Donors’ Choice

As politicians debate school vouchers, many philanthropists start funds to give poor kids a private education

Amid a heated national debate about the wisdom of government vouchers and tax credits for private schooling, an increasing number of philanthropists are creating scholarship funds that enable poor children from inner-city neighborhoods to attend private or parochial schools.

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In the past year alone, donors have committed more than $250-million to more than 40 such funds nationwide, and at least 15 new funds are expected to be created in the coming months.

Most donors say they have established the funds because of what they see as the dismal quality of public-school education in America today — and the belief that the situation cannot be allowed to continue any longer.

But some non-profit leaders say that big-hearted philanthropists are being used as a stalking horse by those who want to institute a nationwide program of government-financed school vouchers. Opponents of vouchers insist that such programs are unconstitutional and undemocratic — and will further weaken the struggling public-school system and benefit students other than those who are most in need.

After the U.S. Supreme Court decided last week not to hear an appeal challenging Milwaukee’s voucher program, some proponents of the scholarship funds argued that they would become even more important as other localities ponder whether to institute programs similar to Milwaukee’s.

Meanwhile, private-school scholarship funds continue to expand rapidly. Among the philanthropists who have recently devoted dollars to so-called school-choice efforts for the poor:

* The leveraged-buyout investor Theodore J. Forstmann and the Wal-Mart heir John T. Walton created the Children’s Scholarship Fund, in New York, and together have committed $100-million to it. In addition, they have raised $70-million from other donors since the fund was started in June. That money will help the organization give partial scholarships to 35,000 kids in 38 cities nationwide, through a lottery to be held in April.

* In partnership with the national school-choice organization CEO America, James Leininger, a physician and founder of the medical-supply company KCI Industries, in San Antonio, has pledged to raise $50-million over the next 10 years for CEO Horizon, a charity in San Antonio that will offer a full private-school scholarship to any of the 13,000 students in the Edgewood School District who are eligible for federally financed lunch programs. So far, CEO Horizon has awarded 720 scholarships.

* Virginia Gilder, an investor in New York City, dedicated $1-million last year to create a fund called A Brighter Choice Scholarships. It offered poor children entering first through sixth grades at Giffen Memorial Elementary School, in Albany, N.Y., a scholarship covering 90 per cent of tuition, up to $2,000, at any private school. About 20 per cent of Giffen’s 458 eligible kids are now attending private schools with Ms. Gilder’s help.

* Amway Corporation President Dick DeVos and his wife, Betsy, have, since 1994, underwritten the operating costs of CEO Michigan, a private-school scholarship fund in Lansing that was created by Dick Posthumus, the state’s Lieutenant Governor-elect. In addition to paying an average of $125,000 a year to operate the fund, the couple also pays the tuitions of four local inner-city children to attend private schools.

Donations to provide private-school scholarships are not limited to wealthy business executives. Efforts are also taking shape at the grassroots level with support from people like Marisa Ramirez de Arellano, executive director of the Latino Student Fund, in Washington.

Ms. Ramirez de Arellano, an architect, now serves as a full-time volunteer for the Latino Student Fund, which raises money to supplement scholarships that students have received from other private funds, or from the Roman Catholic Church, for example.

“Every year we’ve been more successful in our fund-raising effort,” Ms. Ramirez de Arellano says. Last year, the fund — which has no paid employees — raised $40,000, which supplemented tuition scholarships for 56 students. The majority of donors are families that send in $40 or $50.

In a similar fashion, the Washington Scholarship Fund, started in 1993 by a group of business executives in the District of Columbia, has grown from helping 57 kids to helping 1,450 as a result of receiving donations as big as $6-million from Mr. Forstmann and Mr. Walton and as small as a $5 check that comes every month from a local donor.

Many of the philanthropists involved in private-school scholarship funds for the poor say they decided to take action because they wanted to help inner-city children escape a deteriorating public-school system.

