Philanthropy Fall 2013 by Philanthropy Magazine

CAN “FILMANTHROPY” CHANGE AMERICA, ONE MOVIE AT A TIME? • TEACHER COLLEGE REINVENTED A PUBLICATION OF THE

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ELI AND EDYTHE

BROAD 2013 WILLIAM E. SIMON PRIZE FOR PHILANTHROPIC LEADERSHIP AWARDEES have played the Long Game on their way to enduring achievements in

SCHOOL REFORM GENOMIC RESEARCH MODERN ART

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table of contents

PHILANTHROPY

features

departments

10 Playing the Long Game

Meet Eli and Edythe Broad, winners of the 2013 William E. Simon Prize for Philanthropic Leadership. By Aaron Gell

20 Changing the World Through Storytelling

Philanthropist Jeff Skoll is putting money and talent behind silver-screen social reform. By Matthew Bishop and Michael Green 28 Co-starring in Filmanthropy: Phil Anschutz 35 The Web-streaming Model of Filmanthropy

36 Mediocrity Be Gone

The Relay Graduate School of Education is revolutionizing teacher training. By Kari Barbic

42 Home, Land, Security

Pierre Omidyar discovers that property rights are the key to helping the poor. By Adam Sawyer

46 Cash for the Poor?

A tale of unconventional givers. By Liz Essley Whyte

Briefly Noted Ethics from Singer. Giving tips from Buffett. Billions from Christians. Careers for the homeless.

Non-profit Spotlight

A P U B L I CATI O N O F THE

Adam Meyerson PRE SI D E N T

Karl Zinsmeister

VI C E PRE S ID E N T , P U BL ICA T IO N S

Caitrin Nicol

E X E C U TIV E E D IT O R

Now in its thirteenth year, Birthright is coming of age.

Liz Essley Whyte

Interview

A SSI STA N T E D IT O R

Charles Bronfman Handing down heritage in Canada and Israel, spending down by 2016.

50 Reviews & Commentary Closing America’s Other Achievement Gap Why donors should help our most talented students reach their full potential. By Andy Smarick Learning from the Sunset Five lessons for lasting impact from foundations that spent down. By Amy Markham and Susan Wolf Ditkoff

56 Books Where Boys Flounder Two books on the troubles boys face in today’s schools. By Dan Fishman and Matt Bazik Reinvented in California The Golden State gets Howard Ahmanson’s golden touch. By Chris Weinkopf Books in Brief New books on school reform and data-driven philanthropy.

60 President’s Note The light shed by “dark money.” By Adam Meyerson

FALL 2013

MA NAG I N G E D IT O R

Andrea Scott Taryn Wolf

A RT D I RE CT O R

Emily Holmstead I NTE RN

Arthur Brooks John Steele Gordon Christopher Levenick Bruno Manno John Miller Tom Riley Naomi Schaefer Riley William Schambra Evan Sparks Justin Torres Scott Walter

C O NTRI B U T IN G E D IT O R S Philanthropy is published quarterly by The Philanthropy Roundtable. The mission of the Roundtable, a 501(c)(3) tax-exempt educational organization, is to foster excellence in philanthropy, to protect philanthropic freedom, to assist donors in achieving their philanthropic intent, and to help donors advance liberty, opportunity, and personal responsibility in America and abroad. For editorial or subscription inquiries, please contact: The Philanthropy Roundtable 1730 M Street NW, Suite 601 Washington, DC 20036 Phone: (202) 822-8333 Letters to the editor: letters@PhilanthropyRoundtable.org Advertising inquiries: advertise@PhilanthropyRoundtable.org Reprints: reprints@PhilanthropyRoundtable.org Subscription inquiries: subscribe@PhilanthropyRoundtable.org Copyright © 2013 The Philanthropy Roundtable. All rights reserved. Cover: The Broad Foundations

briefly noted

asked for a refund. When they didn’t get it, they sued. After a lengthy legal battle, in August the New Jersey Superior Court ordered the non-profit to return the Adlers’ money, the Star-Ledger reports. “We hold that a charity that accepts a gift from a donor…is bound to return the gift when the charity unilaterally decides not to honor the donor’s originally expressed purpose,” Judge Jose Fuentes wrote in his opinion. The decision is a clear win for donors who want their gifts to be used as they intend. It’s also significant, legal experts say, because most previous court decisions regarding philanthropic wishes involved deceased donors, not living ones. Now, in addition to being generous animal-lovers, the Adlers will be known as trailblazers in protecting donor intent.

Anti-aesthetic Absolutism Princeton ethicist Peter Singer argued in the New York Times in August that some philanthropic causes are objectively more worthy of funding than others. He imagines a philanthropist weighing whether to donate to an art museum or to the prevention of blindness in a poor country. With $100,000, Singer conjectures, the philanthropist could enhance 100,000 museum visits, or he could save the sight of 1,000 poor people. He suggests the only right choice is to prevent blindness. Everyday Times readers disagreed, and crafted strong rebuttals to the professor. Jake Hildner from Chicago asked: “Are we ethically prohibited from enhancing our communities by giving to the cultural, educational, spiritual, or recreational institutions that mean the most to us so long as more urgent problems exist anywhere in the world? To state the proposition is to refute it. For that matter, are we ethically prohibited from spending money for the benefit of ourselves and our families beyond bare necessities so long as those same problems persist?… Unless Mr. Singer lives in a shack, subsisting on gruel, water, a typewriter, and one kidney, I’m sure he agrees.” Other readers pointed out that things like art inspire people to go out and cure diseases: “An effective attack on the scourges that Peter Singer cites, and so many other endemic diseases, will be mounted only by an ethical society with an educated, broadly aware populace. It is a society’s cultural institutions— its libraries, museums, universities—that provide the foundations for such a society,” wrote Robert Green from New York. And Barbara Barran from Brooklyn got right to the point: “The amount of suffering in the world is limitless; diminishing my ability to enjoy the arts is not the answer to curing poverty and disease. Without the arts, life is not worth living.”

intended to save homeless cats. PHILANTHROPY

Erwin Delfin Photography

New Jersey donors

Philanthropy for the Masses “The trick is not to have her give it away faster than I make it.” So joked Warren Buffett to the Associated Press about his sister Doris and the online course on responsible philanthropy she helped launch this summer with 10,000 students from 70 countries. “Giving With Purpose” features tips from business and philanthropic leaders, including Warren Buffett himself. Doris Buffett provided dollars for the student-philanthropists to donate in real life: Drawing upon their lessons learned, each class will allocate $10,000 to a deserving charity. —Emily Holmstead

Every Cause Is Not Alike When their local animal shelter SAVE asked for donations to build new housing for unpopular large dogs and aging cats, Bernard and Jeanne Adler of Princeton, New Jersey, gave $50,000. But then SAVE merged with another non-profit, and told the Adlers their gift would instead go to build a different facility in a nearby township. The Adlers

A Meteoric Rise For many, the National Christian Foundation is not a household name. It doesn’t even have a Wikipedia page. But the meteoric rise of the 31-year-old organization is remarkable. For its first dozen years of existence, founder Terry Parker ran it with the help of just one assistant. By 2005, it broke into the Chronicle of Philanthropy’s list of the 400 highest-grossing charities. Foundation leaders attributed its rise to increasing expertise in handling non-traditional gifts—donations besides the usual cash or stocks. By 2012, the foundation was the 19th biggest American recipient of private gifts, topping Harvard, Yale, and the American Heart Association (among others) in donations collected—$665 million that year. In September, the Georgia-based foundation announced it had given away its four billionth dollar since its founding in 1982. That dollar, and a lot more, went to an orphanage in Thailand that houses and educates children rescued from the sex trade. Though denied headlines, the impressive achievements of this foundation are classic examples of the generosity of faithful givers.

Erwin Delfin Photography

Peter Flanigan, 1923-2013 He was called the patron saint of New York City’s Catholic schools, but Peter Flanigan’s contributions to education extend well beyond that. Born in 1923, he spent most of his 90 years in his beloved New York. An investment banker by trade, he served as a Navy carrier pilot during World War II and later as an economic adviser in the Nixon administration. Then, for more than three decades, he helped lead the charge in America for school choice. In 1986 Flanigan came up with a way for community members to buy in, founding Student Sponsor Partners, an organization that pairs disadvantaged students with mentors who support their tuition at participating New York City Catholic schools and spend time with them individually. From the 45 students sponsored the first year, the program has grown to support 1,400 today. Compared to their peers, SSP students are almost three times as likely to attend college, and many have returned to become sponsors themselves. He served on the boards of the John M. Olin Foundation and several schools and educational philanthropies. For SSP and other philanthropic initiatives in support of countless charter, Catholic, and alternative schools, Peter Flanigan was awarded the first annual William E. Simon Prize for Social Entrepreneurship in 2001. Educational opportunity had no greater champion. Richard Larry, 1935-2013 For three decades, Richard Larry moved behind the scenes meeting people, making connections, and giving grants—playing a key role in the philanthropy that funded the conservative movement. As president of the Sarah Scaife Foundation and treasurer of its companion, the Carthage Foundation, Larry helped Richard Mellon Scaife spend his fortune on principles that both men cared about: “Judeo-Christian values, morals and traditions…limited government, property rights, the rule of law…and a strong national defense,” as Larry told the New York Times in 1998. “They just created so much of the conservative intellectual movement by funding it and allowing people to do their work,” says John Von Kannon, a Heritage Foundation vice president who often worked with Larry and whose institution received tens of millions from the Scaife foundations over the years. An avid fly fisher and target shooter, Larry was a fixture at the Scaife Foundations from 1969 until his retirement in 2001. But he never flaunted his position or his accomplishments. When Von Kannon asked him what he told his shooting buddies about where he worked, Larry said: “I just tell them I work for Mellon bank.”

Q&A WITH TOM OWENS When Chicago businessman Tom Owens retired in 1991, he felt inspired by Mother Teresa to do something to help his community. The Cara Program was the result. One of the premier self-sufficiency training programs in the U.S., Cara prepares homeless and impoverished people for long-term careers. A longer version of this interview is available at PhilanthropyRoundtable.org.

Q: How did you get involved in philanthropy? A: After I retired from my work as an information technology entrepreneur, I

was too young to stand on the sidelines, and I saw this opportunity among the homeless shelters in Chicago. There were about 80 long-term shelters, halfway houses, addiction treatment centers, and so forth, and they all had their own jobs programs. But from what I saw, the jobs available were not career jobs. Too many weren’t substantial enough for someone long-term. My vision was to tap my friends from business and create a professional job platform that would serve all of these individual shelters and place residents in careers.

Q: Is it difficult to find job placements? A: When I described what I wanted to do to my business friends, there was a

heavy degree of skepticism, which honestly I shared too. Our early placements didn’t stick, largely because our people didn’t change their habits or their peer groups. Now we heavily screen our applicants for motivation, and their rate of job retention after one year is 20 points above the national average, in spite of all the baggage they carry. Meanwhile the reputation of our staff has developed among Chicago’s employers. Many big-name companies like Northwestern Memorial Hospital, JP Morgan Chase, and University of Chicago Medicine have been with us for 15 years and keep coming back because the results are good.

Q: What do the homeless look like today? A: There seem to be a growing number of what I call the “couch homeless”—

typically a single mom living on a relative’s or friend’s sofa with her kids. There is a high degree of depression. The economy has crushed the middle class and converted some to the lower class.

Q: What are some of the secrets of your program? A: A lot of it has to do with changing their attitude about who they are and

what kind of opportunities they have. That’s the key to Cara’s success. The average age of someone entering our program is 41. They have been through the mill when it comes to programs, and nothing has worked. Our program is entirely voluntary, and people come because they want to change. If a person comes into the program and isn’t that interested in changing his or her life, not much can be done. The person needs to be sick of his current circumstances; he has to be in a place where he thinks, “I have to change.” A lot of people do it for their kids and other persuasive reasons. They also need to see enough success from their peers in the program to reinforce the fact that they can be successful too. FALL 2013

non-profit spotlight Now in its thirteenth year, Taglit-Birthright Israel is coming of age. A non-profit organization that provides free trips to Israel for Jewish college students and young adults, Birthright is the brainchild of philanthropists Charles Bronfman and Michael Steinhardt, who saw a need in their community and rose to meet it in a unique way. Putting up $8 million apiece to start, they then recruited 15 other partners to contribute $5 million each and solicited $70 million in matching funds from the state of Israel. Today, the program has a broad base of support, with more than 30,000 sponsors who make it possible for about 50,000 souls to travel to the Jewish homeland each year. To date, Birthright has brought 350,000 young Jews to Israel, most of them for the first time. This summer, I was one of them. As the daughter of a Jewish mother and a non-Jewish father, I was raised in a wonderful secular home. But as I grew up, I wanted to embrace Judaism, and I didn’t know how. I kept trying different synagogues, but without Hebrew I often left services feeling out of place. I believed in G-d, but if I hadn’t gone to Israel I might never have felt, as I do now, that I could be a “real Jew.” Birthright’s mission is to strengthen Jewish identity and nurture a connection to Israel, a necessary task given low Jewish birth rates and high assimilation. As Steinhardt points out, “Birthright stands in dramatic contrast to the broader Jewish institutional environment, which is weak and in decline by most important measures. It is a genuine breath of fresh air to the entire Jewish world.” For his part, Bronfman recognizes that while older Jews who lived through Israel’s mid-century existential struggles feel viscerally invested in its fate, younger generations may have a more complicated outlook. But when they visit with Birthright Israel, he says, they meet Jewish peers in the army, in religious life, in universities, and elsewhere, and through these relationships form meaningful and informed connections to Israel. In a 2012 study on the long-term effects of Birthright, Brandeis University researchers found that 90 percent of participants reported feeling “closer to Israel” because of their trip and 30 percent made return visits to the country. Trip-goers were more confident explaining Israel’s political situation, and somewhat more likely to marry someone 6

A Birthright participant explores the Old City in Jerusalem.

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Jewish and to place importance on raising a family in Judaism. For me, there was something wonderful about being in a place where everyone assumed I was Jewish. I have red hair and freckles. In the U.S., people say, “Oh! I thought you were Irish.” In Israel, they say, “Ah, King David was also a ginger.” It is impossible to know until you feel it what a difference it makes to see the world slow down on Saturdays instead of Sundays. I fell asleep to what sounded like thunder but what I learned was the sound of bombs dropping in Syria, and understood, in a small way, just how very close Israel is to its hostile neighbors. The people who live there seem to run on pure chutzpah, tempered by a gravitas that I found surprising. When our guide told us about Mount Masada, where nearly one thousand Jews committed suicide rather than be taken by the Romans, one of the soldiers on our trip frowned, saying, “I don’t think this is a good story to tell to kids.” I asked, “You don’t think it’s noble to live free or die?” The soldier replied, “Sometimes, survival is the most noble thing.” Something in me shifted. For the first time, I felt the weight of this ancient tradition that had endured, miraculously, for thousands of years. Of course, I went to Israel searching for that. Not all participants have the same experience. Steinhardt warns that Birthright is just a starting point, not a panacea for lost religious identity. “The ten days of Birthright Israel cannot fully offset the appallingly poor Jewish education most of its participants were subjected to,” he cautions. “In that light, the long-term benefits of Birthright remain uncertain. The future is thus up for grabs.” —Kate Havard

