program area of the Cummins Foundation.
And the Broad Goes to . . . Aldine!
The Aldine Independent School District, a district north of Houston in Harris County, Texas, has been awarded the $1 million Broad Prize for Urban Education. The prize was announced by Eli Broad, founder of the Eli and Edythe Broad Foundation, and Education Secretary Arne Duncan at the U.S. Capitol Building on September 16, 2009.
Aldine is nationally recognized for consistent student achievement gains—in fact, it has been a Broad Prize finalist four times previously. In 2008, Aldine outperformed other districts in Texas with similar family income levels, recording higher reading and math scores in all grades. Aldine’s 60,000 students are 64 percent Hispanic and 30 percent black; 84 percent qualify for the federal school lunch program; and 31 percent do not come from an English-speaking background.
The Broad Foundation took special note of Aldine’s achievement in making greater gains among minority students than statewide, closing achievement gaps based on income within the district, and breaking “the predictive power of poverty”—the Broad Foundation found that school-level poverty does not seem to have any correlation to student achievement in Aldine. “Aldine has demonstrated that when an entire community and district work together with a singular focus on educating every child, they can succeed, even against the odds of poverty,” said Eli Broad.
The Broad Prize includes $1 million for college scholarships in the winning district; each of the four other finalists—Broward County Public Schools in southern Florida, Gwinnett County Public Schools outside Atlanta, the Long Beach Unified School District in California, and the Socorro Independent School District in Texas—will receive $250,000. The Broad Prize was first awarded in 2002 to honor large urban school districts that make major gains in student performance and close achievement gaps.
No Gender Gap in Bequests
A new study from the Center on Philanthropy at Indiana University finds that there is no difference in the rates of charitable bequests by men and women, nor any difference between single men and single women.
“The center’s key finding contradicts the conventional wisdom that the ‘typical’ bequest donor is a single woman,” said Patrick M. Rooney, executive director of the center. “Nonprofits are likely to find that men and women with similar incomes, similar ages, and similar educational backgrounds respond with equal interest when asked to make provisions for a bequest.”
Of donors surveyed by the center, 16 percent said they had a bequest in their will. Other findings include a difference between single people and married or formerly married people (the former being more likely to leave a bequest) and among donors who attend religious services often (men who do so are more likely than women to leave a bequest). Indeed, among all donors surveyed, religious beliefs were the second-most frequently cited reason for giving, following a “sense of responsibility to help those with less.”
Donors without a bequest were associated with less income, a lower level of education, and less frequent religious attendance. The full report is available on the center’s website.
Carnegie Recognizes Higher Ed Leaders
The Carnegie Corporation of New York awarded its 2009 Academic Leadership Awards on September 21, 2009. “Each of these leaders has an academic vision focused on a commitment to excellence,” said Carnegie president Vartan Gregorian. “They all see the university as an integral part of their communities, and view the health of K–12 education as central to the future of higher education.”
Bard College president Leon Botstein received the award for pioneering a new high school and early college program. It offers New York City’s motivated youth an opportunity to complete their high school education and two years of college within four years—all tuition-free. As Tulane University was restored after Hurricane Katrina, president Scott Cowen reoriented the undergraduate experience toward civic service (including a service requirement in the core curriculum). Cowen also engaged Tulane in K–12 education reform in New Orleans; Tulane even chartered a school. Amy Gutmann of the University of Pennsylvania was recognized for, among other things, increasing support for teacher-scholars who, through joint appointment across Penn’s colleges, integrate knowledge in multiple disciplines. William E. Kirwan, chancellor of the University System of Maryland, was recognized for his commitment to diversity and math and science education.
The use of the $500,000 award is left to the discretion of each recipient, as long as it supports his or her academic initiatives.