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Giving to government: the policy goals and giving strategies of new and old foundations

Abstract

Scholars have found differences between older and newer foundations and their giving priorities and strategies, especially in education. Foundations founded in recent decades with still-living benefactors have been more vocal, result-oriented, and focused on education initiatives like charter schools and alternative certification than their older counterparts. In this paper, I examine whether these differing patterns hold for new and old foundation grants to state departments of education, leading new foundations to target contexts politically amenable to education reform while old foundations focus less on politics and more on state need. Using data on the largest 1000 foundations, in addition to grants from the Gates and Wallace Foundations, I find that new, but not old, foundations, are more likely to support education reform policies when giving to state education agencies. I also find that new, but not old, foundations support state education agencies possessing political contexts conducive to education reform as well as higher levels of child poverty. I illustrate these findings with the case of Kentucky. These findings suggest that, by taking advantage of state need while seeking out political allies, new foundations behave like interest groups in their grants to government.

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Fig. 1
Fig. 2
Fig. 3
Fig. 4

Diamonds and triangles are coefficients. Bars are 90% and 95% confidence intervals. Standard errors clustered by state in the state data specifications and by foundation in the grant data

Fig. 5

Bars are 90% and 95% confidence intervals. All models use standard errors clustered by state

Fig. 6

With 95% confidence intervals. Specifications correspond to the model in columns 1 and 2 in Table 6. Marginal effects taken with all variables held at their means, with the exception of reform groups, the lagged dependent variable and Democratic governor, which are all held at zero

Fig. 7

Notes

  1. One exception is the study by Ferrare and Reynolds (2016), which applies the findings in Reckhow and Snyder (2014) to smaller foundations.

  2. This is according to the Foundation Center. This statistic only includes recipients within the U.S. When international recipients are included, health and education have alternated as the top issues.

  3. Foundations cannot lobby on specific pieces of legislation. Exceptions include providing research or discussing general social problems. They can also testify at hearings when invited and lobby for their own self-defense.

  4. The tax rules are slightly different for private and community foundations. Community foundations are considered public charities and can lobby. However, their lobbying must be a small part of the foundation’s activities and they cannot contribute to candidates.

  5. Specifically, data come from the Foundation Center’s database Foundation Directory Online, which allows the user to search by grant recipients (among many other options) and provides all grants given to the particular recipient. I searched for all grants given to each state education agency.

  6. Operating foundations, however, do not appear in the dataset because they do not give to state departments of education. Corporate foundations might give for different reasons than community or independent foundations since they respond to the strategic concerns and controversies of corporations (Walker 2013). Nevertheless, results are the same if I remove corporate foundations from the analysis. They are included in the results reported below.

  7. See http://data.foundationcenter.org/about.html.

  8. See http://foundationcenter.org/gain-knowledge/foundation-data.

  9. Grants from the Gates Foundation are similar to the amounts listed in the Foundation Center data, but not the same. For the Wallace Foundation, they are the same with the exception that I coded two year grants where the money was disbursed each year as separate grants for each year, whereas the Foundation Center data indicates that the whole amount was granted the first year.

  10. Note that some foundations appear in the data only once—if only a single state was funded in a single year—whereas those providing grants across states and years appear multiple times.

  11. The founding year is the year of incorporation as described in Foundation Center foundation profiles. Where it could not be identified, I use the year of formation listed on 990 tax forms. Where the latter was not available, I use the IRS tax-exempt ruling year.

  12. The literature is vague about what the best cutoff is. Colvin (2005) explains that the in the 80s and 90s, there was a great increase in wealth among a small group that “disrupted old-money ways of doing things, bringing to bear a flashier, more entrepreneurial, more aggressive approach to both giving money and insisting on results” (29). Hess (2005) highlights that these new benefactors were “entrepreneurs and hands-on corporate leaders in the new economy” (6). Snyder (2015) explains that most new foundations were founded in the 90s by still-living founders that made their wealth in tech and retail, while old foundations were founded between 1900 and 1950 by benefactors whose wealth came from manufacturing and print. The foundations he categorizes as new, the Robertson Foundation, Michael & Susan Dell Foundation, Eli and Edythe Broad Foundation, Walton Family Foundation, and Bill & Melinda Gates Foundation, were founded in the 80s and 90s (1996, 1999, 1999, 1987 and 1994), while those categorized as old, the Ford Foundation, Carnegie Corporation of New York, Wallace Foundation, W.K. Kellogg Foundation and Annenberg Foundation, were founded a wide range of years (1936, 1911, 1965, 1930, and 1989).