Marnie Sehayek

Birthright Israel

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interview Charles Bronfman, heir to the Seagram Company fortune and a signatory of the Giving Pledge, established a family foundation in 1986 that will sunset out of existence in 2016. Most of his philanthropy has been dedicated to preserving Jewish identity; he is a founder of Taglit-Birthright Israel (profiled on page 6). A Canadian, Bronfman once owned the Montreal Expos baseball club, and threw the opening pitch at the first World Series game played outside the U.S.—at the Toronto Skydome in 1992. Bronfman and Jeffrey Solomon, president of the Bronfman Philanthropies, collaborated on two books that distill lessons from their three decades of giving. Philanthropy recently sat down with Bronfman and Solomon to discuss the foundation’s legacy and how the spend-down process is unfolding. Philanthropy: Birthright Israel, your signature initiative, recently marked its 13th year. How would you rate its success? Bronfman: The target market for us at Birthright is young people who’ve either been turned off being Jewish or never been turned on being Jewish. Judaism is a people, it’s a culture, it’s a way of life. The Jews are taught to ask questions and inquire and not take things for granted. You don’t have to follow it. Many young adults today dislike institutions, and we go after that group. The mark of success isn’t whether people have a good time on the trip, although they have to have a good time to learn anything. That is one of our mantras. But does it change them at all? Do they decide to be Jewish on terms that are meaningful to them? We seek three things: that the participants decide that they like being Jewish, that they identify with the Jewish people, and that they have an emotional attachment to Israel. And the answer for typical participants is, happily, yes on all counts. Solomon: Birthright’s success is really built upon the failure of another program that 8

the game of philanthropy. In America, you can give capital gains to your foundation and not pay tax on them; Canada did not have that until lately, so there was less incentive to form foundations. Also, while the umbrella infrastructure for some of the major charities is similar in both countries—the cancer organizations, the heart organizations, the United Ways, etc.—Canadians, per capita, just don’t give as much as do Americans. And in the foundation world, Canadians could learn from Philanthropy: Your foundation is very Americans about how to partner, how to active in Israel. What characterizes the look for a common goal; they are not as creative and inventive about philanthropy philanthropic culture there? Bronfman: Go back in history and think as perhaps they should be. about who the original Israelis were. The Jews were always a minority. They struggled; Philanthropy: You recently signed the they had very little money. They just didn’t Giving Pledge and went public with plans have resources to do much. With the estab- to expire your foundation, but you were lishment of the state in 1948, overseas Jews intending to spend down long before. started to send support. The problem then What inspired your decision? was that Israelis got used to handouts, and Bronfman: Some people want infinthe handouts kept coming. Even when they ity. They bring their children into their started building wonderful institutions like foundations, and the children will change the Weizmann Institute and the Technion, the agendas over time. When I asked my overseas residents were giving to those, and children if they wanted to join my late Israelis were used to being on the receiving wife and me they said, “No, thank you. end. They also didn’t have tax benefits for Our generation is going to be very differcharitable giving; they still do not have the ent from yours. We’ll do our own foundasame tax incentives that we do. Today, there tions.” And they’ve both done that. Then is a lot of new wealth in Israel, and peo- we said, “Well, we don’t want to rule from ple are giving. They always gave locally and the grave.” So we asked ourselves, how quietly, but now they’re building a richer much money do we have, what can we do with it, and do we make it forever or tradition of philanthropy. do we spend it down? And we decided in Philanthropy: Your foundation has also 2001 to spend it down by 2016. made major investments in Canada. What Solomon: At the time, 15 years seemed can you tell us about philanthropy in our like a long way off. It was necessary for us to have a carefully developed plan, and neighbor to the north? Bronfman: Most Americans think that we decided to be very transparent in our Canada is like the United States, only spend-down, because there is so little writthey freeze. That does not happen to be ten about it and we thought we could be true. There, more so than in the U.S., soci- helpful to others. ety depends a lot on the government. For instance, there are few private universities Philanthropy: One hurdle donors who conin Canada, and people don’t have the same sider sunsetting struggle with is abandoning loyalty to their schools as in the U.S. Even the beneficiaries they support most strongly, Americans who give to nothing else tend to and perhaps even founded. How have you give to their alma mater. Canadians just don’t helped your programs achieve independence give as much; they’ve come more recently to so they can thrive without you? the foundation supported in the 1990s called the Israel Experience and aimed at high-school students. Lessons we learned in that failure led to Birthright’s extraordinary success. Something that we don’t do enough of in philanthropy is recognize instructive failures and learn from them. Charles often says that philanthropy is like being a miner. You keep plunging away in hard rock. Then you hit a huge gold deposit and suddenly everything was worth it.

PHILANTHROPY

David Rubinger

CHARLES BRONFMAN

David Rubinger

Bronfman: Our goal in any project was to incubate it and make sure it was worthy of partnership. With partners, we could reduce our support gradually until it could stand on its own feet. We gave our grantees fair warning. People accepted this, and many of them thanked us, because they had time to find other funders. Sometimes donors will just pull the plug, which is wrong. Solomon: Historica, a leading provider of Canadian history, is a good example. In 2000, when we were deciding to spend down, it was a department of our foundation. A year later, it was an independent organization with a great board of business leaders and academics and professionals from all over Canada. We worked hard with all of our beneficiaries to be sure that they had the human resources and skills necessary to make the transition. In many ways we followed the lead of the Irene Diamond Foundation, which did a good job documenting its spend-down experience. The early notification of stakeholders was something that Irene Diamond modeled beautifully. They started as a time-limited foundation, so from day one everybody knew the plan. Philanthropy: What would you say about the value of spending down to someone who is considering it? Solomon: The problem with many family foundations is that the default position is to run the foundation in perpetuity, and that shouldn’t be the default; it should be a conscious decision on the part of the donor or the founder. Philanthropy can be the weak spot in the lives of busy people, Charles Bronfman, chairman of the Andrea and Charles Bronfman Philanthropies where they don’t think through all of the aspects. So we all know many foundations Those are the pioneers. And the so-called more confident country. People now take that are engaged in activities that would robber barons, Carnegie and Rockefeller. pride in being Canadian. And Birthright They may have been robber barons, but by has had a strong effect on participants’ be abhorrent to their original donors. Jewish identities. The real measure of God, they paid back. Birthright’s success is the words you hear Philanthropy: Who are your philanPhilanthropy: How do you hope your giv- from young adults. People’s eyes light up. thropic heroes? Bronfman: First of all, my father. And ing will be remembered 50 years from now? To me, it’s an astonishing success. Bill Gates. And the people who founded Bronfman: The Canada of today is a Solomon: We’ll help people see that you the Jewish Federations, the United Ways, very different place than it was when we don’t have to be a Gates or Buffett to the Catholic Charities, the Red Cross. started our heritage programs; it’s a much change the world. P FALL 2013

li Broad has long made it a habit to read four newspapers every morning. Which is how one day in March 2006 he came across an article in the New York Times entitled “Where Have You Gone, Molly Picon?” The story described the demise of the Hebrew Actors’ Union, a century-old outgrowth of the once-thriving Yiddish theater in New York, noting that the group’s archive of posters, props, manuscripts, musical scores, and other pieces of Jewish culture was in danger of being lost forever. Then the businessman and philanthropist did something he almost never does: He acted on pure impulse. “Out of the blue, I called and said, ‘What’s it going to take to preserve all this?’” he recalls, sitting in the living room of his breathtaking Frank Gehry-designed home in the Brentwood section of Los Angeles, amid a few of the many treasures in his collection of contemporary art. Meet Eli and Edythe Broad, winners Broad made a call, solicited a proposal, and wrote a check for $186,000. of the 2013 William E. Simon Prize Some three years later, he and his wife, Edythe, attended the opening of “Stars, Strikes and the Yiddish for Philanthropic Leadership Stage,” a Manhattan exhibition of some of the materials By Aaron Gell their gift had saved. In brief remarks to the invited guests, Eli explained the impetus for his gesture. His parents, Lithuanian immigrants to the Bronx and then Detroit, were great fans of the Yiddish theater and even spoke the language at home. “I’ve always had a wish to do something for my parents that they would have loved,” he told the crowd of scholars, performers, and history buffs assembled for the occasion. Then, as the couple looked on approvingly, the artistic director of the National Yiddish Theater led a performance of “America,” a long-forgotten show tune discovered in the moldering archive. “America!” the song Aaron Gell is a writer in New York. Formerly editor-in-chief of the New York Observer, he is a contributing editor to T magazine and author of Speak of the Devil, a Kindle single. 10

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The Broad Foundations

goes in English translation. “When I came you extended your hand to me. You let me in your beautiful country. I will be useful to you, and I’ll shine Uncle Sam’s boots in America! Everyone has freedoms here without end!” Except perhaps for the part about shining boots, it was a sentiment Broad knows well.

Five-and-dime to Fortune 500 The only child of the owners of a five-and-dime store, Eli Broad went on to become a living embodiment of the American dream. In 1956, at age 23, he gave up a nascent career in accounting to co-found the homebuilding firm Kaufman and Broad, later KB Home. It became the first such company to be listed on the New York Stock Exchange. Later, Broad transformed a small insurance company into SunAmerica, a giant in retirement savings. Now 80, he is well into what he likes to call his “fourth career,” overseeing the distribution of the couple’s $6 billion fortune in an impressive array of philanthropic ventures. The Broads are signatories of the Giving Pledge, having Building houses, building a home promised to give 75 percent of their fortune to charitable Given his achievements in the corporate sphere and his 12

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The Broad Foundations, Andy Warhol Self-Portrait, 1966 © The Andy Warhol Foundation for the Visual Arts, Inc.

Eli and Edythe Broad in front of one of their Andy Warhol pieces.

causes. But apart from the Hebrew Actors’ Union gift, they rarely base their donations on a passing fancy. They are pioneers of what is often called “venture philanthropy”—giving designed in a business-like way to create maximum impact. They have focused their donations in three areas: education reform, modern art, and genetic research. Though he hasn’t practiced accounting for more than half a century, Eli’s head for number-crunching and penchant for meticulous research has made the Broad Foundation an exemplar of the ways that philanthropic gifts, when strategically deployed, can change a culture. “I’m working harder now than when I ran a Fortune 500 company,” Broad tells me. “Others just write checks. We don’t do that. We want to make a difference. We see everything we do as an investment and we want a return, whether that’s in terms of scientific and medical findings, or bigger and broader audiences for art, or student achievement.” We’re sitting at a small conference table in Broad’s twelfth-floor office at his foundation’s Los Angeles headquarters in Westwood. It’s a tidy, sunlit room decorated with a number of museum-quality canvases, including a Jasper Johns “Flag” painting and several Cy Twomblys. Eli strides over to his desk and retrieves an inch-thick binder. “We have a separate unit that evaluates every grant we make,” he explains, flipping through the painstakingly compiled end-of-year grant report, which runs nearly 300 pages. He notes that the foundation’s three-member evaluation unit is kept separate from other areas of the organization, to maintain the independence and accuracy of its findings. “We’re very proud of that,” he says. “I can’t think of any other foundation that has this sort of discipline.” Another point of distinction: Unlike many foundations that have teams of grant officers who sift through applications as they arrive, Broad says, “We don’t wait for people to come to us. We go and seek out ideas. I’m an entrepreneur…. I look for opportunities.” It’s an approach that other philanthropically minded executives are eager to learn from. Not long ago, the couple received a visit from an ambitious tech entrepreneur—“a very bright and very sweet young man in tennis shoes,” as Edythe recalls—who was thinking about making a big education gift and wanted some advice. The introduction had come from Arne Duncan, the U.S. Secretary of Education and a longtime colleague in the school reform movement, and the Broads were happy to offer their expertise. Not long afterwards, the sneaker-clad entrepreneur, Facebook founder Mark Zuckerberg, pledged $100 million to improve Newark, New Jersey’s struggling school system. The Broad Foundation later donated an additional $500,000 to the effort.

The Broad Foundations, Andy Warhol Self-Portrait, 1966 © The Andy Warhol Foundation for the Visual Arts, Inc.

membership in what his education opponent Diane Ravitch calls the “billionaire boys club,” it’s curious to note that Eli Broad grew up in a socialist household. His father was a devoted member of the Workmen’s Circle, a Jewish labor organization, and as a boy Eli was sent to the group’s “red diaper” summer camps. “My parents went through the Great Depression,” he points out, noting that their view of the world was shaped by that experience. “It was ‘poor working people versus the big bad bosses.’” Despite this class consciousness, Eli plunged into the corporate world right out of college. As the first person to create two Fortune 500 companies, he became a business titan. His paths to success, however, might have found favor with even his father’s progressive lodge brothers. KB Home made home ownership a reality for middle-income families. SunAmerica offered people a safe place to build their retirement savings. Growing up, the man who would seek a wholesale transformation of the education system could be an argumentative student. “The teachers would make a statement and I would challenge it or ask a lot of questions, and they didn’t like that,” he recalls. “They just wanted you to accept whatever they said.” Broad matriculated at Michigan State University, where he majored in accounting. On graduating, he persuaded the powers-that-be to make an exception to the state accounting exam’s age requirement. He passed on the first try, becoming the youngest CPA in Michigan history at age 20. It was around this time that he met Edythe Lawson and proposed marriage after only a few dates. They wed in 1954 and soon had two sons. Sitting at home one afternoon—he in his usual tailored suit, she in a black pantsuit, a scarf draped over her shoulders—Eli and Edythe seem wonderfully complementary. He’s analytical; she’s intuitive. He can be brusque, beginning one interview session with the edgy admonition, “Okay. Let’s go,” while she is warm and empathetic, with an impish sense of humor. Asked whether Eli’s penchant for being “unreasonable” (the leitmotif of his 2012 memoir) ever made married life difficult, Edythe laughs. “He’ll just keep pushing and pushing and pushing, but if I say something, he listens. He’s a little more mellow now,” she adds. “Not a lot. A little.” Despite Edythe’s calming influence, Eli’s implacable nature cost him his first accounting job, when he pressed his boss so relentlessly for a raise that he wound up getting sacked. Rather than seek out a similar position, he teamed up with homebuilder Donald Kaufman, the husband of one of Edythe’s cousins, and with $12,500 in seed capital from her father started KB Home. As Broad relates in his memoir, The Art of Being Unreasonable, he scrutinized every step of the building process, hunting for economic efficiencies. Significantly undercutting the competition in price, the firm sold 120 starter houses in its first year.

After taking the fast-growing corporation public in 1971, Broad and Kaufman diversified by purchasing the Baltimore-based Sun Life Insurance Company, a sleepy regional business. Shifting the firm’s emphasis from selling life insurance to marketing retirement savings just as baby boomers were beginning to plan for their golden years, Broad landed on a winning formula—and a massive return when AIG purchased the company in 1998 for $18 billion. Art in the City of Angels While the sale of SunAmerica prompted the Broads’ full-time commitment to philanthropy, their charitable engagement had actually begun years before. Back in 1984, as their collection of fine art outgrew available wall space, the couple established the Broad Art Foundation to share their formidable trove with museums and institutions around the world. The collection has steadily expanded to include more than 2,000 works, with an emphasis on postwar and contemporary artists, and over the years the art foundation has loaned works more than 8,000 times to nearly 500 institutions. “The model that Eli Broad established of making his collection available for loan is exemplary,” says Thomas Campbell, director of New York City’s Metropolitan Museum of Art. “I can’t think of any comparable body of work that is lent as generously.” Broad has not merely lent artworks to museums. He’s also helped to create several major institutions in Los Angeles and one at his alma mater Michigan State, contributing money, connections, and energy—and no shortage of what his parents might have called kibitzing (Yiddish for sometimes unwelcome advice). While his eagerness to shake up art-world paradigms has led to criticism over the years from observers who deem him an unusually meddlesome benefactor, no one disputes that his efforts have helped transform Los Angeles into a legitimate art capital. “There are a lot who would say he’s been overly influential and a lot who would say without him they wouldn’t be there,” notes Glenn Lowry, director of the Museum of Modern Art in New York City. “He doesn’t listen to either side. He does what he believes in. Of course it’s going to be controversial. You don’t change cities and reimagine urban landscapes from an armchair.”

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Raising up reformers On a mild afternoon in late July, Eli Broad strides into a large hotel ballroom and perches on a director’s chair before 43 bright-eyed young business-world refugees. They have come from around the country to enlist as foot soldiers in his campaign to transform public education in America. Each is joined by a mentor who has already completed the two-year program, known as the Broad

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The Broad Foundations

Broad’s vision for a renewed city center in L.A.’s long moribund downtown includes a new museum, the Broad, which will achieve the couple’s long-term goal of sharing the better part of their collection with the public. Set to open in 2014, the museum is being erected just steps away from the city’s Museum of Contemporary Art (for which Broad served as founding chairman) and the landmark Frank Gehry-designed Walt Disney Concert Hall, a project that was nearly abandoned due to cost overruns and mismanagement until Broad stepped in to provide the financial boost and aggressive leadership necessary to bring it to fruition. Just a few blocks away sits the Ramón Cortines School of Visual and Performing Arts, a glittering public high school that also owes its existence to Broad’s largesse. While the recession has slowed the cultural district’s redevelopment plans, new shops and restaurants are now opening at a fast clip, bringing energy to an area that had long been written off. “I think Grand Avenue is going to become the cultural and civic center of Los Angeles,” Broad says. “It’s happening already.”

