A Lesson in Charity Survival

Teach For America turns around its operation after financial crisis

Most college students turn in their senior theses, heave massive sighs of relief, and rarely think of their topics again.

But 11 years after Wendy S. Kopp submitted hers to Princeton University, she continues

to live many of the words she wrote her senior year: a business plan to create a national charity that would recruit recent college graduates to teach in poor urban and rural schools.

As president of Teach For America, Ms. Kopp today oversees a $10-million budget, 120 employees, and a corps of 1,600 teachers nationwide. And she has ambitious plans for a major expansion of the group, including tripling the number of participants in its teacher corps over the next few years.

In addition to providing short-term solutions for school districts with chronic teacher shortages, Teach For America has enjoyed success encouraging a new generation of young people to pursue careers in teaching and community service. Several have even taken an cue from Ms. Kopp and started their own charities.

Many of Teach For America’s successes, however, were hard to imagine just five years ago, when severe money shortages nearly forced the group to shut down.

The organization’s ability to survive through serious growing pains can be chalked up in large part to perseverance, management skills, and simple good fortune in pursuing the right kind of idea at the right time. Its path provides a lesson in the evolution of a charity and its founder — a subject Ms. Kopp has spent much time reflecting on for the book she is writing, which is due out next spring.

“They have certainly matured as an organization,” says Rick Love, a former program officer at the John S. and James L. Knight Foundation, in Miami, which has given some $2-million to Teach For America. “All of the bumps — and there have been some big ones — they have learned from.”

A Splash of Publicity

Soon after its start, Teach For America grabbed the attention of grant makers and journalists who were intrigued by the group’s mission and its youthful founder. The New York Times published a front-page story about the group in August 1990, just before the first corps members entered the classroom, and PBS produced a documentary about the group the following year called “Who Will Teach For America?”

But four years into the effort, Ms. Kopp found herself on terrain all too common for nonprofit entrepreneurs. Most of the group’s initial grant dollars had started to run dry and many of the foundations that had been interested in getting the idea off the ground were not interested in providing continuing support. She recalls the immense frustration she felt during the “dark years,” as she calls them.

“I don’t think funders knew what to do with us” after the organization was no longer a brand-new group, says Ms. Kopp.

The situation soon reached a crisis, and Ms. Kopp found herself struggling to raise $200,000 every two weeks just to make payroll. “It was stressful beyond belief,” she says.

Teach For America’s problems were compounded by the sharp criticism it received around the same time from critics who described the group’s approach as naïve or even detrimental.

Doing Harm

Chief among them was Columbia University professor Linda Darling-Hammond, who published a devastating critique of the group in Phi Delta Kappan, a leading education-policy magazine, that accused Teach For America of sending unprepared teachers into classrooms and, in the process, doing students more harm than good.

Such charges left some grant makers wary of investing in the group.

“Many funders were afraid to antagonize the professional educational establishment,” recalls Sue Lehmann, a nonprofit-management consultant who became the chairwoman of Teach For America’s board around this time and remains so today.

In response to the criticism, the organization has since worked to improve its training program for new teachers and to work more closely with education schools at many universities.

A Plea to Grant Makers

In May 1995, Ms. Kopp called an emergency meeting of 25 foundation officers, most of whom had previously supported the group, to plead for money to keep it from going under.

To immediately reduce costs, Ms. Kopp pledged to eliminate 60 of the group’s approximately 150 employees, those who worked out of regional offices to train new teachers and give them feedback. The move would help Teach For America slash its operating budget from $8-million to $5.2-million.

Ms. Kopp also promised to put aside plans for new ventures that fell outside of the group’s central mission of recruiting and placing teachers in poor school districts. One such program had sought to recruit mid-career professionals as teachers and help them obtain their licenses. Ms. Kopp says she realized that she and her employees “had to focus all of our energy on the core mission.”

Ms. Kopp’s presentation proved persuasive: The grant makers at the meeting agreed to provide $750,000 to keep the group afloat.

That money helped put Teach For America on firmer financial footing, giving Ms. Kopp and others at the group the breathing room and time they needed to figure out long-term strategies for raising money and devise a new plan to shape the organization.

Ms. Kopp says the financial crisis helped her realize that the group needed to reach out to more people.

“We looked around the table and we realized: We are the only people who know that Teach For America is on very rocky footing,” she recalls, “and it shouldn’t be this way. There should be other people in the world who have many more connections than this group of 25-year-olds who feel a sense of responsibility to the organization.”

System of Local Boards

So Ms. Kopp and others set about trying to build stronger ties to education, nonprofit, and business executives, as well as news media leaders, in the communities where Teach For America operates. The group created a system of local boards of trustees in each of the 15 geographic regions in which it works, and it directed the boards to take responsibility for fund raising from donors in their areas.

Today, Teach For America’s 13 local boards raise about $5.6-million a year, or slightly more than half of the organization’s total revenue in 1999. In coming years, Ms. Kopp hopes that local boards will provide at least three-quarters of all revenue.

Outside Forces

Several external forces also contributed to Teach For America’s turnaround.

The creation in 1994 of AmeriCorps, the federal community-service program, provided a new stream of income. For the past six years, AmeriCorps has given Teach For America about $1.5-million a year, or about 12 percent of its current income.

Fund raising has also been helped by the prospect of a major teacher shortage. The U.S. Department of Education predicts that the nation will need 2.2 million new elementary and secondary teachers over the next decade, or about 220,000 a year.