“Each year that goes by, more kids are stuck in bad schools,” says Mr. DeVos. “Those bad schools need to get the message that it’s not acceptable anymore and those kids deserve better.”

Other philanthropists say they created their funds after years of disappointing experiences with the public-school system, such as serving on school boards or giving money directly to schools.

They believe that opening up competition between public and private schools is the best way to improve what they say is a monopolistic and bureaucratic public-education system that only swallows money and additional resources given to it by government, private donors, or others trying to reform it. Some say they are frustrated by what they view as noble but failed efforts by philanthropists like Walter Annenberg, who has given $500-million to an assortment of programs to improve public schools nationwide.

Still other philanthropists say they are hoping that their efforts will ultimately have a hand in shaping public policy.

Indeed, private school-choice scholarship funds have gained much visibility recently through the efforts of CEO America, an umbrella organization of such funds based in Bentonville, Ark. By encouraging and publicizing the efforts of private philanthropists, CEO America has spearheaded a powerful and growing movement for changes in education policy. And with the support of many Republican legislators, the organization has succeeded in pushing the school-choice issue forward in many state legislatures.

“A large part of why we are where we are in the school-choice debate is because of what these pioneers have been willing to do in privately funded voucher programs,” says Fritz Steiger, president of CEO America, which has received contributions from the Walton Family Foundation, Mr. Leininger, and other business executives. “People say, ‘Wait a minute, there’s a movement here. There’s something going on.’ And that has helped the debate on school choice.”

He adds that private-school scholarship programs have become the model for government voucher programs, saying that they have turned a hypothetical debate on school choice into a demonstrable experiment that proves that such programs work.

“They provide the models for the legislators, the media, and the general public to see how this idea of school choice could work,” says Mr. Steiger.

But other observers say the philanthropic model does not apply to the public-policy debate.

“I applaud individual philanthropists who try to help give kids an unusual break,” says William H. Gray III, president of the United Negro College Fund. “But it does not fundamentally address the needs of millions of American kids who must depend on public education.”

Ira Glasser, executive director of the American Civil Liberties Union, agrees. “The notion that this kind of private philanthropy can become a model for public policy totally breaks down when you look at the numbers,” Mr. Glasser says. “I think it is being cynically exploited by people who have no concern for the children and the poor.”

Mr. Glasser compares the private-school scholarship funds to giving out a handout on the street. That handout, he says, is not going to solve poverty, or solve the problem of homelessness. What works for several thousand children with a relatively small cost cannot work for millions of American kids, since the cost of educating them all is so high, he says. That cost was about $313.5-billion in 1996-97, according to the U.S. Department of Education.

Despite the emotionally divisive debate that surrounds the issue, many school-choice philanthropists insist that their efforts are apolitical and that they have no desire to get embroiled in public-policy matters.

Mr. Forstmann, for example, says he supports the public schools but is trying to introduce competition into the educational system. He argues that giving students and their parents a choice to select which school they wish to attend will create more competition for students between public and private schools. He believes that bad public schools would see an exodus of students and, consequently, be forced to improve or shut down, since public schools depend on their enrollment levels for their funds. Good schools, on the other hand, would flourish, attracting more students and more dollars.

“The generic problem in education today is that it is a creaking monopoly, it is an aging monopoly,” Mr. Forstmann, a senior partner in the investment company Forstmann Little & Company, said at a recent press conference in Washington. “And tinkering around the edges of monopoly isn’t the only way to reform public education.”

He added, “With all the wealth, and generosity, and entrepreneurial imagination that is America’s, there’s no reason why we can’t harness the creative forces of competition to create more excellence in education.”

Such avoidance of politics has earned Mr. Forstmann’s Children’s Scholarship Fund endorsements from people ranging from President Clinton to Senate Majority Leader Trent Lott, and from Alveda King, a niece of Martin Luther King, Jr., to the Hollywood mogul Michael Ovitz.