Residency in Urban Education, and who is eager to guide the next class of reformers. The Residents are a diverse group of poised MBAs and experienced executives from around the country, carefully selected for new careers helping run public-school systems. The Residency and the companion Broad Superintendents Academy are Broad’s flagship leadership initiatives to catalyze change in public education by planting dynamic administrators in places where they can make a big impact—urban school districts, charter school organizations, and departments of education at the state or federal level. “First I want to say I’m grateful you’re all willing to go on this journey for two years, because I can think of nothing more important in education than people with your background getting involved in urban school-district management,” Broad tells them, going on to outline how his own interest in K-12 education developed. In his travels around the world, Broad was impressed by the high level of academic achievement he witnessed in other countries, particularly South Korea, China, India, and parts of Scandinavia. “It was very clear to me that they are doing a far better job of educating their children than we are,” he tells the residents. “And it was obvious we’d pay a big price if we didn’t change.” Though Broad had some firsthand experience in higher education decades ago—he was an assistant professor of accounting at the Detroit Institute of Technology—he quickly realized he had little to offer in terms of curriculum or pedagogy. What he did know about was how to manage a large, complex organization—something too few of the nation’s district leaders were doing effectively. So in 2002, he launched the Superintendents Academy, an 18-month training program designed to prepare hard-charging executives from the business and non-profit sectors for placement in urban school districts. Its 150 alumni to date include Los Angeles superintendent John Deasy and state superintendents of Louisiana ( John White), Maryland (Lillian Lowery), New Jersey (Christopher Cerf ), and Rhode Island (Deborah Gist). To be truly effective, of course, such leaders need to be surrounded by teams of managers who share their visions and support their efforts. That, Broad tells the Residents, is where they come in. Founded in 2003, the Residency retrains talented professionals to work in conjunction with these leaders to shake up the status quo. “So what are we trying to do?” he continues. “We’re trying to ensure that every student has an opportunity to succeed. We’re trying to make sure the money goes into the classroom and isn’t tied up in bureaucracies. We’ve got to empower teachers but at the same time keep them responsible for performance.” And to pull all of this off, “You’ve got to be a great communicator,” he tells them.

The Broad Foundations

Eli Broad helps out students in Massachusetts and Michigan.

“You have to be able to sell your ideas to an audience that sometimes doesn’t want any change.” When I meet with several of the Residents, I find that most were discovered by the organization’s three-member recruitment team, which is charged with visiting top MBA and policy programs and conferences of young business executives around the country, and making a pitch to the best and the brightest. Interested applicants undergo an elaborate screening process: those who pass the written application, phone interview, and extensive day of panel interviews must then go through another round of interviews to be hired by whatever school district, charter-school office, or education department will be hosting them. This year, out of nearly 3,000 applicants, a little more than 1 percent made the final cut. “This is the most rigorous recruitment process I’ve ever been through, and I did recruitment!” says Jevelyn Bonner-Reed, a member of the new class, who previously worked as human resources manager at Goldman Sachs. Earlier in the week she started her new job as director of strategic initiatives in human resources for the Charlotte-Mecklenburg School District in North Carolina. “I was like, ‘Oh, my goodness, this is tough!’ But we can’t send the wrong people to these schools to be a part of this change.” Broad Residents have generally abandoned promising and highly remunerative careers in the private sector out of a real passion to make a difference. As Edythe puts it, “It’s really thrilling to see young, highly educated people who could earn a lot of money being so willing to put that on hold and do something that benefits underprivileged children.” Felipe Perez, for example, served as an Army reservist in Iraq and Afghanistan and became Los Angeles’s policy director for emergency services before landing a well-paid position at a security consulting firm. “I was going down a comfortable path, but I wasn’t fulfilled,” he

says. Growing up in East Los Angeles, Perez excelled in his public school, but he was an exception. “Of the kids in my freshman class, half dropped out,” he recalls. “We need to bring the American education system closer to the American ideal of equal opportunity.” His colleague Ann Ziker is one of the few Broad Residents with classroom experience, having taught history and social studies in Houston. “I went in as a wide-eyed, idealistic, save-the-world type of person and left three years later, deeply disillusioned and frustrated,” she tells me. Later she found herself in a management consulting position with McKinsey & Co., an experience that “restored my faith,” she says. “I learned that with extraordinary people and extraordinary problem-solving tools, there is no problem too intractable. It turned me from a cynic back into an optimist.” Ziker now works at YES Prep, a charter-school system in Houston. “In education—although they deeply understand the urgency of this work—the Broads are playing the long game, through talent development,” says Education Secretary Duncan. “To serve students well, school systems need leaders with the skills to do a complicated job. The Broads are contributing in major ways to the solution by helping school systems find and develop leaders. They deserve credit for bringing a thoughtful approach to a hard problem and generosity to the solution.” Conventional vs. unconventional alternatives The Broads’ support for systemic change in education goes beyond funneling leaders into the field. They recently initiated the Broad Prize for Charter Schools, naming YES Prep, an organization with 13 campuses serving low-income kids, the winner in 2012, and Uncommon Schools, a network of 38 schools across three states, in 2013. Those schools (and other finalists for the Broad charter-school prize) have produced FALL 2013

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Anton Grassl

The Broad Institute of MIT and Harvard.

superb results with hundreds of thousands of children from difficult backgrounds, as demonstrated by hard achievement data. A predecessor to the charter-school award, the 13-year-old Broad Prize in Education, is given annually to conventional public schools to “highlight successful urban districts.” Former New York Schools chancellor Joel Klein recalled the day they won the Prize in 2007 as “one of the most significant of my tenure.” Yet the initiative has garnered criticism from those in the school-reform movement who view it as propping up mediocrity or failure. In two big-city public districts named as Broad Prize finalists in 2013, Houston and San Diego, only about one out of ten African-American eighth graders can read proficiently, notes education analyst Andy Smarick. That’s a far worse performance than charter and other less-conventional schools achieve with the same populations, so why not give them the million-dollar award instead? Eli Broad has acknowledged that the “best urban public charter-school systems are performing significantly better than the best traditional school-district systems.” Some reformers would prefer he stop underwriting conventional urban schools altogether and shift his efforts entirely to promising alternatives. Michigan schools are close to the hearts of the Broads, who both attended public school in Detroit. The dysfunctional school system in their struggling native city dismays them. “It’s a disaster,” Eli says. In response, the Broads worked with Gov. Rick Snyder to create the EAA, which is now responsible for more than 10,000 students. In these schools “there’s a seven-and-a-half-hour school day, two meals per day, and every child has a tablet,” Eli says. In an effort to end “social promotion,” under which a child is moved to the next grade without being proficient, students learn at their individual pace, only advancing when they have mastered the given material. “They don’t have grades, they have levels,” Edythe explains, recalling a visit to one Detroit school. “Honestly, I don’t think there was one child at that school who was at grade level, so what a clever way to not discourage them. You can only succeed.” “Eli and Edythe Broad are proud Detroit natives who are passionate about the city’s comeback and know that a strong public education system is one of the keys to that restoration and resurgence,” observes Snyder. “Their generous support and hard work for the EAA have simply been instrumental every step of the way—and most importantly, in making a positive difference for Michigan’s school children and their futures and quality of life.” The Broads have also been forward-thinking when it comes to employing the tools of the digital era to reform education. They are among the nation’s top proponents of “blended learning,” which couples computer-based

Anton Grassl

instruction with personalized teaching focusing on knowledge gaps revealed by daily computerized assessment. This allows each student to work at his or her own individual pace, tracks student progress, and frees teachers from the necessity of delivering one-size-fits-all mass lectures, letting them tutor students individually instead. Last year, the Broad Foundation gave some $20 million to an array of blended-learning initiatives, including the online Khan Academy and New Classrooms Innovation Partners, co-founded by Joel Rose, creator of the New York City personalized education program School of One. “Eli and Edythe Broad are the epitome of private citizens doing public good,” says former President Bill Clinton, who has overlapped with the Broads on school reform. “Through their transformational approach to philanthropy, they’ve been taking on great challenges and noble causes. Our country’s future is brighter because of them.” Won’t back down The Broads’ education-reform crusade has not been without controversy. Detractors, many aligned with teachers unions, see the reform movement as a bid to undermine public education. Others wonder if the high-stakes testing has gone too far. Even Eli acknowledges that No Child Left Behind, for instance, “was in dreamland” when it mandated that every child be totally proficient by 2014, but he remains convinced that the overall approach is the right one. “You need a measurement system of some sort,” he says. “But how you evaluate teachers shouldn’t just be testing alone. There needs to be observation by principals or master teachers or others. And you have to give teachers more training.” Broad would like to see teachers obtain degrees in subject areas like English, math, or science, rather than in education theory. Given the public-school bureaucracy’s resistance to reform, the Broads are also active at the political level. They have funded a number of policy groups and political action committees, including Students First, 50CAN, Democrats for Education Reform, and Stand for Children. “Most people with money like to do feel-good things. There aren’t a lot of people willing to tackle the hard issue of significant school reform,” says Joel Klein. “The Broads are among the few willing to take the heat, and their impact has been enormous. I’m sure Eli and Edythe would like to avoid controversy and just get the work done, but they’re not afraid of it.” Eli sees the criticism of his education activism as proof that his approach is shaking up the system. Edythe concedes that the criticism used to bother her at times, but she says with a smile, “I’m 77. It doesn’t bother me anymore. I know the things we’re doing are important and will yield good effects over time.”

Cracking cancer’s code At the Eli and Edythe L. Broad Institute of MIT and Harvard, the genomic research facility built in Cambridge, Massachusetts with $600 million of Broad donations, the DNA sequencers, incubators, liquid handlers, robotic arms, and other high-tech devices are often given whimsical monikers. Some are named for pioneering scientists, others for comic-book superheroes. There are several named for famous captains (Captain Janeway of Star Trek, and Captain Crunch of the cereal), and even a pair of refrigeration units named Thing 1 and Thing 2, after the Dr. Seuss characters. There are “fun reasons and practical reasons” for this, says Niall Lennon, director of technology and applications development for genomics, as he walks me through one of the labs where top-of-the-line sequencers hum day and night. The fun part is obvious. The practical reason is that identifying pieces of equipment by “asset numbers” works for computers but not for people. “Humans interact with objects a lot better when they have something in their mind they can associate with it.” This juncture between human ingenuity and technological wizardry is at the core of the Broad Institute’s approach. Dedicated to defeating cancer, infectious disease, and other ailments by sequencing the genomes of thousands of human subjects as well as various microbes, viruses, and other organisms, the institute is applying the latest industrial tools to create vast leaps in efficiency. In the fast-evolving field of computational biology, pioneered in part by the Broad Institute, powerful databases churn through vast troves of data, seeking clues into why some cells become cancerous, for instance, while others do not, or how infectious diseases like malaria or dengue fever mutate and thrive. The institute is now constructing a second building down the street to house its growing team of “Broadies,”

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One key to that leverage is that the Broads’ donations come without strings attached. “Unrestricted funds are gold, they’re magic,” Lander says. “We’re able to say when we have a good idea, ‘Let’s start investing in it now rather than write a grant and start working on it two years from now after it wends its way through the NIH system.’” As Todd Golub, the institute’s chief scientific officer, puts it, “Having unrestricted funds allows you to think more ambitiously and be more creative. The knowledge that there is some funding available has liberated people here to think in new ways, putting things in motion that will one day find other funding.” The premium put on free-flowing, collaborative work is apparent everywhere, down to the very architecture: Glass walls throughout the building are covered with notes and equations scrawled by Broadies wielding markers, suspending moments of tangled problem-solving or spontaneous insight for others to see. The institute even boasts an artist-in-residence, who gives expression to the secrets of nature unfolding around him. Another long game What the Broad Institute and similar facilities are doing is reinventing how medical science is conducted. Whereas the old model, which is still predominant, involves rigorously testing a given hypothesis, the research underway at the Broad tends to focus on enhancing our knowledge of the underlying processes, on the theory that understanding what is actually happening at the molecular level will inevitably lead to more effective practical treatments. It’s another long-game approach of the sort that appeals to Broad, who shows a distinct preference in his philanthropy for rewriting the rulebook over settling for incremental progress. What makes this effort so unique—and such a magnet for the world’s top scientific minds—is its open-ended vision, its effort to bring together a variety of scientific disciplines to work toward common goals, and the staggering array of technological gadgetry on hand. Patrick Faloon, a Broad researcher whose work involves using industrial robots to test quickly thousands of chemical compounds for their effects on various bits of DNA, notes that the equipment available to Broadies is typically found only in Big Pharma labs, where it is aimed squarely at bringing lucrative new drugs to market. Here, the mission involves “projects a pharmaceutical company might not see as being financially worthwhile,” he explains. Clad in a blue lab coat, Faloon points out that his department came in first in the country for the past three years in the volume and difficulty of “assays,” or laboratory procedures, conducted. “It took a lot of initial investment to get up and running,” he adds, standing in front of a top-of-the-line unit that uses acoustical waves to transfer liquids by the nanoliter. “I’ve worked in very

Mark Hanauer for The Broad Foundations

as the 2,000 researchers associated with the institute are known. The now-burgeoning center grew out of the Broads’ struggle to understand their son’s Crohn’s disease, a type of inflammatory bowel disease. Finding that the mysterious illness had no known cause or cure, the couple began funding research on Crohn’s and similar disorders. One grant recipient was the Whitehead Institute at MIT, where Eric Lander was directing work on the Human Genome Project. One day, the Broads paid a visit to the lab. “They were very excited, because they had never seen anything like it,” recalls Lander. In time, he told Eli about his dream of creating a new institute, an intensely collaborative place that would bring together scientists from an array of disciplines and institutions to work on projects both large and small, making the resulting data freely available. Broad asked him what it would cost, and Lander came up with an estimate of $800 million. “I said, ‘I hope you get it!’” Eli recalls with a laugh. After that, “Eli, being Eli, went and did a tremendous amount of due diligence,” Lander says. “And Edythe, being Edythe, was very intuitive and said, ‘This makes a lot of sense.’” “I just fell in love with Eric Lander and what he was doing,” Edythe says. “I wanted to give him all my money.” In 2004, Eli came back to Lander with an offer of a $100 million challenge grant, and Lander devised a plan to bring in Harvard and MIT as partners. The two rival schools had never before joined forces on a project of such ambitious scope. Eighteen months later, the Broads put another $100 million into the project, and in 2008, they agreed to endow the institute to the tune of $400 million more. (They also support regenerative medicine and stem-cell research centers at the University of California, Los Angeles, the University of Southern California, and the University of California, San Francisco.) Broad, who writes in his memoir about the importance of leveraging one’s investments and energy, can take comfort in the fact that the $20 million a year in funding his foundation provides to the institute is a catalyst for a much greater investment by the National Institutes of Health, which provides the bulk of the institute’s $270 million annual operating budget.

Mark Hanauer for The Broad Foundations

traditional labs in the past, and to have this type of setup is unparalleled in my mind.” Better yet, the institute is determined to make the results of its labors as widely available as possible. While taking pains to protect patient data and valuable bits of intellectual property, so that incentives for private companies to spend heavily on lifesaving therapies are preserved, “everything else we think should be out there as much as possible,” explains Golub. “We take a pretty aggressive stance on that. In the early days, the Broad helped set a standard for what is now the expectation—if you get a big data set, you should make the raw material available, not just the little snippets that you might write a paper about. And the journals now expect it.” While some researchers have taken issue with the use of scarce funding for research that may not lead to immediate clinical applications, the institute is betting that this work will eventually yield dividends on a scale that would be unthinkable under the old model. “The Broad has taken a leadership role, dissecting the genome of cancers to make a new taxonomy of the disease that I think is going to rewrite the textbooks,” Golub says. “Now that we have a basic framework of the genetic underpinnings of the disease, the challenge is to bring it into the clinic, where patients can benefit directly from precision medicine.” He also cites the area of schizophrenia. “There has been no biological understanding of what those diseases were,” he notes. “There haven’t been new drugs for these diseases for 50 years, in part because it hasn’t been clear what to work on. Now, in an international effort spearheaded by the Broad, a number of research committees have come together to unveil the first genes that are likely causes.” The ripple effect In addition to a board of directors, the institute has enlisted a blue-ribbon board of scientific counselors to conduct careful annual reviews of its work. And each year, Eli and Edythe dutifully attend the counselors’ meeting, which Golub describes as a “two-day, exhausting, scientifically intense” series of reports. “It’s not because they have any intention of steering what’s going on,” he adds, “but just to ensure that the scientific advisors continue to be impressed by what we’re delivering on. And that’s a very good thing. It keeps us on our toes.” As to whether they truly comprehend the advanced scientific concepts being discussed, Broad says, “We understand more than we did—maybe about 10 to 20 percent.” Unlike in other areas, Broad studiously avoids making suggestions as to the institute’s management or overall strategy. “I know that in the art world there are those who think that Eli expresses his opinion a great deal,” Lander notes. “In the scientific world, nada. Never.” “I’m always struck by the utter absence of any agenda in dealing with us,” notes David Altshuler, the institute’s

Edythe and Eli Broad established the Broad Art Foundation.

deputy director and chief academic officer. “There’s nothing they’ve ever asked for other than that we try to be excellent. That’s pretty extraordinary.” And before long, it’s expected that Eli’s and Edythe’s efforts will bear fruit in ways we can’t yet begin to predict. “We’re not yet at a point where there’s a drug that is benefitting patients, but we’re on that path,” Golub says. “I think in the end, though, the even bigger impact will be made through unleashing the rest of the world’s ability to make discoveries because of tools that we develop or data that we generate and share.” Big ripple effects like that are precisely what the Broads hope to set in motion through their philanthropy. “We used to give to things that were already there,” Edythe says. “Now we create. We look and see something, and Eli will say, ‘We can do this better.’ And that’s a lot more fun.” “She says it’s fun,” Eli interjects with a smile. “It’s also hard work!” P FALL 2013

Courtesy of Participant Media

Changing the World through Storytelling Philanthropist Jeff Skoll is putting his considerable money and talent behind silver-screen social reform By Matthew Bishop and Michael Green

Courtesy of Participant Media

Quick: What do these popular movies have

in common? …Syriana vilifies big oil companies; …Good Night, and Good Luck pillories 1950s worries about communism; …An Inconvenient Truth churns up a tidal wave of advocacy against climate change; …Food, Inc. makes viewers queasy about industrial agriculture; …Contagion portrays heroic public-health workers facing down a devastating virus; …The Help rallies to the side of downtrodden domestic workers. Though it’s unlikely that one American in 100,000 realizes it, these star-laden, carefully crafted, politically colored films (and lots more like them) all have a single progenitor: philanthropist Jeff Skoll. Since 2004, when he formed Participant Productions “to create entertainment that inspires and accelerates social change,” Skoll has placed his “executive producer” stamp (and piles of his cash) on almost 50 movies, a mix of feature films and some

highly evolved documentaries. Many of these movies have enjoyed critical acclaim—reaping 35 Academy Award nominations and seven Oscar statuettes in less than a decade. Some have also sold many, many tickets. Five Participant films have reaped nine figures of box-office traffic: Charlie Wilson’s War ($119 million), The Help ($212 million), Contagion ($135 million), The Best Exotic Marigold Hotel ($137 million), and Lincoln ($275 million). Yet money is not what drives the boss at this highly unusual film studio. Skoll has told the New York Times that the amount of funding he has poured into Participant is “hundreds of millions to date, with much more to follow.” To Fortune, he says, “everything I put into Participant, I don’t expect to get back.” “Participant is for-profit for everyone but me,” Skoll put it when we interviewed him in July. “For me, it is philanthropy.” Structuring the enterprise as a business has multiple advantages: It keeps everyone focused on making movies that lots of people will want to watch. It makes it easier to hire Matthew Bishop and Michael Green are co-authors of Philanthrocapitalism: How Giving Can Save the World. Bishop is New York bureau chief of The Economist. Green is executive director of the Social Progress Imperative.

