Philanthropy Doesn’t Compensate for State Education Cuts, Study Finds

Private philanthropy does not fill the gap when states reduce spending on education, a new study finds.

In fact, it may help widen the gap in quality between rich and poor schools, according to an Indiana University researcher.

Contrary to assertions by supporters of leaner government budgets, policies aimed at reducing states’ spending on education have “no effect” on charitable giving to public schools, said Ashlyn Nelson, associate professor of economics at Indiana’s School of Public and Environmental Affairs, who conducted the study.

“There’s a big argument often made by state policy makers or people who are fans of austerity measures that ‘Why should we have to spend more on public education?’ ” Ms. Nelson said, with many people suggesting that “the response for that should devolve to the local level, and the nonprofit sector can pick up the slack.”

In her study of national data for the years 1999-2010, Ms. Nelson looked for evidence of whether Tax and Expenditure Limitations, or TELs — fiscal policies that restrict state revenue or spending — affected activities by local nonprofits that support public schools, such as Parent Teacher Associations, school foundations, and booster clubs. Such policies are currently in place in 30 states.

She found no effect. “When you impose a measure like a TEL, there is no response from the nonprofit sector,” Ms. Nelson said. “That is not a solution. You just lose money, and that’s that.”

Sharing the Pie

In research leading up to her new study, Ms. Nelson had found a “gigantic increase” in both the number of local nonprofits supporting public schools and the level of private revenue raised from 1995-2010.

“There has been a lot of popular press around the issue of parents’ out-of-pocket spending [on education], and kids having to sell candy bars to raise money in recent years,” she said. “We wanted to see if we could link it to a loss in revenue at the state level.”

Ms. Nelson’s new research didn’t find a causal connection between spending cuts and private fundraising. And the surge of fundraising for public schools appeared to deliver the greatest benefit in communities that needed it the least. Parents in wealthy districts are more likely to have the resources and the will to give their public schools a big boost.

Meanwhile, Ms. Nelson said, “that’s just not happening in poor districts,” leading to a wider inequality gap in education.

Ms. Nelson suggested that nonprofit support for public schools should focus on reducing inequality through fundraising partnerships, like adopt-a-school programs between wealthy and poor districts.