Mr. Forstmann — who wanted to be a schoolteacher when he was growing up — said his desire to support school choice began to take shape long ago, while he was acting as a Big Brother to a 7-year-old boy. The two stuck together during some pretty rough times, Mr. Forstmann said, and the youngster’s education was lacking. But today he is in his late 20s and leading a very productive life, Mr. Forstmann added.

“The experience taught me that even kids born without luck can truly succeed if they’re only given some help,” he said.

Other philanthropists say they created their private-school scholarship funds after years of disappointing experiences with educational-improvement efforts.

Peter Flanigan, an adviser at Warburg Dillon Read, an investment-banking company in New York, is one of these. Mr. Flanigan says he started the Student/Sponsor Partnership — which this year provided mentors and $5-million in full scholarships to 1,200 New York high-school students — after he became disillusioned trying to reproduce the philanthropic efforts of Eugene Lang’s I Have a Dream Foundation. In that program, individuals adopt an entire public-school class and help the students toward graduation and college.

Mr. Flanigan says that after reading about Mr. Lang’s successful efforts with a particular class in Harlem, he and his wife were inspired to do the same. Shortly after meeting with Mr. Lang, Mr. Flanigan says, he went to a school in the South Bronx where he told 50 sixth-grade students that those who dreamed of going to college would receive financial assistance if they graduated from high school.

But, he says, “it quickly became clear to us that you couldn’t just put out high goals six years hence.” So the couple hired a full-time social worker, paid for after-school tutoring three days a week, and took the kids to cultural events.

The result, he says, was disappointing. Only 2 per cent of the kids he supported went on to college, and it took “lots of time, lots of effort, lots of money,” he says. “I’d say that’s a failure.”

The experience, however, taught him a valuable lesson, he says. He now believes that to help inner-city children, a program must get them out of the inner-city schools and into a different environment.

“Without changing the home life — which you cannot — and the neighborhood — which you cannot — you leave them in these utterly incompetent inner-city high schools,” Mr. Flanigan says. “There’s not enough of that kid left for you to get your hand around, whereas if you put them in a good inner-city private school, they get seven hours a day of caring, discipline, and academic attention.”

Private-school scholarship funds for poor children have existed, almost unnoticed, for nearly a decade. J. Patrick Rooney, chief executive officer emeritus of the Golden Rule Insurance Company, in Lawrenceville, Ill., is widely considered the pioneer of such efforts.

In 1991, Mr. Rooney was solicited by his alma mater, Saint John’s University, in Collegeville, Minn., for a $1-million gift. Mr. Rooney took the request to his company’s president, but added a twist.

“I went to our president and said, ‘I think we’d be better off to spend the same kind of money establishing a grant for minority children to get a private education,’” he recalls. “If their parents can’t afford it, well, we can.”

The company offered to pay half the tuition for 500 poor children so that they could attend private schools. With that money, Mr. Rooney created the Educational Choice Charitable Trust, in Indianapolis, which has become the model for many of the new funds nationwide. The fund will award $1.25-million this year to help some 1,700 kids attend 78 different schools.

Donors and other observers say that one reason such funds are growing by leaps and bounds — in addition to the current emphasis given by political leaders — is that the donors feel they are truly making a difference in children’s lives.

Several observers cite the report of a $1-million study released last month by Mathematica Policy Research and Harvard University’s John F. Kennedy School of Government. The report said that New York students in the fourth and fifth grades who had received money from the School Choice Scholarships Foundation, in New York, to attend a private school had achieved marginally better standardized test scores than a control group of children who stayed in public schools.

“The actual support of students has a dollar-for-dollar tangible benefit,” says Clint Bolick, litigation director for the Institute for Justice, a Washington group that is leading the legal efforts to defend school-choice programs in courts across the country. “You can see the impact with each and every child who is able to pursue high-quality educational opportunities.”

Mr. DeVos puts it a little differently. “We have kids who have to go to school every day,” he says. “If they are not getting the best education, I want to be a part of helping them find it.”

Susan Gray contributed to this article.