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â&#x20AC;&#x153;social action campaignâ&#x20AC;? from the studio and a Nobel Prize for Al Gore.

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Courtesy of Participant Media, takepart.com/an-inconvenient-truth/action

An Inconvenient Truth, the Participant Media jeremiad against carbon-dioxide emissions, birthed an aggressive

Courtesy of Participant Media, takepart.com/an-inconvenient-truth/action

expensive Hollywood talent. It offers a greater prospect of sustainability via the recycling of profits (which are uneven but sometimes significant) back into production. Skoll also realized it would be easier to woo powerful collaborators like Warner Bros. and DreamWorks if he established Participant as a business. “I wanted it to be for-profit so we could bring in other partners, who saw it as a good business opportunity. This was the quickest way to become a global media brand. People in Hollywood aren’t used to the non-profit concept at all.” “Participant doesn’t make a lot of sense from a financial investment perspective,” he explained to Wired a couple years after founding the company. “Social good is what we’re really after.” But Participant turned out to be more profitable than anyone anticipated. Last year he told Forbes that “we like to be break-even if we can, and we have been. Our other bottom line is social change, and that’s where we really look to make an impact.” While Skoll and Participant take positions that are typically seen as being at the less conservative end of the ideological spectrum, their highly effective approach offers lessons for philanthropists of every political color. The social entrepreneur From the beginning, Jeff Skoll has been an unusual mix of donor and capitalist in his philanthropy. The first focus of his Skoll Foundation was social entrepreneurship. He has given about $350 million directly to social entrepreneurs who devise business-like solutions to problems like disease, food shortage, and lack of education. In so doing, he has mixed grants, loans, for-profit investments, equity stakes, gifts, and loan guarantees—a hodge-podge of mechanisms drawn from the worlds of business and charity alike. Skoll and Pierre Omidyar, his former business partner and fellow billionaire, are today’s two leading exemplars of the business-minded, high-impact, risk-taking philanthropy we call philanthrocapitalism. In particular, Skoll and Omidyar have been pacesetters in combining giving, the profit motive, innovation, and social entrepreneurship in order to achieve large-scale change. When we interviewed Skoll in 2007 for our book Philanthrocapitalism, he explained that “there was something different about this form of philanthropy… non-profit in nature but entrepreneurial in spirit.” The Skoll World Forum for Social Entrepreneurs has been staged annually for the past ten years in Oxford, England. In an emotional opening speech at this year’s forum, delivered through the pain of a recent back operation, Skoll reflected on the last decade’s “Top Ten Highlights for Social Entrepreneurship.” His list included new technologies that advance social good; a

Nobel Peace Prize for microfinance pioneer Muhammad Yunus; declining deforestation rates in Brazil; access to fresh water for hundreds of millions more people; significant mitigation of death and suﬀering from diseases such as guinea worm, polio, and AIDS; and a big reduction in the number of people living in extreme poverty in undeveloped countries. A break, a billion, a vision All of Skoll’s work using the media to galvanize social and political change, and employing social entrepreneurship to solve immediate human problems, is possible thanks to a remarkable period of just a few years doing business during the dot-com boom. When the Canadian-born Skoll failed to gain occupational traction with his electrical engineering degree from the University of Toronto, he headed to Stanford Business School, where he became friends with a local software engineer named Pierre Omidyar. Omidyar told him about the auction website he was tinkering with; Skoll was not impressed. In 1996, though, Omidyar convinced Skoll to become the first full-time employee of the enterprise. About two and a half years later, Skoll became a billionaire when the firm known as eBay went public. He was 33 years old. Less than two and a half years after that, Skoll resigned from his job and set out to spend his newfound money as a social reformer. Today, Forbes ranks Skoll at #122 on its list of wealthiest Americans. His personal assets are estimated at $3.8 billion. He has about another billion dollars parked at his foundation and other philanthropic vehicles.

“Participant Media is for-profit for everyone but me. For me, it is philanthropy.” FALL 2013

A A SELECTION SELECTION OF OF PARTICIPANT PARTICIPANT FILMS FILMS film

moral of the story

global box office

The Fifth Estate

A celebration of WikiLeaks

not yet released

Benedict Cumberbatch

2013

Snitch

Mandatory sentences are the real dangers in the drug war

$43 million

Dwayne “The Rock” Johnson, Susan Sarandon

2012

Promised Land

Respected schoolteacher saves small town from gas fracking

$8 million

Matt Damon

2012

Lincoln

Lincoln fights to emancipate slaves

$275 million

2012

Best Exotic Marigold Hotel

Retirees throw off convention and become fully alive

$137 million

Judi Dench, Maggie Smith

2011

Contagion

Doctors race a deadly virus

$135 million

Matt Damon, Gwyneth Paltrow, Kate Winslet

2011

The Help

The hardships of African-American domestic workers

$212 million

2010

Fair Game

Valerie Plame punished by Republicans

$24 million

2010

The Crazies

Virus in the drinking water yields zombies

$55 million

2009

The Cove

Animal abuse decried

$1 million

2009

Waiting for “Superman”

Inner-city schools are failing

$6 million

Davis Guggenheim, Michelle Rhee

2009

The Informant!

Truth-teller blows the whistle on corporate price-fixing

$42 million

Matt Damon, Steven Soderbergh

2009

The Soloist

Journalist befriends a homeless cello virtuoso battling social injustice

$38 million

Jamie Foxx, Robert Downey Jr.

2009

Food, Inc.

Scolding agribusiness

$5 million

Oscar nomination

2007

Charlie Wilson’s War

Right-wing Americans planted the seeds of al-Qaeda and the Taliban

$119 million

Oscar nomination

2007

The Kite Runner

Boyhood tale set in Afghanistan

$73 million

Oscar nomination

2007

The Visitor

Defending illegal immigrants from overzealous law enforcement

$18 million

Oscar nomination

2006

An Inconvenient Truth

Human profligacy is creating catastrophic global warming

$50 million

2 Oscar nominations 2 Oscar wins Nobel Prize—Al Gore

Al Gore, Davis Guggenheim

2005

Syriana

Big oil companies and the CIA seek scapegoats for their own perfidy

$94 million

2 Oscar nominations Oscar win

George Clooney, Matt Damon, Christopher Plummer

2005

North Country

Sexual harrassment on the job

$25 million

2 Oscar nominations

Charlize Theron, Frances McDormand

2005

Good Night, and Good Luck

Exposing the bullies of the anti-communist scare of the 1950s

$55 million

6 Oscar nominations

George Clooney, Jeff Daniels, Robert Downey Jr.

2005

Murderball

Wheelchair athletes triumph

$2 million

Oscar nomination

forthcoming

Sources: Box Ofﬁce Mojo and IMDB

PHILANTHROPY

major awards

12 Oscar nominations 2 Oscar wins

4 Oscar nominations Oscar win

notable participants

Daniel Day-Lewis, Tommy Lee Jones

Viola Davis, Emma Stone, Jessica Chastain Naomi Watts, Sean Penn

Oscar nomination Oscar win

Tom Hanks, Julia Roberts

takepart.com/syriana

year

takepart.com/syriana

The undertaking Skoll is most passionate about at this phase of his life is clearly Participant Media (as the expanding entity is now known). When Skoll started the organization, his goal was to do movies and television, “but we got into movies much quicker.” For both undertakings, Participant’s motto is that “a good story well told can truly make a difference in how one sees the world.” Jeff Skoll grew up wanting to be a writer, before deciding he first ought to make money. “I have always wanted to tell stories that got people involved,” he recalls. He helped edit student newspapers at the University of Toronto and then Stanford. “That was as close as I got to being a journalist, but I think I would have enjoyed it,” he said. “I read a lot of books when I was younger, and it struck me that the world of the future might be a pretty scary place with terrible new weapons, new wars, new diseases,” Skoll told the Huffington Post. When he was 14, his father (owner of an industrial chemicals company) had a bad brush with cancer. He ultimately beat the disease, but it marked his son. Skoll uses the word scary often, recently telling a reporter from Lifestyles Magazine that “things in the early 1970s were getting pretty scary…. I thought I could help by being a writer. Luckily, I met Pierre. Instead of being a writer, I could hire writers and reach the public in a massive way.” The central effect of many Participant films is to cause viewers to fear something. Fear is, of course, at the root of many personal and public concerns: environmental dangers, plagues, war, racial conflict, oppression of all sorts. One Participant executive told the New York Times that one result of their filmmaking is taking a particular issue and adding it to “the pool of worries” of everyday people. Often, worry is the beginning of action. From the earliest days of Participant, “I wanted it to be a media company focused on the public interest,” Skoll explains, “a global media company that faced issues.” And not just any issues. Participant, Skoll’s foundation, and his other ventures have very specific causes that they pursue aggressively: global warming, pandemic worries, suspicion of industrialized agriculture, social equality, gay rights, education reform, peace and disarmament. Recent Participant films on highly politicized topics include 99%, a detailed look at the Occupy protesters; Snitch, a rebuke of strict drug sentences; Chicago 10, an animated celebration of the rioters at the 1968 Democratic Convention; The Fifth Estate, a profile of Julian Assange; and the anti-fracking film Promised Land.

Syriana spread the anti-oil gospel, with help from George Clooney.

duction quality is high. The company started with an astonishing bang. In July 2005, a year and a half after its founding, Participant released its first film, a documentary about wheelchair rugby called Murderball, that went on to win an Oscar nomination. A few months later, Good Night, and Good Luck premiered, starring George Clooney, Robert Downey Jr., and Jeff Daniels. Hollywood rained laurels on the anti-McCarthyite drama, including six Academy Award nominations (Best Picture, Best Director, and Best Actor among them). The public responded more modestly; global receipts for the film totaled $55 million. The project was highly profitable nonetheless, because its production budget was less than $8 million—due largely to the fact that the politically minded Clooney, who normally gets up to $20 million per movie, offered to co-write, direct, and star in this one for a grand total of $3 ($1 for each job). This illustrates the intangible benefits Participant reaps as the go-to studio for movies reflecting the political beliefs of some of Hollywood’s biggest stars. A month later in 2005, North Country hit theaters. A fictional account of a sexual harassment lawsuit, it garnered two more Academy Award nominations, including Best Actress (Charlize Theron) and Best SupFinding a formula for culture change Jeff Skoll personally approves every script that Participant porting Actress (Frances McDormand). The public was green-lights, and thanks to his firm’s ability to attract lukewarm, with the worldwide box office of $25 million first-rate talent from the entertainment industry, its pro- falling short of the $35 million production budget. But FALL 2013

From fantasy to reality The success of An Inconvenient Truth provided Skoll with compelling early evidence that linking a powerful story with a highly developed activist campaign could move public opinion. A 47-country Internet survey conducted by the Nielsen Co. and Oxford University a year after the film came out found that 66 percent of respondents who had seen An Inconvenient Truth said it “changed their mind” about global warming. Before the film was released, opinion polls suggested that fewer than 30 percent of Americans considered global warming a serious issue. Afterward, 87 percent deemed it “an issue of concern.”

The first full year of existence of Participant brought an astonishing 11 Oscar nominations. Plus $176 million of ticket sales. And a sudden slew of top actors, directors, and Hollywood insiders scrambling to work with Jeff Skoll. 26

PHILANTHROPY

Participant vigorously promoted the crisis theme, setting up the website ClimateCrisis.net, establishing alliances with activist groups like the National Resources Defense Council and Stop Global Warming, and distributing hundreds of thousands of study guides aimed at getting the topic into school classrooms. Participant cites “more than 15 climate-change bills introduced in Congress” as part of the film’s legacy, and concludes that the “worldwide phenomenon” it kicked off meant that “global warming was now part of the international conversation.” “I would never have predicted that a film like An Inconvenient Truth would impact so many people,” says Skoll. But he is only getting started with his work on climate change, with two new projects underway. The first, Climate Nexus, aims to be a sort of public relations agency or rapid response team promoting the crisis message. (The Rockefeller Brothers Fund is a philanthropic partner in this.) The second, as yet unnamed, is a three-year effort to survey in depth the American public’s views of global warming. “We are going to poll the entire U.S.,” he says. Skoll’s ringing of alarms is part of his wider effort to confront what he considers the most urgent public dangers. He has established a separate philanthropy he calls the Global Threats Fund to research and advocate on five topics: climate change, water shortages, pandemics, nuclear weapons, and Middle Eastern conflict. “I’d like to see the Global Threats initiative go from a five-year experiment into a properly endowed organization of scale. I am looking to bring in other philanthropists and funders,” he says. And he is interweaving the efforts of Global Threats with the products of Participant Media— mixing, blending, and blurring entertainment, research, and political activism to move public opinion and spark governmental action. Skoll reports that the Global Threats Fund and Participant are “somewhat explicitly working together,” noting that numerous movies have been made already in each of the five areas. In addition to An Inconvenient Truth, Participant’s 2010 Climate of Change with Tilda Swinton is also about global warming. Last Call at the Oasis (2012) addresses water worries. Steven Soderbergh’s 2011 hit Contagion, which

Skoll pronounced himself happy with the film when the “social action campaign” that accompanied its release coincided with federal reauthorization of the Violence Against Women Act. (More later on the advocacy campaigns that are launched with every Participant film.) Then 2005 was brought to a close by the release of Syriana, a thriller built on corporate, CIA, and oil-business perfidy, and again starring Clooney, along with Matt Damon and Christopher Plummer. It enjoyed a total box office of $94 million, was nominated for two Academy Awards, and won the Oscar for Best Supporting Actor. All told, the first full year of existence of Participant Productions brought an astonishing 11 Oscar nominations. Plus $176 million of ticket sales. And a sudden slew of top actors, directors, and Hollywood insiders scrambling to work with Jeﬀ Skoll. This was immediately followed by a crowning success in the area that is of most concern to Skoll. Early in 2006, an unlikely Participant film adapted from the PowerPoint slideshow of a retired politician rolled across America and then the globe. An Inconvenient Truth popularized Al Gore’s crusade against carbon emissions that he explains will result in harsh climate change. The film was awarded an Oscar for Best Documentary, and another for Best Song. Its $50 million total box office made it one of the highest grossing documentaries of all time. And the next year Gore won the Nobel Peace Prize.