Already school leaders, especially in large, urban districts, are scrambling for new hires, sometimes traveling far afield to lure teachers from other districts, states, or even countries, as well as offering them signing bonuses, free graduate courses, and housing assistance as incentives.

School districts are also starting to turn to groups like Teach For America. To better assist those districts, Ms. Kopp has started a separate nonprofit consulting group, the New Teacher Project, which will use what Teach For America has learned and advise school districts on recruiting, hiring, and training new teachers.

“The marketplace is so different than it was,” observes Dan Katzir, director of program development at the Broad Foundation, in Los Angeles.

The problem of recruiting teachers was barely a blip on most radar screens a decade ago, he says, whereas “nowadays you can’t pick up any urban daily without knowing there is a huge teacher shortage.”

Change in Donors

The landscape of donors has also changed over the years in a way that favors groups like Teach For America.

Today Teach For America raises the bulk of its foundation income from new philanthropies, many of which were created by entrepreneurial business leaders looking to support risk takers like themselves.

More than two dozen venture capitalists and technology entrepreneurs, working through a Boston organization called New Profit, now support Teach For America and other nonprofit groups that have recently grown beyond the start-up phase.

Many of Teach For America’s current foundation donors didn’t even exist five years ago. For example, the charity received an $8.3-million challenge grant — its largest single grant ever — from the Pisces Foundation, which is a supporting organization of the San Francisco Foundation established in 1997 by Donald and Doris Fisher, founders of the Gap clothing chain.

Of the $9.4-million Teach For America has raised to match the Pisces gift, $6.4-million has come from four foundations, none of which existed more than three years ago: the Broad Foundation, created by the businessman Eli Broad; New Profit; the New Schools Venture Fund; and the Stupski Family Foundation.

Teach For America’s recovery strategies didn’t stop with its fund-raising plans. Ms. Kopp has worked hard to strengthen the group’s bottom line by instituting more formal management structures and systems than existed at first.

Ms. Kopp says that initially she had no interest in organizational management; her passion was recruiting and placing teachers.

“We were extremely loose on management,” she says. “If people came here, they might have wondered, ‘What is going on?’ and ‘How are decisions being made?’”

So the organization created a set of eight “operating principles” that more clearly articulated how goals were set, put in place a formal system for making sure that staff members were held accountable for meeting the goals, and made sure that employees had the training and tools they needed.

The new system “really had a huge impact on our culture,” Ms. Kopp says. “Rather than assuming that everyone understood what was valued in the organization, we made it really explicit.”

As part of the changes, the organization has tried to make better use of employees’ time.

Jerry Hauser, Teach For America’s chief operating officer, recalls how in the early years employees would pitch in after work, fueled by pizza and caffeine, to help stuff envelopes for recruiting letters and other mailings. While he and others recall those late nights with fondness, the management team came to realize that such manual tasks were better farmed out to companies that specialize in assembling mailings.

Gaining Expertise

In recent years, Ms. Kopp has also tried to hire people with more experience. Whereas initial employees were often recent college graduates who came armed mainly with enthusiasm, many of those hired since have graduate degrees and career experience in other jobs and fields. For example, after Mr. Hauser completed his service as a teacher in the corps, he attended Yale Law School and then worked at the McKinsey & Company consulting firm before being hired as Teach For America’s director of operations.

Says Mr. Love, the former program officer at the Knight Foundation: “As Wendy has gained experience, she has also learned the value of experience and recruited it.”

With the organization’s finances now in order, Ms. Kopp is once again thinking big.

By 2004, she hopes to triple the size of the teachers corps (to about 4,000), increase the number of geographic areas served (from 15 to 25), and slightly more than double the group’s budget (to $26.4-million).

The $17.7-million from the Pisces grant and matching funds will help pay for added costs of the expansion beyond the increased amounts Teach For America thinks it can raise over the next four years. Local boards will in turn be responsible for raising a rising percentage of the group’s annual revenue, reaching about 80 percent by 2004.

Over the course of the next four years, Teach For America plans to plow about $10-million of its income into a new endowment that can provide it with regular income — a cautionary move in case times get tough again.

But as the organization matures, Ms. Kopp seems determined to try to hang on to the informal and collegial atmosphere that characterized the group’s early days.

Teach For America’s headquarters, for example, now located in New York’s Garment District, still have a decidedly uncorporate look and feel. The loft-like space has high ceilings, exposed pipes, and bare concrete floors. On one wall a large chalkboard lists staff birthdays, this month’s selection for the office book club, and a staff compilation of favorite Halloween treats.

Ms. Kopp presides from a cubicle that is set off a bit from the other work spaces for privacy — the only visible emblem of her status as president.

Looking back, Ms. Kopp admits that she and her colleagues made their share of mistakes. But she also believes that Teach For America might never have happened without the fresh perspective that youthful idealism can bring.

“We would never have had Teach For America if I hadn’t been completely inexperienced,” she says, “if I had realized how absurd the whole idea was.”

Whenever Ms. Kopp has considered doing something else, such as teaching or opening her own school, she says she always concludes that she can have the greatest influence on educational opportunities for poor children in her current job. “We are always driving toward something bigger,” she observes. “And that keeps me completely energized, interested, and challenged.”

TEACH FOR AMERICA: A SNAPSHOT OF ITS FINANCES

Source: Teach For America

Source: Teach For America

Source: Teach For America