(Illustration by Adam McCauley)
Editor’s Note: June 18 through 20, 2018, the Stanford Center on Philanthropy and Civil Society (Stanford PACS), the academic home of Stanford Social Innovation Review, hosted the annual Rockefeller Foundation Junior Scholars Forum at Stanford University. The event, now in its fifth year, brings together new researchers, including graduate students, postdoctoral fellows, and junior faculty, whose work covers civil society, the nonprofit sector, and philanthropy. Its purpose is to promote the scholarly community and to enhance the overall quality of research in the field. This report is one of four on research papers by scholars who participated in the forum.
Foundations have traditionally signaled their favored causes merely by donating money to organizations. Over the past few decades, however, a new wave of foundations led by a new generation of wealthy philanthropists has adopted more pronounced advocacy that resembles the work of political interest groups.
Leslie K. Finger, a lecturer on government and social studies at Harvard University, wanted to understand how the new foundations choose their recipients. Because education is the most frequently cited issue priority among the largest US foundations, she focused on foundations’ support for the education sector.
“New philanthropy” is defined as the hallmark of foundations with living, hands-on donors whose fortunes were made in modern industries, such as retail, tech, or finance. In contrast, older, pre-1980 foundations were established by now-deceased benefactors who accumulated their wealth from manufacturing or printing, and they have historically focused on capacity-building and political mobilization rather than on specific outcomes.
Finger’s research centered on state-level education funding. Even though state agencies account for only a tiny fraction of total foundation giving, they are “important but understudied actors in shaping state education reforms,” says Jeffrey Henig, professor of political science and education at Teachers College of Columbia University. Finger’s study “provides an interesting empirical test of whether giving is targeted at states with the greatest need or those where the political conditions for influence are most propitious.”
Both old and new foundations give generously to education, but their objectives diverge. Old foundations typically support traditional public-school institutions. By contrast, new foundations seek to reshape or bypass the public-school system through a specific set of choice- and accountability-oriented education policies under the rubric of “education reform.” Representative reform programs include school vouchers, alternative certification programs like Teach For America, and charter schools.
Further, recent national initiatives such as No Child Left Behind and Race to the Top require state education agencies to implement them. The agencies’ involvement presents an opportunity for foundations to shape local policy through assistance at the state level. New philanthropists see these programs as higher-leverage, because, Finger explains, they fundamentally change the structure of the school system, channeling the flow of dollars rather than simply adding to it.
Through a combination of data analysis and fieldwork, Finger discerned clear patterns. She analyzed grants to state education departments that exceeded $10,000, as reported to the Foundation Center by the 1,000 largest foundations between 2003 and 2014, plus IRS-listed grants from the Bill & Melinda Gates Foundation and The Wallace Foundation, the two largest grantmakers to state education agencies. She then correlated this information with political and social factors in the recipient states.
The analysis showed that states with higher poverty rates are not more likely to receive grants from either new or old foundations, suggesting that need alone doesn’t necessarily drive grant strategy. In fact, education agencies were more likely to receive funding in states where there was strong support for school reform and where teachers’ unions—generally not amenable to new teacher-certification proposals—were weaker. States with collective bargaining were about 10 percent less likely to receive grants.
Such political considerations were less critical for older foundations. Finger found that they tended to give money to states that spent a larger percentage of the budget on education, were more urban, and had Democratic governors. Taken together, “the state-level analyses suggested that new foundations target states with weaker teachers’ unions for grant receipt but give more where there are education reform groups present and higher levels of poverty,” she writes.
For example, in 2008, the Gates Foundation sought to encourage changes in teacher policy. The organization looked for states with at least 45 percent of students receiving free and reduced-price lunches and without prohibitions on tying teacher evaluations to student test scores. The Gates Foundation also looked for states with “auspicious political conditions for bold teacher reform” and found them in Kentucky. The state had a strong education reform advocacy organization, it did not have collective bargaining, and fewer than 60 percent of teachers were union members. Moreover, education resources were getting cut, and the state didn’t receive Race to the Top funding.
Gates targeted its assistance to Kentucky at reforming how teachers’ performance was assessed, through both funding and training. This approach, Finger writes, was “interest-group-like” in that it took into account the constellation of interests already present in the state. “The extra funding increased the capacity of the state to design and enact a new teacher evaluation system, and most people I spoke to, from bureaucrats to union leaders to teachers, welcomed the help.”
Leslie K. Finger, “Giving to Government: Are New Foundations Interest Groups?” working paper, 2018.
Read more stories by Marilyn Harris.