Julia Roberts and Tom Hanks, seen here in Charlie Wilson’s War, are but two of the many

Hollywood stars who have joined forces with Participant.

featured Matt Damon, Gwyneth Paltrow, Laurence Fishburne, Jude Law, and Kate Winslet, is about a global pandemic. The Crazies is a 2010 horror flick premised on a virus infecting a town’s water supply and turning the inhabitants into bloodthirsty killers. Countdown to Zero is a Participant documentary about the proliferation of nuclear weapons. “It was not a box office success, but it had an impact,” Skoll reports. “In the run-up to the New Strategic Arms Reduction Treaty talks, we held more than 150 screenings, in venues ranging from the White House to the Kremlin and the Indian Parliament. A lot of people who came to the New START negotiations had seen the film.” The grassroots campaign that accompanied the theatrical release included celebrity public-service announcements, a video on Hiroshima that garnered 400,000 views, a texting pro-

gram, rallies, and targeting of seven U.S. senators whose votes were needed for the New START, which passed the Senate in 2010. In addition to Syriana, Participant is adding its voice to various Middle Eastern issues with several other films. State 194 is a cry for Palestinian independence. The 1982 classic Gandhi was dubbed into Arabic by Participant in hopes it would promote non-violence in the region. And the studio created films like Charlie Wilson’s War, The Kite Runner, and Jimmy Carter: The Man from Plains with an eye to influencing Middle East-related opinion. Contagion may have been the most successful collaboration between Participant and the Global Threats Fund to date. The action campaign accompanying the movie featured an informational hub that was visited (continued on p.31) FALL 2013

Another major philanthropist who broke into Hollywood with the goal of nudging America in healthier directions is Phil Anschutz. Like Jeff Skoll, he has put up hundreds of millions of dollars to create top-notch films. Anschutz, however, lacks Skoll’s brand of politics. An evangelical Christian who lives a comparatively modest and family-oriented life for someone with a net worth of $10.3 billion (ranking #38 on the Forbes list of wealthiest Americans), Anschutz was frustrated at how vulgar, violent, sexualized, dark, and depressing so much Hollywood fare had become. “I’d been thinking about it for a while. I had children and grandchildren of my own, and I had never been satisfied with the content in movies,” Anschutz told Philanthropy in a rare interview this August. Aiming to be a more positive influence for families and children in particular, in 2001 Anschutz bankrolled Walden Media, the brainchild of Micheal Flaherty. An educational entrepreneur who was teaching part-time in a rundown Boston public school when he first considered making movies for kids, Flaherty saw his students struggle to engage with book after book, unable to grasp how someone else’s story could ever change theirs. But when the blockbuster movie Titanic came out, those same students wanted to visit museums, check out books from the library, engross themselves in the catastrophe and its time period. Flaherty thought: Why not make more movies that engage students in historical events or works of literature? What if movies could both make money and open children’s minds to the world of books? Joining with his former college roommate Cary Granat, who was

president of a Miramax film division, Flaherty hit the private investment trail with his idea. But after exhausting his savings and 401(k) pitching children’s films, he and Granat still had no funding. They made their last call to Anschutz. “Phil got behind it right away. He liked the mission statement, and already had some great ideas for books that he was reading to his grandkids,” Flaherty says. Walden Media, the resulting company, went on to produce Charlotte’s Web ($145 million in total box office), Bridge to Terabithia ($138 million), Journey to the Center of the Earth, 1 and 2 ($242 million and $335 million respectively), Tooth Fairy ($112 million), Parental Guidance ($120 million), and other films. Walden’s biggest success was the Chronicles of Narnia series. The first film, released in 2005, grossed $745 million; the second brought in $420 million in 2008; the third reaped $416 million in 2010. Anschutz himself was a key player in bringing Narnia to the silver screen. Flaherty says he was the first to suggest making films of the beloved series written by C. S. Lewis, and he became personally involved in negotiating for rights to the books. Lewis’s stepson Douglas Gresham told the Los Angeles Times that he ultimately settled on Walden because of his trust in Anschutz. “I believe he’s a man of faith, probably someone who’s had some realizations in his life, and is trying to carry them out,” concluded Gresham. Anschutz then poured around $200 million into filming the first book, hiring Andrew Adamson, a digital animation expert who had created Shrek, as director, and bringing in Disney as distribution partner. Since then Anschutz has invested even more in

PHILANTHROPY

his fledgling film company, but won’t say how much: “I don’t even know how much for sure, but it’s been considerable.” Now entering production is a film version of The Giver, the Newbery Awardwinning children’s novel by Lois Lowry that a generation of U.S. students have carried around in their backpacks. The film will star Jeff Bridges as the wizened community leader who opens his young disciple’s eyes to the problems of their seemingly idyllic society. Walden recently backed out of an arrangement to produce the movie version of Unbroken, Laura Hillenbrand’s survival story of World War II hero Louis Zamperini and his postwar redemption. Anschutz says he worried the movie’s other partners were taking the film in the wrong direction. “One of the things that had attracted me to that movie, beyond the heroic effort and adventure, was the strong Christian message of forgiveness and discovering faith. I just felt like the way the movie was going to be made, those messages might not be portrayed as clearly as they could have been,” he says. The studio has had its share of box-office flops—some of which Anschutz nevertheless considers a success, including Amazing Grace, the true story of William Wilberforce’s quest to abolish the British slave trade. Anschutz says he was drawn to the story for its underlying themes of faith and courage. “On the surface it was a story about the abolition of slavery, but really what that movie was about was coming to faith, about having the courage and the faith to do the right thing, promoting positive change in our society. And it was a message to politicians to do the right thing,” he says. The movie didn’t prosper in theaters, taking in only $32 million worldwide, but Flaherty says it made a difference. “We hired a polling agency, and recognition of Wilberforce went up substantially after the movie,”

Getty Images, © Disney Enterprises Inc. and Walden Media, LLC, © Paramount Pictures Corporation and Walden Media, LLC

CO CO--STARRING STARRING IN IN FILMANTHROPY: FILMANTHROPY: PHIL PHIL ANSCHUTZ ANSCHUTZ

he notes, adding that Anschutz pushed to make the film and even contributed a few lines to the script. “I don’t know anyone else who would dedicate their resources to making a movie about a forgotten abolitionist.” Like Skoll and Participant, Anschutz and Walden employ a “double bottom line.” “Obviously we pay attention to profit and loss,” Flaherty says, “but we also pay attention to whether we are making a great movie that is having a positive impact on the culture.” For Anschutz,

Philanthropist and Walden Media owner Phil Anschutz specializes in bringing classic children’s literature to the big screen, seeking moral inspiration

Getty Images, © Disney Enterprises Inc. and Walden Media, LLC, © Paramount Pictures Corporation and Walden Media, LLC

and instruction in family-friendly forms.

Walden is philanthropy. “Walden has always been more of a philanthropic effort than a business—because it’s not a very good business,” he says. And like Participant, Walden has produced its own versions of “action campaigns” to maximize the chances that a film will have a positive social effect. The company’s educational arm, for many years based in Boston, separate from the film center in Los Angeles, designs curricula for students and teachers to accompany many of its films, offering historical background, reading lists, bits of science, writing exercises, quizzes, and more. The company also involves libraries, museums, and faith

groups in events and seminars, often featuring stars or writers from the movie. And it has distributed hundreds of thousands of copies of the classic books that inspired their films, particularly sending them to undersupplied school libraries so kids don’t have to sit on a waiting list before reading the story they saw in the theater. The rather different orbits of Walden and Participant overlapped directly on one film. In 2009, Flaherty was participating in a panel discussion at the Harvard School of Education when he heard a Participant executive talking about its upcoming movie on charter schools. “The second I heard

FALL 2013

that pitch, we did everything we could to be a part of it,” Flaherty says. Walden ultimately chipped in with both production funding and marketing support for what became Waiting for “Superman.” Davis Guggenheim, director of An Inconvenient Truth, co-wrote and directed the film, which follows a handful of children through their dysfunctional public schools, portraying how painfully limited their choices are and angering teachers unions in the process. Though not a box-office success, the documentary united advocates of all political stripes behind its call for student-centered reforms. With the support from Walden and Participant, the Bill & Melinda Gates Foundation donated $2 million to bolster the film’s social action campaign.

After operating shoulder-to-shoulder with Participant on Superman, Flaherty says he’d be pleased to make common cause again: “I really like that company, and we’re going to find more projects to do with them.” It remains to be seen what their next project will be. And Walden is now in a major transition. In August 2013 the company announced it will no longer create films with its own production team, apart from projects already underway. Instead, the firm will co-produce projects brought to it by other studios. As part of this retrenchment, the company announced layoffs that will shrink the enterprise from around 50 employees to about 35. “We’re scaling back the amount of capital we allocate to movies per year, but it will still be a meaningful number, and we’re still very much staying in the business,” says Anschutz. Flaherty presents the move as an opportunity to refocus the company on classic children’s literature. Walden’s top priority is stories kids should read. “Literacy is at the center of almost every socioeconomic problem we have in this country and in the world,” he says. “Rather than come up with a gigantic list of all the societal ills we’d like to address, we want kids to get excited about reading great books, and to know that great books are transformational and change lives.” But movie-goers will have to wait and see whether the double bottom line that gives a project extra credit for moral goodness can survive in this cutthroat and often nihilistic industry. “We have shown, I would hope, that making movies of a certain type that don’t have sex, violence, bad language, or promote bad taste—and in fact do the opposite of all four of those—can succeed and be profitable,” says Anschutz. “I certainly didn’t change the world,” he adds, with a quiet laugh. “But if you succeed in affecting a few people’s lives in a very positive way, then I look back on it as being worthwhile and certainly a justifiable effort.” —The Editors 30

A A SELECTION SELECTION OF OF WALDEN WALDEN FILMS FILMS film

moral of the story

global box office

notable participants

The Giver

A boy confronts the dark secrets of an idyllic society

not yet released

Jeff Bridges

2012

Journey 2: The Mysterious Island

Sequel to their 2008 film of Jules Verne’s science-fiction classic

$335 million

Dwayne “The Rock” Johnson, Michael Caine

2012

Parental Guidance

Generations clash when grandparents look after grandkids

$120 million

Billy Crystal, Marisa Tomei

2012

Won’t Back Down

Determined mothers fight an entrenched bureaucracy to transform a failing school

$5 million

Maggie Gyllenhaal, Holly Hunter, Viola Davis

2010

Chronicles of Narnia: Voyage of the Dawn Treader

Children go on a transformational journey

$416 million

Liam Neeson

2010

Waiting for “Superman”

Inner-city schools are failing

$6 million

Michelle Rhee, Davis Guggenheim

2010

Tooth Fairy

Minor-league hockey player becomes the Tooth Fairy

$112 million

Dwayne “The Rock” Johnson

2008

Journey to the Center of the Earth

Jules Verne’s science fiction classic

$242 million

Brendan Fraser

2008

Chronicles of Narnia: Prince Caspian

Children ward off evil, fight for good

$420 million

Liam Neeson

2007

The Water Horse

A boy discovers the mythical title creature

$103 million

2007

Bridge to Terabithia

Adaptation of Newbery Award-winning tale about friendship

$138 million

Zooey Deschanel

2006

Charlotte’s Web

Adaptation of E. B. White’s children’s classic

$145 million

Dakota Fanning

2006

Amazing Grace

True story of William Wilberforce’s moral crusade to end the British slave trade

$32 million

Ioan Gruffudd, Benedict Cumberbatch

2005

Chronicles of Narnia: The Lion, the Witch and the Wardrobe

Adaptation of C. S. Lewis’s classic Christian allegory

$745 million

Tilda Swinton, Liam Neeson

2004

Around the World in 80 Days

Adaptation of Jules Verne’s classic ballooning adventure

$72 million

Jackie Chan

2004*

Ray

Life story of singer Ray Charles

$125 million

Jamie Foxx

2003

Holes

Adaptation of Newbery Award-winning book about mysteries in a detention center

$71 million

Sigourney Weaver, Shia LaBeouf, Jon Voight

year

forthcoming

* Source produced by Walden sister company Bristol Bay Productions, also owned by Phil Anschutz Sources: Box Ofﬁce Mojo and IMDB

PHILANTHROPY

(continued from p.27)

2 million times and a video that was viewed by more than 200,000 people. According to Participant, this campaign helped drive the House of Representatives to increase funding for government responses to pandemic diseases. The “social action campaigns” “Socially relevant content is our entire focus,” states Participant’s CEO, Jim Berk, in an August 2013 essay in Forbes. He closes his piece with a bit of militant inspiration from Edward Murrow: “There is a great and perhaps decisive battle to be fought against ignorance, intolerance, and indifference.” At the same time, Berk notes that “it all starts with a good story. It’s how you establish an emotional connection. For us, the story is primary. Without this we will not move forward with a project, no matter how important the issue.” Once Skoll and his associates find that “socially relevant” story with a strong emotional resonance, and produce it with Hollywood’s top creative talent, the final crucial step is the “social action campaign.” Designed to spur public response, these have been an essential element of the Participant formula since the beginning of the company. In 2008, Participant built the website TakePart.com as its division charged with organizing opinion shifts, political activity, and direct action among film viewers. TakePart’s official mission: “to inspire and accelerate social change by connecting compelling content to action.” Typically, partnerships will be formed with relevant activist groups and non-profits. Participant reports that it has formed 600 such working relationships since its first film was released eight years ago. Special screenings are offered to politicians, social organizers, and interested groups of citizens. Facts about the issue at hand are publicized. Curricula are often created for use in classrooms. Social media is unleashed. Nine books have so far been published to accompany the studio’s movies, through a business relationship with PublicAffairs, a well-respected New York publisher with a similar cultural slant. The book spun off of Participant’s inner-city education movie Waiting for “Superman” reached No. 1 on the New York Times bestseller list within three weeks of its publication. Food, Inc.: How Industrial Food Is Making Us Sicker, Fatter, and Poorer—and What You Can Do About It, another Participant movie tie-in, became a bestseller that is now in its tenth reprint. The campaign accompanying Food, Inc. has been one of Participant’s most successful, and continues to be active several years after the film’s 2008 release. TakePart solic-

ited 230,000 signatures for a petition asking Congress to reauthorize the Child Nutrition Act. Researchers from the Annenberg School of Communications and Journalism surveyed a large sample of people and found that after watching Food, Inc., 81 percent of respondents said “this film has changed my life” and 76 percent stated they could be “part of a social movement to reform agribusiness.” Current priorities of this ongoing campaign include encouraging consumers to give up meat, criticizing corporations like Monsanto, agitating against genetically modified organisms, and building pressure on members of Congress not to reduce the budget of the federal food-stamp program. As it approaches its 50th film and its tenth year, Participant’s most voluminous “product” has been the millions of “social action events” (as CEO Berk calls them) that its films have inspired. By August 2013, TakePart claimed “over 15 million social actions completed” through its website during the first seven months of the year. At that rate, Participant’s action arm is accumulating something like 25 million petition signings, letters to Congress, personal pledges, book orders, video viewings, or other click-throughs annually. And the campaigns are becoming increasingly ambitious. AllThingsD.com reported in August that TakePart will soon be adding new direct opportunities to give money and volunteer time. These resources will be channeled to activist groups operating in the field. The Pivot to television Many additional opportunities for rousing direct citizen action will arise from Skoll’s newest investment, which

“At the movies, your phones are off. When you are watching TV, you will have your phone on, you can text and tweet—get your friends to turn on. This will allow more spontaneity; you can get people in the moment.” FALL 2013

If the social cause is right, Skoll is willing to give a picture the go-ahead even if he is pretty sure it will be a commercial failure. 32

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was just days from its debut when we spoke with him in July. “Pivot” is a new cable television network that gives Skoll and his colleagues a platform for reaching more than 40 million Americans in their homes, and the potential to connect with many more people overseas via exported shows. “If we do eight movies a year, that’s at most 16 hours of content. But if we’re on TV, you’re reaching people 24/7,” Skoll notes. Like his movie production company, Pivot is firmly aimed at social advocacy, and its new programming aims to draw in young viewers. Its signature launch show, Please Like Me, features a 25-year-old Australian comic who is struggling over whether to come out as gay. Raising McCain is a public-affairs talk show hosted by Meghan McCain. One of the network’s linchpins is TakePart Live, an hour-long show mixing news with celebrity and activist guests plus audience feedback, all geared toward inspiring the sorts of social and political involvement promoted at TakePart.com. Skoll describes it as “a news show with a topic of the day that will be crowdsourced; it will be explanatory, participatory, and edgy.” He has high hopes that it will be effective in mobilizing young people politically and personally. Skoll believes Pivot will demonstrate that the combination of content and campaign can be especially powerful on television. On TV, he says, “the opportunities are even more interesting, as this will be a two-device environment. At the movies, your phones and so on are off. When you are watching TV, you will have your phone on, you can text and tweet—get your friends to turn on. This will allow more spontaneity; you can get people in

the moment.” The hope is that Pivot will be able to go viral with its messages. Pivot’s shows will employ Participant’s signature feature of building campaigning into storytelling, each show with its own set of companion action efforts. The “Pivot actions” suggested for watchers of TakePart Live include a petition to ensure gay athletes are safe at the 2014 Winter Olympics, a petition to repeal “stand your ground” laws, a pledge to end mandatory minimum prison sentences, and a petition to “bring an end to corporate-funded voter suppression” (pressuring businesses not to support the American Legislative Exchange Council). There is also a networkwide campaign called “Eyes Wide Open” which aims to help young viewers interpret the blizzard of news and messages they receive via today’s rapidly proliferating media, from broadcast to texts and Twitter. Skoll reckons that Participant has built considerable expertise over the past decade in allying compelling content with effective activism. “For every film, we have developed a social action campaign of some kind,” he says. “We have gotten pretty good at it.” Skoll wanted to enter television years earlier, but was slowed by the difficulty of finding a piece of cable-TV beachfront where programming could be made available to enough potential viewers. “We felt we needed to be in 40-50 million homes at the launch, going to 60 million,” says Skoll. Initially, Participant looked into buying Current TV, a network launched in part by Al Gore. But the inconvenient truth was that Al Jazeera offered around $500 million to take over Current so its new Al Jazeera America programming could be parked on those channels. Participant was never going to match that price. “Ours cost a fraction of that,” Skoll reports. “We bought the Documentary Channel, which was in 28 million homes, and combined it with Halogen, an independent network. So at launch we are in more than 40 million homes.” Because he was able to build his distribution network cheaply, Skoll says, he has “a lot of financial headroom to invest in programming.” Pivot launched this summer with a staff of more than 75 people, broadcasting 24/7, airing ten original series totaling 300 hours of its own content, plus access to all of Participant’s movies as well as the archive of the Documentary Channel. Skoll believes that if his network can succeed with the younger viewers it is initially targeting, it will then be able to extend its offerings to other demographics. “A toehold with that group will give us a good chance to grow into the broader market,” he says. The firm

Daniel Day-Lewis in Lincoln, Participant’s highest-grossing film yet, with box-office receipts exceeding $275 million.