    I argue that 1980 is a logical cutoff because, while most new foundations were founded in the 90s, Walton, one of the most important education funders and a paradigmatic new foundation, was founded in the 80s, as were several other foundations in the dataset that better fit the mold of entrepreneurs in the new economy rather than wealthy industrialists (e.g., The Grove Foundation, founded by the President and C.E.O. of Intel Andrew Grove in 1986; The Milken Family Foundation, founded by path-breaking Wall Street trader Michael Milken in 1982; The Barr Foundation, formerly The Hostetter Foundation, founded by cable television entrepreneur Amos B. Hostetter, Jr. in 1987). The results are almost identical if I instead categorize new foundations as those founded after 1985.

  13. However, with the 1980 cutoff, the Annenberg Foundation, which was founded in 1989, is classified as a new foundation. The 1993 Annenberg Challenge is frequently cited as emblematic of the old style of foundation giving. The inclusion of Annenberg as a “new” foundation shows that within the new and old categorizations, foundation behavior varies to a certain extent.

  14. A Foundation Center survey of 11,000 foundations reported that 76% had less than four staff members, and the president of the Foundation Center noted that in his experience only about 8% of grant applications are funded (Smith 2009).

  15. Alternatively, they might give where achievement is lowest. However, there is no good way to operationalize this. NAEP results come out only every few years. Graduation rates are another option, but they are notoriously unreliable since there have been different reporting practices across states and time. Nevertheless, the inclusion of NAEP scores or yearly graduation rates does not change the results. I prefer poverty over graduation rates because it is closely correlated with achievement and is more reliable.

  16. The variable is proportion of children under 18 living in families making under the federal poverty line. The data were downloaded from https://datacenter.kidscount.org and comes originally from the Census Supplementary Survey for 2001 and for 2002 through 2014, from the American Community Survey. Results are the same if I instead use school-age children from the Current Population Survey. I do not use the latter in the analysis because some years are missing.

  17. PIE is the only organization of its kind, and it currently affiliates 77 advocacy groups in 34 state. See pie-network.org.

  18. In about half the states, the state superintendent of education is appointed by the governor or by a state board of education that is appointed by the governor. The number of state superintendents appointed by the governor or by a governor-appointed board has increased over time.

  19. See http://www.wallacefoundation.org/how-we-work/our-work/Pages/Past-Initiatives.aspx for more information.

  20. In Fig. 2, I leave out grants for library computer access (which was funded exclusively by the Gates Foundation). I also leave out other technology initiatives unrelated to student data systems or libraries, postsecondary grants, grants for stakeholder engagement, and grants explicitly for refugees and immigrants, all of which had among the lowest number of grants (4 or 5 each). I also leave out other miscellaneous grants that didn’t fit into the other categories. However all these grants are included in the analysis below, since they qualify as grants to state departments of education.

  21. I also carried out specifications including a variable for how the head of the education department, usually called the Chief State School Officers (CSSO), is selected. Where CSSOs are elected, especially in off-cycle elections (Anzia 2011, 2012), they would be expected to be susceptible to electoral pressure from teachers’ unions and other education groups, and this might shape foundations’ willingness to support the state. On the other hand, where CSSOs are appointed and not elected, they may be less susceptible to electoral incentives. Indeed, when it comes to foundation donations to urban school districts, foundations prefer to give to districts with mayoral or state control, rather than to those with elected school boards (Reckhow 2013: 47). In order to account for the possibility that CSSO selection impacts foundation giving, I carried out specifications including either a binary variable for whether the CSSO is elected or a variable for whether the CSSO is elected in non-partisan elections (this is the case only in Wisconsin, California, North Dakota, and Washington). However, regressions using either variable are never statistically significant, so I leave out the variable in the results presented here. Results are available upon request.

  22. I include public sector union membership rates rather than teachers’ union membership rates because the latter are not available every year for all teachers. The public sector union membership rates are from the Current Population Survey (CPS), and they are highly correlated with teachers’ union membership rates. Pairwise correlations of teachers’ union membership rates from the Schools and Staffing Survey (SASS) and public sector membership are .89 in 2000, 2004, and 2008, and .86 in 2012.

  23. These are four-year moving averages of contributions from teachers’ unions as a percentage of all contributions to state races. The data come from FollowtheMoney.org.

  24. For the Gates data, the interaction is significant for campaign contributions, but not the other variables (Results available upon request).

  25. This is according to the 2007–2008 round of the Schools and Staffing Survey (SASS).

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Correspondence to Leslie K. Finger.

Appendix

Appendix

See Figs. 8 and 9.

Fig. 8
figure 8

Foundation funding of state departments of education from 2003 to 2014

Fig. 9
figure 9

Gates and Wallace Foundation funding of state departments of education from 2000 to 2014

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Finger, L.K. Giving to government: the policy goals and giving strategies of new and old foundations. Int Groups Adv 7, 312–345 (2018). https://doi.org/10.1057/s41309-018-0042-4

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Keywords

  • Foundations
  • Bureaucracy
  • Interest groups
  • The politics of education