Education Entrepreneurs: New Frontiers in Philanthropy

New Schools Venture Fund has been funding America’s public schools since 1998.  Why?  NSVF “seeks to transform public education by leveraging the power of entrepreneurs to effect change,” its Web site said, by determining “the most powerful levers for impact on public education.”

Apparently, raising the tax rate on corporations and the rich to increase public school funding is not a good lever.  According to the Economic Policy Institute, “Between 1960 and 2004, the average tax rate fell by nearly 14 percentage points for the top 1% of earners, while it has increased slightly (from 15.9% to 16.1%) for earners in the middle 20%.  The shrinking share of corporate taxes combined with an increase in payroll taxes has helped widen income inequality.”   

Against this backdrop of a growing gap between the “have-mores” and the rest of the American people, NSVF welcomes small and big investors.  You may have heard of the latter.  Try the Bill & Melinda Gates Foundation, Eli and Edythe Broad Foundation, Robertson Foundation, Irvine Foundation, and Walton Family Foundation. 

According to Julie Petersen, NSVF communications director, “We support both nonprofit and for-profit organizations, but tend to call this support ‘investment’ in both cases because our financial support comes with the sort of active, hands-on guidance that a venture capital investor would provide to a tech startup.  In both cases, our ultimate goal is social impact, rather than financial return — although in cases where one of our for-profit companies is sold or goes public, any returns we generate are returned to NSVF for re-use.”

Crucially, the NSVF helps investors identify “the market they are addressing.”  As in real estate, location is the key.  Thus the best sites are “several key cities, including New York City, Chicago, Los Angeles, Washington D.C., Oakland, and New Orleans.”  Why these communities?  The answer is their “size, history of underperformance and potential for transformative change.”

In plain English, education entrepreneurs can have their way with populations whose living and working lives are defined by an inequality of resources.  Due to decades of falling public and private investment, such inequality is widespread in many big-city neighborhoods which the NSVF targets.

In a capitalist society such as the U.S., investment creates jobs for workers to produce goods and services for sale in the marketplace.  Absent that process, poverty grows, with current joblessness for some at Depression-era levels.  Take the 35.7 percent unemployment rate for African American teens this January versus a rate of 27.9 percent last October, the Labor Dept.’s household survey reported.

Meanwhile, in under-funded public schools in low-income communities, NSVF investments have increased the number of charter (contract) schools.  The city of New Orleans is one example where this privatizing process is underway.  Recall that inequality harmed people in this American city well before Hurricane Katrina struck there in 2005, which FEMA has worsened.

In New Orleans and across the U.S., charter schools owners, politically connected to business leaders and elected officials, can and do void employees’ labor union contracts.  One NSVF investor, the Gates Foundation, knows the drill.  It invested in the chartering of Sacramento High School five years ago.  The St. Hope Corp. gained control of Sac High, a nonunion school now, under the guidance of Kevin Johnson, ex-NBA all-star, and current land developer and Democratic candidate for mayor in California’s capital city.

Private funding in the chartering of public schools sends a pro-investor and anti-worker message to parents, students, and teachers. In this way, NSVF philanthropy helps to expand a kind of union-free efficiency for America’s new education entrepreneurs and for U.S. society generally.  It’s all about using “powerful levers” for “social impact.”

Seth Sandronsky lives and writes in Sacramento.  Contact: <>.

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