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also hopes to expand around the world. A television partnership has been formed with Univision that will yield ten documentaries, available in both English and Spanish versions. Participant is also producing Spanish films with partners south of the border, including with the company established by Mexican actor and director Gael Garcia Bernal. Skoll’s investment in television is as risky as his venture into movie production, which has notoriously eaten the fortunes of many rich men. Yet he is approaching his latest experiment in world-changing through tale-telling with his usual calm willingness to try things that have defeated many predecessors. “You just never know what will work,” he reflects. A tolerance for risk while pursuing his favorite causes is a constant theme in Skoll’s philanthropy. Payoff—with or without box office For Participant and its campaigning partners, much depends on whether the featured entertainment product becomes popular. Of course, predicting which films will succeed with viewers is fiendishly difficult. Skoll acknowledges that filmanthropy is a much riskier form of giving than backing social entrepreneurs. “Comparing movies and social entrepreneurship is like comparing apples and oranges. The social entrepreneurship side is a lot more stable and predictable. We are adding four to ten proven social entrepreneurs to our portfolio each year. On the movie side, it is hit or miss.” 34

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takepart.com/foodinc/action

An image from the social action campaign created for Food, Inc.

Skoll cites the example of The Beaver, a 2011 movie about depression directed by Jodie Foster and starring Mel Gibson, which flopped. “Nobody saw the movie. It didn’t lead to social change.” Big audiences make other elements of Participant’s formula work better, and the last couple years have been good in this regard. Participant saw its first movie reach No. 1 in nationwide ticket sales when The Help tackled issues of race, class, civil rights, and fairness in pay (garnering four Academy Award nominations and one win). Very soon after, the studio notched its second No. 1 with Contagion. Participant’s biggest financial hit of all, so far, is 2012’s Lincoln, written by Tony Kushner, directed by Steven Spielberg, and decorated with 12 Academy Award nominations and two wins (including Best Actor for Daniel Day-Lewis). Yet box office success has not proved essential to a Participant movie achieving social impact. If a movie gets “screened a lot of times to legislators,” Skoll tends to consider it a success even if it loses money. Take 2013’s A Place at the Table, a documentary about hunger. According to Skoll, “it did okay at the box office, but there were so many private screenings it was credited for shutting down the Farm Bill plan to ax food stamps. We screened it on the Hill before the vote.” Skoll also points to the political fallout from Middle of Nowhere, a 2012 film about a woman whose husband is incarcerated. Among other things, it portrayed the high cost of making phone calls to prison. Participant and its partners launched a “campaign for phone justice” which lobbied legislators in many states to reduce these prices. “We have already succeeded in California and Pennsylvania,” he says. Skoll is willing to give a picture the go-ahead even if he is pretty sure in advance it will be a commercial failure. “We will sometimes look at a film and say, ‘We think this is going to lose X million dollars, but it would be worth it because it can make a diﬀerence in the issue,’” he told the Stanford Social Innovation Review last year. North Country, for example, “was a story very well told, and it had a lot of social value,” but did not seem primed to do well commercially, “and sure enough it didn’t.” But its message about “violence against women and women’s rights in the workplace” was directly linked to the Violence Against Women Act, which was facing uncertain renewal in Congress. “We had screenings on the Hill and met with legislators, and the act eventually passed.” Skoll admits to being “surprised by how eﬀective the private screenings have been,” though he adds, “everyone likes to see a movie!” He recalls a recent “very nice” meeting with the Democratic leader in the Senate, Harry Reid. “Turns out he is a huge Participant fan. He is a very powerful man who is spending a lot of time watching our movies.”

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Crusading philanthropy Overall, Skoll is pleased with how his philanthropic activity has gone so far, although the problems facing the planet are proliferating. “In some ways, I’m surprised how things have gone over the past ten years. The world is more complicated and troubled than it was ten years ago, and will be still more troubled in ten years time. Yet interventions are working.” He believes that philanthropy will become more effective in the years ahead. This is partly due to the work of the Giving Pledge, of which he is a signatory. “I have found through the Giving Pledge and so forth that there is a new school of thinking about philanthropy, that is data-driven and focused on results,” says Skoll. One of the features of this school is that it does not see philanthropy simply as a matter of making charitable grants. “You want many arrows in your quiver: non-profit grants; forprofit grants; program-related investments such as debt instruments; and proper investment wrapped around a social investment idea,” Skoll explains. For wealthy men and women looking to achieve massive social impact, the media is emerging as a crucial sphere of activity. By blurring lines between business and non-profit, their actions may not fit into traditional conceptions of philanthropy. It is still unclear, for example, what Jeff Bezos, the founder of Amazon, wants to achieve with his recent $250 million acquisition of the Washington Post, but there were hints of Participant’s “double bottom line” philosophy in Bezos’s early statement to employees that the newspaper’s “duty will remain to its readers and not to the private interests of its owners.” Skoll believes the evolution of philanthropy will soon accelerate due to “a big generational shift in wealth in the next ten years.” In a decade, he predicts, much more “wealth will be in the hands of people who are much more strategic about where the money should go. People like Pierre Omidyar, [Pershing Square hedge fund boss] Bill Ackman, and me.” Certainly Jeff Skoll has clear, strategic ideas about where he wants his money—and American society—to go. Davis Guggenheim, director of An Inconvenient Truth, noted in Fortune in 2010 that “there’s an incredible continuity” to Skoll’s film portfolio. “Before you know it, you’re going to say, ‘You know, all these movies that Jeff is making are adding up to a larger statement.’” That statement has now come into focus. And we can expect a lot more innovative giving aimed at dramatic culture change—Skoll is not yet 50. There are likely to be many more big, risky bets in areas where “you just never know what will work.” P

THE WEB - STREAMING MODEL OF FILMANTHROPY At the 2007 release of the first documentary he funded, Ted Leonsis— who made his fortune in the early days of AOL—used the term “filmanthropy” to describe the creation of movies that aim to inspire social change. Bitten by the film bug, and intrigued by the possibilities of transmitting video over the Internet, Leonsis founded SnagFilms in 2008 to distribute documentaries and independent films that would otherwise never reach big audiences. Relying on digital streaming and recommendation software to draw in viewers, SnagFilms now offers about 4,000 films for free over the Web. Short ads are embedded in the movies, and half of the resulting revenue is shared with the filmmakers. Though the founders won’t say how much they’ve put into SnagFilms, the New York Times reported that the company started with a $10 million investment drawn from a pool of funders that included Leonsis, AOL co-founder Steve Case, and the John S. and James L. Knight Foundation. CEO Rick Allen says the company made a profit in the fourth quarter of 2010, but then decided to spend more and expand. He predicted Snag would be profitable again in 2014. Allen says Snag too operates on a double bottom line: “While we’ve been very clear from the beginning this is a commercial entity, and we intend to make a return for our investors, our investors are all interested in also accomplishing good…. What filmanthropy means to us is harnessing the community power of film to inspire an audience to take action, to be a catalyst for them to take action, to learn more, to volunteer, to forward the message.” Leonsis tells Philanthropy that there are rewards for the company beyond financial ones: “We are all citizens…we care about the world around us, and we are deeply moved by a well-told story. It is incredibly rewarding to help make that happen.”

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Leonsis and SnagFilms don’t have a pronounced social agenda, as Jeff Skoll and Participant Media do. Nor to they have a special focus, like Phil Anschutz’s interest in films for children and families. The causes their films promote are a mishmash of many topics and perspectives. What the company stands for is that easy access to documentaries will help spur people do good things. Allen offers two examples of a real-world effect. Several months after Snag posted the 2009 documentary The Least of These, chronicling the conditions at a Texas detention center for immigrant families, the Obama administration shut the center down. And after SnagFilms carried Return to Tarawa—about the abandoned remains of American soldiers at a World War II battlefield—the Pentagon sent a team of investigators to the site to gather and identify the bones. “From our perspective, it wasn’t our job to decide whether policies should change,” says Allen. “It was our job to make sure that the films were broadly accessible, so a wider coalition of nonprofit organizations could use them to draw attention to public issues. We provide our digital tools for spreading the films, and the non-profits pick the course of action.” The company also created Snag Learning, a library where teachers can browse films by topic for use in a classroom. And this autumn Snag plans to debut what it calls “social screening”—a mashup of simulcast, movie screening, live panel discussion, and social-media feedback—that it hopes will let non-profits make big events out of films that matter to them. “Few non-profits can commission expensively produced films on each subject key to their mission, but every group or fan can adopt a relevant film from our library and use it to spread the word about vital topics,” says Leonsis. —The Editors 35

MEDIOCRITY BE GONE

The Relay Graduate School of Education is revolutionizing teacher training By Kari Barbic

s this some kind of This Is Your Life thing?” chuckles Larry Robbins. “My involvement with the Relay Graduate School of Education goes back to the early 1990s, when I was in college at the University of Pennsylvania. I was friends with Mike Feinberg.” It would prove to be a fortuitous alliance. Feinberg majored in international relations, while Robbins finished Penn’s prestigious five-year dual-degree program in economics and engineering. Neither, however, was the traditional Ivy Leaguer. In high school, Robbins spent his summers pouring concrete foundations in the Chicago suburbs for a construction crew. Feinberg was a popular college bartender, who sometimes jokes that he went into teaching because the LSAT law school admission test was given during Mardi Gras. More importantly, both men were naturally impatient, eager to strike out on their own. After graduation, they went their separate ways. In 1991, Feinberg became one of the first corps members of Teach for America. He was sent to Houston, where he worked closely with fellow TFA corps member David Levin. In 1994, Feinberg and Levin started KIPP, the Knowledge Is Power Program, at a public middle school in inner-city Houston. Feinberg and Levin had big plans.

They wanted to take the KIPP model and use it to create a network of high-performing charter schools. Feinberg stayed in Houston. Levin moved to the South Bronx. Robbins, meanwhile, went to work on Wall Street in 1992. Three years later, he was hired by Leon Cooperman’s Omega Advisors as an analyst and, eventually, partner. “In 1996, I earned my first real paycheck,” says Robbins. “I sent $25,000 to Mike for KIPP Houston. Every student in the entire school sent me a perfectly written thank-you letter— each of them with the kid’s name, when they were going to college, and what their favorite subjects were. Right then, I became a loyal KIPP supporter. I had a feeling that KIPP was going to do big things, and I knew that it was going to be driven by Mike and Dave.” Crafting the prototype “Dave Levin,” says Norman Atkins, “is Teacher Zero in the movement to create high-performing schools that serve low-income students.” It’s high praise coming from Atkins, who ranks among the nation’s most accomFormer Philanthropy associate editor Kari Barbic was once a high-school English teacher and is now a writer in Washington, D.C.

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Relay Graduate School of Education

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Relay Graduate School of Education

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Bloomberg via Getty Images, KIPP Foundation

Robert Evans

training than the programs offered at traditional teacher colleges. The curriculum at almost all education schools was far too theoretical, especially for instructors facing a room filled with disadvantaged kids. The intellectual fulfillment to be found in the works of Jean Piaget, John Dewey, and Erik Erikson wouldn’t be much help for a new teacher struggling to teach math to a roomful of rowdy seventh graders. “I can study Vygotsky later,” Tayo Adeeko, a 24-year-old third-grade charter school teacher, told the New York Times, “but right now, my kids need to learn how to read.” (Lev Vygotsky was a Soviet theorist of cognitive development. He died in 1934.) Atkins and Levin reached out to Dacia Toll, a former Rhodes Scholar who founded Achievement First, another New York-based high-performing charter network. Together, Atkins, Levin, and Toll decided to develop their own teacher-training program—a program that would focus on practical strategies that could be used in the classroom immediately. They started with a blank sheet of paper. “What qualities do we need in a teacher?” they wondered. Once they had sketched them out, they started reverse-engineering a curriculum that Larry Robbins, prime funder of Relay would produce those qualities. During the next few weeks, the three educators plished education reformers. In 1997, Atkins co-founded refined their idea for a new teacher-training institute. The Uncommon Schools, a charter-school network ranked as project was starting to look more and more like a business one of the nation’s highest performing, with 32 branches plan—and what the idea needed next was investors. operating in New York, New Jersey, and Massachusetts. In late 2005, Dave Levin and Norm Atkins met at Finding the investors Olives Restaurant on Union Square in New York City. In late 2000, Robbins left Omega Advisors and founded They talked shop over dinner and drinks. The conversa- his own hedge fund, Glenview Capital Management. tion kept circling back to a shared complaint: Neither Robbins named the business for the suburban hockey KIPP nor Uncommon Schools could ever seem to find league he joined as a kindergartner. It was in the hockey enough great teachers to staff their schools. It was a major rink, he has since explained, that he learned the virtues of obstacle to growth. These programs relied on smart, per- consistency and teamwork. “I grew up in the Midwest as sistent instructors willing to put in long hours to reach a student and a hockey player,” he says. “Playing hockey, some of America’s most at-risk young people. you quickly learn that it is a team sport where everybody The conversation went round after round, as it often is good and that you need to work hard, and you need to had, with Levin and Atkins trying to square the cir- work hard throughout the whole game.” cle. Gradually they realized there simply weren’t enough That ethos of steady consistency has brought Glentop-level educators to meet their demands. All of the view some very impressive returns. Robbins keeps a low high-performing charter networks needed great teach- profile, personally and professionally. He is reluctant ers, but it seemed like the only way to get them was by to talk much about his hedge fund’s strategy or percannibalizing each other’s programs. formance, noting only that it manages roughly $5 bilIt looked like an intractable problem—one that lion. Still, aspects of his investment philosophy can be called for some fresh thinking. What if, they wondered, deduced from public sources. New York magazine once we started making the kinds of teachers we need? What placed Glenview among the industry’s leading “singles if we stopped relying on existing pipelines and started hitters”—not power sluggers, but contact hitters who drilling for talent ourselves? It was a daunting task. They rack up winning seasons like Joe Torre’s Yankees. The had their hands full running fast-growing school chains. New York Post reported that Glenview has seen an averDeveloping a teacher-training program to suit the needs age annual return since inception of about 13.2 percent. of their students was an additional burden. (Throughout the same period, the Standard & Poor’s has One thing was immediately clear. If they were going posted a 1 percent average annual return.) “Any hedge to do this, they wanted a dramatically different kind of fund that’s been around for 12 years is obviously one that

Bloomberg via Getty Images, KIPP Foundation

Robert Evans

has had some success,” he avers. “That success is what allows us to be responsible philanthropists.” In 2000—four years after cutting his first check to the organization—Robbins joined the board of KIPP New York, and has since served as its chairman. As a major supporter of one of New York City’s leading charter networks, he soon was familiar with the difficulties of finding and training great teachers. “One can’t be involved with the administration of charter schools without realizing that what makes the great ones special isn’t bricks and mortar,” explains Robbins. “It’s the human capital. We needed more teachers and better teachers.” The proposal developed by Atkins, Levin, and Toll struck Robbins as a sound philanthropic investment. He quietly pledged $10 million. At the same time, another major player in New York philanthropy had taken notice of the proposed new teacher-training program. In 1998, hedge fund manager Paul Tudor Jones established the Robin Hood Foundation with a simple mandate: Reduce poverty in New York City. Central to that mission has been a commitment to fund innovative educational reform efforts. Impressed by Robbins’s $10 million commitment, Robin Hood took a major step in helping move the teacher-training program forward, agreeing to feature the program at its fundraising benefit every year in Manhattan. Robin Hood’s annual fundraiser is a major event in the Manhattan social scene, with many of the city’s most generous donors attending and many of its most promising non-profits showcased. When Robin Hood first highlighted the new teacher-training program in 2007, the benefit shattered records, raising $72 million in one night. Amazingly, within the first three minutes of fundraising, the master of ceremonies secured 23 separate commitments of $1 million apiece. Donors were clearly enthusiastic about the experiment in improving K-12 human capital: About $20 million of the funds raised by Robin Hood that night were directed toward the program being developed by Atkins, Levin, and Toll. David Saltzman, executive director of Robin Hood, thought it was a relatively easy sell: “This is one of the most exciting projects we’ve ever been involved in.”

Paul Tudor Jones, Robin Hood Foundation

Dave Levin, KIPP Academy

What is now known as the Relay Graduate School of Education opened its doors in 2008. Initially known as Teacher U, the program was housed at Hunter College, where the dean of the education school, David Steiner, was an enthusiastic patron of the experiment. Its founders saw three distinctive competencies in the new model, explains Atkins. First, it would be relentlessly pragmatic. Second, video and online instruction would be deeply integrated into the curriculum. And third, in order to graduate, students would have to deliver measurable results in the classroom. To get a master’s in education from Relay, you must demonstrate that your students have made a minimum of one year’s worth of academic growth in one year’s time. First and foremost, Relay was intended to offer practical instruction. “We are teaching how to teach,” explains Atkins. “We teach very specific techniques and strategies that help teachers to be eff ective in leading their classrooms on Monday morning.” How does a master teacher keep a roomful of fifth graders engaged with a math lesson after 30 minutes? What do you do when you ask an easy question and only two eighth graders raise their hands? How do you handle the social needs of second graders who are already deeply familiar with violence, addiction, and poverty? Any material that can’t immediately be put into practice in K-12 classrooms is shelved. Relay makes creative use of technology to expand access to the most useful pedagogical strategies. “If I could wave a magic wand, I’d love to bring the best Disrupting the market What made the teacher-training institute such an easy teachers in the country to our school so we could watch sell was its intense focus on practicality. Atkins, Levin, them work,” says Atkins. “Well, that’s not going to and Toll began by figuring out what a new teacher needed to know how to do, and then devised a two-year master’s program (required for New York public school teachers) that would drill those skills into their graduates. Underlying the whole enterprise was the conviction that great teaching isn’t an innate, mysterious talent. Rather, it is a craft that can be studied, broken down, and taught.

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happen. So we do the next best thing.” Relay is assembling a library of video case studies, real-life episodes that can be watched, paused, repeated, and discussed. Relay students observe great teaching in action. They discuss what works, and what doesn’t, in a given situation. “Often, the video will run right up to a critical moment,” says Atkins. “Then we pause it and ask the class: ‘So, what would you do next?’” Video confers additional benefits. For one thing, the case studies can be viewed after work or on weekends. They can be transmitted online, where about 40 percent of Relay classes take place, relatively easily. Relay also extensively tapes its master’s students to help them see their strengths and weaknesses in action.This watch-and-analyze method is results-focused, allowing graduate students to monitor their own progress, with support and feedback from experienced faculty. (Another unexpected benefit: The K-12 students behave better when they know they are being taped.) This regular feedback provides new teachers with the mentorship they need to help ensure their success—and the success of their students. Which gets to the program’s third distinctive feature: To earn a master’s degree from Relay, candidates must demonstrate that their students have achieved a minimum of a full year’s academic growth during their teaching year. Research on American education schools largely finds no statistically significant correlation between earning a master’s in education and improving student performance. Relay, by contrast, ties half of its total graduation credits to measurable student outcomes. If a master’s candidate cannot empirically prove the value he adds to the classroom, he won’t get a degree.

“What I’ve been privileged to do is actually the lowest-risk philanthropy out there.” 40

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Relay Graduate School of Education

Dacia Toll, Achievement First

Aaron Soffin, Relay Graduate School of Education; Courtesy of Achievement First

Norman Atkins, Uncommon Schools

Expansion mode “We wanted a name that would convey the team spirit of the work,” is how Atkins explains the college moniker. “It’s not about any one individual teacher—but a relay of teachers.” He points to research which finds that if a student has three great teachers in a row, there is a significant effect on his academic success; conversely, three ineffective teachers in direct succession can place an average student well behind, greatly diminishing the odds he will ever catch up. “We want to create a relay of great teachers for more children.” In 2011, Relay became the first new independent graduate school of education in more than 80 years to receive credentials from the state of New York. It’s too early to know Relay’s full potential, but Robbins and Atkins are encouraged by the program’s opportunities for expansion. Relay partners with the New York City Department of Education to train district public school teachers and recently launched two pilots to train public school principals. Relay is already working with master’s candidates at campuses in New Orleans and Newark, New Jersey, and aiming to grow further. “We hope that in a decade we are able to serve thousands of teachers in cities across the country,” says Atkins. Funder Robbins agrees that the goal is attainable. He has always seen Relay as a safe bet. “My father worked at a horse racetrack and taught me how to handicap horses when I was young,” he reflected on the tenth anniversary of his fund. “I have met several skilled handicappers over time, but none of them has made the Forbes 400 list, and for good reason.” Investing, he pointed out, is different from gambling. Investors draw on a much larger pool of data, enjoy much lower transaction costs, and benefit from much greater predictability. All of which tends to make investing “much more useful and productive.” Robbins sees his charitable giving in that same light. In philanthropy, as in investing, he looks to minimize risk and maximize return. “What I’ve been privileged to do is actually the lowest-risk philanthropy out there,” he explains. “While it’s true that I agreed to be an early funder of Relay, the overall concept was as risk-free and foolproof a business plan as one can design. This is not a drug discovery, it’s not medical research, both of which have phenomenal benefits but also carry huge risks of failure. In our judgment, the odds of success were exceedingly high, and it was incumbent upon us to find a way to ensure its success. Relay was the rare philanthropic investment that offered a proven track record of effectiveness and achievement and the opportunity to back incredible social entrepreneurs, to address educational quality— the largest issue facing our country—and to have an impact on a national scale. It has been, and continues to be, a wonderful investment.” P

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Relay Graduate School of Education

Aaron Soffin, Relay Graduate School of Education; Courtesy of Achievement First

Eric Millette,

HOME

Land SECURITY Pierre Omidyar discovers that property rights are the key to helping the poor By Adam Sawyer

Eric Millette,

n 1995, when Pierre Omidyar, a Silicon Valley-based software designer, launched the website that would become eBay, he didn’t know how rapidly it would grow from a hobby to a digital bazaar linking millions of buyers and sellers each month. But Omidyar did know that people would have to trust strangers if they were ever going to feel comfortable using his website. As Adam Cohen recounts in The Perfect Store, with traffic on eBay growing exponentially during its initial months, Omidyar noted a rash of arguments between buyers and sellers. In response, he created a Feedback Forum where the community of users could set and enforce expectations among themselves. With a firm belief in the power of marketplaces to benefit consumers and their communities, Omidyar was confident that a few rules to incentivize good behavior could make sure the auction website was safe and effective. As it turned out, standards recognized by the online community that injured customers could fall back on were just what users needed to boost their confidence and make billions of purchases. Twelve years later, Pierre and his wife Pam picked up Hernando de Soto’s 2000 book, The Mystery of Capital. “The hour of capitalism’s greatest triumph,” declares the famed Peruvian economist, “is in the eyes of four-fifths of humanity, its hour of crisis.” De Soto explains that for many people in the developing world, the land on which they live is their

only asset. If that property is not publicly recognized as belonging to them, as is common in Third World nations, they cannot make good use of it. These people remain isolated from rural or urban services, vulnerable to exploitation from individuals who make false claims of ownership, afraid to leave their property unattended, and unable to turn their primary resource into a means of accessing credit. Omidyar built eBay on the fundamental principle that the Internet provided more and more opportunities for individual buyers and sellers to interact peaceably through direct commercial transactions. He made the power of the free market more accessible for everyone. So he could see the parallels between eBay’s need for community standards and the developing world’s need for property rights. Many in the world still looked at capitalism with suspicion at best. In de Soto’s book he saw an answer to this quandary: Secure and recognized land tenure could bring the dynamism of the marketplace to the poor around the world. A macro look at microfinancing The Omidyars’ interest in de Soto’s claims was also fanned by the growing popularity of microfinance. Thousands of Adam Sawyer, formerly an intern at Philanthropy, is a 2013 corps member of Teach for America working in Dallas, Texas.

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clear that other mechanisms beyond loans were needed to bring the power of markets to the poor.

Taming the wild Hernando de Soto traced U.S. economic history from the untitled lands of the wild west to the robust property rights of today. Omidyar helped lead a similar taming of the Internet. A 1995 study by the Pew Center found that only 8 percent of Americans felt comfortable using their credit card on the Internet. Cyberspace was a wild west of its own. Omidyar’s creation of eBay’s Feedback Forum was thus a seminal event in the development of the online marketplace. After Omidyar established his new rules, eBay published every user comment publicly. If someone repeatedly made unduly negative comments, he or she would be banned from the site, but otherwise all buyer-seller commentary of each transaction became part of an open record. Sellers with consistently good reviews became known as trusted vendors. The Feedback Forum brought accountability and security to cyberspace. After working at eBay, Amy Klement worked closely with the Omidyars to set up the property-rights program which informs their overseas philanthropy. She notes several continuities in the two kinds of work. “One of the things we saw from eBay was the importance of rules, of governance, of the rule of law,” says Klement. “When we made changes to the rules of the marketplace, it would dramatically affect the behavior of buyers and sellers, positively and negatively.” This created an awareness within Omidyar philanthropic ventures of the importance of property rights (which for many poor people in the developing world means secure land tenure) as a precondition for economic development. Pam Omidyar brought an additional insight. “Pam was struck by the importance of land rights in war-torn environments, in conflict zones,” Klement says. “This is not to say she is not conscious of the economic-development perspective, but she connected more with the human-rights They’ve got (land) rights. perspective.” When Pam read about how de Soto’s land reforms helped resolve a 20-year civil war in Peru, she recand half non-profits. The organization joined forces with ognized that property rights would not only promote good some colleague organizations like the Clinton Founda- outcomes like increased schooling and higher agricultural tion and the Gates Foundation in channeling money to output, but also help establish and protect peace. entrepreneurial citizens across the globe. In 2007, during the peak of microfinance fever, Forbes magazine ranked Three paths to land rights the top 50 microfinance institutions, and banks like The United Nations estimates that more than 70 percent of Citigroup and Morgan Stanley began providing socially the world’s population lives without any formal acknowlmotivated investment products. edgement of ownership of their land. That is both a human As microfinance became a multibillion-dollar indus- and an economic problem. It is “very difficult [to get a free try, though, observers began to see some limitations. society] without a property rights framework,” says Karol While many individuals used the microloans to found or Boudreaux, director of investments for property rights at expand small businesses, or gain access to a new market, the Omidyar Network. ON thus believes everyone needs a little bit of land to others applied the money to everyday living expenses. As in the rest of the world, some residents of the developing call “home.” When people have secure land, they invest in world have a flair for commerce. Some don’t. It became improvement projects, work more hours without fear of land 44

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Landesa/Deborah Espinosa

organizations around the world had begun lending small amounts of money to poor farmers and artisans in the hope that these “microloans” would spur a cycle of profitability. By founding their own social-impact investing organization in 2004, Pierre and Pam became leaders in this burgeoning field. The Omidyar Network (ON) was launched with the same fundamental beliefs that had guided the creation of eBay: People are inherently capable and fundamentally good, and, given opportunity, their potential is limitless. In a departure from the traditional structure of philanthropic foundations, the Omidyars designed ON as both a grantmaker and an investment firm. Just as non-profits could reap the benefits of ON’s strategic giving, private for-profit companies demonstrating a potential for social impact could receive investments, with an expectation of at least partial returns that could be reinvested. The first $100 million of funding distributed by ON went to 28 organizations, about half of them for-profits

Landesa/Deborah Espinosa

theft, and are more likely to take out loans using their new property as collateral. Scholars have even found increases in school attendance after a family gains land security. Public recognition of ownership “allows people to come out of the shadows for the first time and to come forward to claim more of their rights,” said ON’s Peter Rabley. Klement characterizes property rights as the gateway to other social improvements. “Whether it is gender equality, food security, environmental issues, conflict, economic development, or education—investing in land rights is foundational.” ON and its partners strive in three ways to make land tenure more secure. For one, they conduct research on land tenure’s effects. Maitri Morarji, who oversees property-rights investments at the philanthropic consulting firm Wellspring Advisors, notes that more data and information make it easier to justify and plan transitions to secure property rights. “We need to concentrate resources focusing on what works and what doesn’t.” Second, ON and its partners provide legal consultation and support for government officials willing to make improvements in legally vulnerable communities.They often do this indirectly through organizations like Landesa, a Seattle-based non-profit that has established relationships with local policymakers in many states across India. Thus far, more than 900,000 Indian families have benefitted from Landesa’s legal work. Finally, ON and its partners educate communities on the possibilities of land rights. Legal systems often seem inaccessibleto people who cannot read or cannot read well. Non-profits like Red Tierras collect property information on computers and wield the collated results to establish land rights. OpenTitle, a software product of Thomson Reuters that organizes facts about land usage and produces documents useable in establishing claims, has been used by Red Tierras in Bolivia. Once basic documentation is in place, rural landholders can use their cell phones (which are widely used in Bolivia and many other developing countries that skipped the stage of erecting land-line phone systems) to identify the coordinates of their property, monitor the progress of their land claim through the titling process, communicate with authorities, and receive information via simple text messages. “It is designed to be a low-cost but commercially sustainable project,” said ON’s Rabley, who previously worked for Thomson Reuters and was the architect behind OpenTitle. In the Bolivian pilot project, “it took 306 days to do what would normally require 550 days,” says Red Tierras director, Matthew Alexander. “That’s a major step towards a more inclusive property rights system, but there’s still a lot of room for improvement.”

keeping land-tenure initiatives from garnering the interest of philanthropists, banks, and rural households to the same degree that microfinance has? “Perhaps Americans forget how efficient and convenient our property market actually is,” suggests ON’s Boudreaux. “Americans take secure property rights for granted. We have had them for a while. We are like fish swimming in an ocean. But people around the world do not have the same opportunity to swim. Investments in this space really allow people to swim with us.” Klement thinks that effective storytelling may be part of the reason for microfinance’s celebrity-like status. “Everybody knows about the woman who has the cow and needs the money to buy food for the cow to produce milk for a profit.” Meanwhile, despite the work of many scholars who have followed up on de Soto’s discoveries, land tenure is still finding an audience for its story. Instead of praising land-tenure programs as a cure-all for poverty—as some praised microfinance— property-rights advocates and their funders try to promote secure land rights for poor communities as an essential step, but one that must fit in with other intelligent reforms. Gregory Myers, land-tenure director at the U.S. Agency for International Development, thinks that microfinance and land rights are compat-

“Whether it is gender equality, food security, environmental issues, conflict, economic development, or education— investing in land rights is foundational.”

ible. “I think it’s a matter of sequencing,” he explains. “In theory, gaining security for one’s land precedes the access of people to the market. But sometimes, microlending can pull people into an economy where they can later demand their land rights.” The Omidyar Network is comfortable combining microfinance and land-rights advocacy in the very same program. Their MicroBuild Fund supplies capital for distribution to the poor in the developing world in the form of housing loans, with a percentage of the loan going toward securing their property rights and the rest being used to build on the site. Organizations like Habitat for Humanity International are partners in the effort. Since its inception in September 2012, the fund has already distributed more than $20 million for lending. Boudreaux is excited about the possibilities going forward. “Sometimes people get discouraged, saying, ‘It’s too complicated. How can we ever make a difference in this area?’” The view within the Omidyar Network is Not taking property rights for granted It is easy to understand why someone would want his own different. “If we could funnel our attention, we could do piece of property to cultivate, to use, and to own. So what is tremendous things.” P FALL 2013

Cash for

THE POOR? A tale of unconventional givers

Andersen Ross via Getty Images

By Liz Essley Whyte

PHILANTHROPY

Andersen Ross via Getty Images

he hot June sun rode waves of humidity as D.J. and Mike stepped off a Greyhound bus at a stop they thought would be Hickory, North Carolina. Instead, it was a Citgo station four miles outside the town. With no one to pick them up, they were stranded. Then they spotted other marooned travelers. The truck’s hood was up, its air filter tossed to the ground, and its elderly owner grumbling under the aging pickup’s belly. His wife, sitting nearby, told the two men that they dropped off a relative at the Greyhound station. “Now he’s on his way, and we’re stuck,” the woman said with humor, rather than dismay. As Mike and D.J. left the Citgo station to begin the trek toward town, they dropped an envelope filled with $200 in cash in the truck’s front seat. They walked away like that, again and again, for a week. They talked to more people, and gave out more envelopes, each stuffed with $50, $100, or $200, across D.C., Virginia, and North Carolina. To some they gave money without a word—the sight of their desperation was enough. But D.J. and Mike weren’t just giving away cash. They “wanted to make someone’s day,” says D.J. The money came with a Bible verse, a link to their blog, and prayers from the two men, who did not want their last names to be used for this article. Their project—riding Greyhound buses for a week to meet people, hear their stories, and help them out with cash—hinged on anonymity. What it didn’t rely on was results. “Some people’s lives may have been transformed forever. And some people may have gone out and bought a six pack,” D.J. says. But is giving money away—seemingly at random—a good way to help people?

founders. “In Kenya, the folks that we’re getting are living on an average of around 65 cents per day. Put that in context, that means a latte in the morning is one week’s budget for a typical recipient. The other reason we use [houses] is because they’re objective and that makes it a lot easier to monitor them.” Preliminary results indicate that nearly all recipients use the money to buy food, start businesses, or replace thatch roofs with metal, while very few have used the money for alcohol or tobacco. And studies of other simple cash-transfer programs in the developing world also report significant long-term improvements in income, health, and education. Despite many people’s misgivings about handing out funds with no strings attached, it seems that for many impoverished Kenyans, a one-time influx of capital can be just what they need to make more money on their own. The impressive findings won over a skeptical Jacquelline Fuller, director of Google Giving. “They’re going to provide a new yardstick for the entire development community, which is: Prove that you can do more for the poor than the poor can do for themselves,” she says. “I think that’s going to help raise the bar everywhere.” Google gave $2.4 million to help GiveDirectly expand to another (yet unnamed) country. Supporters think the charity can be replicated elsewhere, and that giving cash may be a simple and efficient way to alleviate extreme poverty—now that bypassing corrupt leaders and distributing money on a macro scale is possible thanks to mobile-phone payment technology. But GiveDirectly supporters don’t think donors should abandon their traditional work entirely. Rather, they suggest that cash transfers could be to international

Cash for the cash-strapped Unbeknownst to D.J. and Mike, giving out cash is getting trendy—or at least receiving quite a bit of media coverage. Facebook co-founder Chris Hughes made headlines when he decided to put his support behind GiveDirectly, a non-profit that gives poor households in Kenya cash via mobile phone, typically $1,000 in installments spread throughout one to two years. The only qualification for receiving funds? Live in a house made of mud and thatch. “It’s a pretty good predictor of poverty,” says Paul Niehaus, one of GiveDirectly’s Liz Essley Whyte is managing editor of Philanthropy. FALL 2013

Changing things up A mix of strategies and tools for helping the poor also appeals to D.J. This wasn’t his first foray into philanthropy, and he wanted to try something different. “For me this is kind of the portfolio approach to philanthropy. You’ve got the planned, rigorous, disciplined, long-term relations where you know all the people, all of that. And this is more just the private-equity side of philanthropic giving,” he says. An accomplished lawyer who worked in a top slot in the George W. Bush administration, D.J. helped set up a scholarship fund for kids in San Pablo, Guatemala in 2005. Since then, the small non-profit running the fund has helped about 70 children go to school every year, and set up an Internet café in the town, training locals to administer the programs. D.J. remains the non-profit’s chairman. But two books inspired D.J. to search for a different way to approach philanthropy. Barbara Kingsolver’s The Bean Trees made him realize that many Americans operate in an economic sphere he’s never encountered. “It occurred to me that I live in Loudoun County, Virginia; I work in Manhattan; and I don’t very often run across people who are truly in need,” he says. “I started thinking: How do I position myself in such a way that I can meet people who are really in financial need?” At the same time, Steve Corbett and Brian Fikkert’s When Helping Hurts convinced him of the negative side

“Some people’s lives may have been transformed forever. And some people may have gone out and bought a six pack.” 48

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On the shoulders of giants Although cash giving is something of a novelty today, it isn’t new. Henry Ford thought gifts to individuals were the most genuine form of philanthropy, and often gave away cars, food, and money, always wanting to shake the hand and look in the eye of the recipient. Although he left behind him what would long remain the largest foundation in the world, he was wary of organized charities. Once, when driving through rural Massachusetts, Ford spotted a farmhouse that had been wrecked in a storm. He gave the elderly farming couple all the money he had in his pocket—$200—before driving on. For more than 16 years multimillionaire Percy Ross used his “Thanks a Million” newspaper column to give money to strangers who wrote him to request everything from a harness for a farm cow to taxi fares to visit their parents. Ross received thousands of requests, responding

development what index funds are for investors. Transferring cash is “very efficient,” so it can be “the benchmark that you use to evaluate and direct your actively managed portfolio,” suggests Niehaus. “Index funds were probably the biggest no-brainer ever to hit retail investing. It took 30 years for them to become mainstream. I think that similarly cash transfers are such an unorthodox idea to most Americans that it could take most of our lives to see them become mainstream and play that benchmarking role—which I think they should.”

effects of much of Americans’ giving. “You can create a sense of entitlement; you can create cultural dependencies; you create distortions in the relationship. There’s the giver and the receiver, and the giver is sort of the master to the receiver, who’s more subservient. That’s unhealthy. So it’s very, very difficult to give money to people in a way that is just positive,” he says. D.J. and longtime friend Mike began trying to think of how to meet people and help them in ways that wouldn’t foster either dependency or servility. Their solution? A philanthropic road trip on Greyhound buses, riding wherever the next departure took them, and giving money to people they met along the way. They named the venture “Good Will Tour 2013” and established rules: 1) Don’t give to people who ask for it. 2) Give away money only while walking away, to avoid awkward thanks and promote anonymity. 3) Talk to everyone. 4) No planning—follow the next opportunity wherever it leads. They hopped on a bus in D.C. and ended up giving away about $5,000. They didn’t donate to everyone they met. On the way to Hickory, D.J. sat next to Samantha, a woman with a history of substance abuse who had just been released from prison, where she served time for using cocaine while driving. Samantha told D.J. her ultimate goal in life was to meet a “sugar daddy” and she preferred when other people took care of her two children. D.J. listened to her story and offered to buy her lunch, but thought any cash he gave her would be misspent. Yet he found her story fascinating, and her personality lively and humble. “It wasn’t just the money. It was the time. People asked for legal counsel; they asked for personal counsel. It was amazing how people were just very, very open with their lives: ‘Here’s what I’m going through; help me through this,’” D.J. says. “All the money said was: ‘We’re serious about wanting to help you.’”

to the worthiest with checks—usually in amounts less than $1,000—and featuring several of the stories in his weekly column, which ran in about 800 newspapers. Even before the column, Ross was known for his largesse. In 1978, while riding along in a Minneapolis parade, he threw $16,500 worth of silver dollars to children along the route. He stopped writing the column in 1999, when he said he had given all he had—$30 million. “I’ve achieved my goal. I’ve given it all away,” Ross wrote in his final column. “You’ve given me so much over the years. In many respects, I’m far richer today than when I started.” Former Secretary of the Treasury William E. Simon dedicated much of his time and money to the New Jersey hospital now known as Morristown Medical Center. There he met Sister Jo, a nun who convinced him to offer cash support to patients engulfed in financial difficulty because of medical expenses. Though the details of how it all began are now murky, according to his daughter Aimee Bloom, the program known as Project Independence formally began in 1989 and is now supported primarily by her father’s philanthropy, the William E. Simon Foundation. Since then, the foundation has dedicated $6.4 million to needy patients in one-time gifts averaging around $7,000, program staff report. Social workers refer patients, who often don’t know about the program, to a board that decides whether and how much to give to each. The foundation asks for nothing in return. “I think my dad felt very strongly that he just wanted to give somebody a break who fell on hard luck,” Bloom says. “He didn’t really want any strings attached.” A number of philanthropists finance similar programs run by churches and religious groups that quietly give out cash or pay people’s bills. No one can say what difference Ford’s, Ross’s, or Simon’s gifts made in the recipients’ lives. And experts are quick to point out that even the targeted cash infusions pioneered by GiveDirectly are unlikely to work everywhere or solve every problem. Large-scale systemic change in developing countries often requires complex problem-solving and concentrated effort. Tamping down an endemic disease, or even building a well or paving a road requires collaboration that one person with $1,000 can’t achieve alone. And if a country’s economy rules or laws are perverse, even a determined person with money to spend may find it impossible to improve much. Cash infusions may be inappropriate for many populations: Program advocates say successful cash recipients have special circumstances. Bloom says recipients in Project Independence are generally hardworking, responsible individuals whose illnesses have made a job impossible, or whose medical bills made it hard to make mortgage payments. Niehaus says his program works because rural Kenyans are impoverished mainly

because they were born in an undeveloped country. A cash-transfer pilot program with education, work, and health requirements for a low-income population in New York City has shown mixed results so far, researchers at social policy research organization MDRC found. Google’s Fuller found that the GiveDirectly team was split about whether the approach would work elsewhere. “There are probably people in your extended family that you wouldn’t hesitate to give $1,000 if they needed it. But there also probably people in your extended family or your neighbors that you’re not so sure they would make good choices with that. Human nature is human nature,” she says. But for philanthropists like D.J., sometimes measurable results don’t matter. He wanted to establish a personal connection, to make someone’s day, and that’s what he got. “We want to tell you all that we really appreciate the generous donation that one [of ] your guys left for my husband,” the elderly woman from the Citgo station in Hickory wrote on Mike and D.J.’s blog about a month later. “Words cannot express how thankful we were and still are.” P

“I think my dad felt very strongly that he just wanted to give somebody a break who fell on hard luck.” FALL 2013

reviews commentary AND

Closing America’s Other Achievement Gap

Why donors should help our most talented students reach their full potential BY ANDY SMARICK

What is honored in a country is cultivated there. —Plato, Republic, Book VIII

A Wise Giver’s Guide to Helping Our Most Talented Students Reach Their Full Potential

This intriguing book makes a powerful case for a sorely needed U.S. educational improvement that has been almost entirely overlooked. During the last two decades, philanthropists and education reformers have made urgent efforts to pull weak students up to levels of basic competency. Though that vital work is incomplete, there is evidence of progress among low achievers. Meanwhile, though, children at the other end of the achievement spectrum have gotten lost in the shuffle. Programs and funding once aimed at stimulating high-potential students to make the most of their talents have withered, and we are now doing a poor job of stimulating our quick learners. When the particular needs of high-potential students are not met by schools, that is a moral failure—because every child deserves to be stretched and challenged. It is also a threat to our national interests—since high achievers will be crucial to America’s future ability to compete internationally. This is a field where donors have wide-open opportunities to lead. In the pages of this fresh, practical guidebook, savvy school-reform philanthropists will be introduced to scores of programs and institutions that can pull talented students of all ages, races, and income levels up to their full natural capabilities.

PhilanthropyRoundtable.org (202) 822-8333

Free copies of this guidebook are available to qualified donors. An e-book version is available from major online booksellers.

PHILANTHROPY

This is excerpted from the Roundtable’s new book Closing America’s High-achievement Gap: Closing America’s A Wise Giver’s Guide to High-achievement Gap Helping Our Most Talented Students Reach Their Full Potential. Andy Smarick is a partner at Bellwether Education and recently served as New Jersey’s deputy commissioner of education. He helped launch a college-preparatory charter school for underserved Maryland boys and girls; he is also a former White House fellow. His article “Magna Charter” ran in the Spring 2013 issue of Philanthropy. The Philanthropy Roundtable

SMARICK

Closing America’s High-achievement Gap

Gifted students also deserve help Many schools today do a poor job of stimulating quick learners and stretching them from average or good results toward greatness. The majority of gifted students do not match their tested ability with comparable achievement in school. Bright students “spend time in school working well below their capabilities. The belief espoused in school reform that children from all economic and cultural backgrounds need to reach their full potential has not been extended to America’s most talented students. They are under-challenged and therefore under-achieve,” summarized a U.S. Department of Education report. In a recent survey, teachers were asked which students were top priorities at their schools. They were three times likelier to say “academically struggling” students than “advanced” students. When asked who was most likely to get one-on-one attention from teachers, 81 percent said struggling students. Only 5 percent said advanced students. CLOSING AMERICA’S HIGH-ACHIEVEMENT GAP

There is something quintessentially American about bootstrapping your way to success from a humble beginning. We admire the greats who made it big despite strong odds against them. Former slave Frederick Douglass emerges as a moral leader. Rising above rural poverty, less than a year of schooling, homeliness, and depression, Abraham Lincoln becomes a national savior. Steve Jobs, given up at birth and later dropping out of college, pioneers an entire industry. This proud populist tradition of self-invention has blessed America in many ways. We recognized from the beginning that education can equip a person to rise above his station. Our tuition-free schools, our numerous programs for low-income and special-needs children, and the many educational gifts of philanthropists seek to perpetuate the fundamentally democratic rise of young climbers. For struggling students we now have government and philanthropic interventions of all sorts, Title I spending and Pell Grants, networks of high-poverty charter schools, “equity lawsuits” and the Individuals with Disabilities Education Act, and countless scholarship programs for the low-income—all efforts we can be enormously proud of. But there is another group of students we largely ignore: those naturally achieving at an advanced level. We certainly have no intention of holding back our top students, but we are inclined to let them be. These students were blessed, we reason; they were given capacity and

talent to spare. They will be fine without any favors from us. Bob Davidson, a software entrepreneur and a leading philanthropist in this area, responds that “that’s like saying a great athlete will be great no matter what, so we don’t need expert coaches.” Besides, intellectually gifted students are often far from “privileged” economically, emotionally, or otherwise, and like every learner they have weaknesses and needs. Yet our system of school supports for high-potential students is astonishingly under-resourced, deprioritized, and inchoate at present. Guiding children to the very highest levels of academic achievement now falls low on the priority list of most schools, far below equity, diversity, and extracurriculars. Not only is this tragic for many students, but it also flies in the face of individual and national realities. Many of our most admired achievers from the past were talented people who were given special help along the way. Frederick Douglass received surreptitious reading lessons during his childhood. Thomas Edison was homeschooled by an attentive mother. Robert Goddard was given a telescope, microscope, and subscription to Scientific American during formative years. Steve Jobs was repeatedly encouraged and aided in following his unconventional fascination with technology. While America’s most at-risk kids deserve all the help they can get, we ought to also give increased attention to our potential top achievers—both for their own sake and for the nation’s. And philanthropists are best positioned to lead the way.

A Wise Giver’s Guide to Helping Our Most Talented Students Reach Their Full Potential Andy Smarick

The first and most basic reason to invest in programs for top students is the same as that for helping low-performing students: a moral desire to see that every child has a chance to fulfill his or her potential. Squandered human talents are a loss for the person, the community, and the nation. This is as true for the gifted student who languishes as for any other child. And it is especially easy for high-potential children to become bored with school or, worse, lose interest in education generally. If left unchallenged, they may never acquire hard-to-measure but vital attributes like grit and perseverance. This will bring trouble when they face obstacles in college, graduate school, the workplace, or family life. The “drop-off ” of high-potential students into mediocrity is far more than speculation. A 2011 study found that, depending on the grade span and subject studied, somewhere between 30 percent and 50 percent of “high-fliers” descend and no longer achieve at the most advanced levels. Research at English schools found that many of the brightest children were also not getting the attention they needed, and as a result 27 percent of previously high-attaining children no longer earned A’s or B’s in English and math. Even if a high-potential student ends up with a perfectly fine career, the gap between what is and what could have been represents a waste of both personal fulfillment and potential contributions to society. In some families, knowledgeable, insistent, well-resourced parents are able to compensate for undemanding schools. They offer enrichment, find tutors, or supplement the school work of their under-challenged children. Some simply decide to homeschool. But high achievers are born into inattentive as well as attentive households, poor as well as comfortable homes, families where parents know how to compensate

and families where they don’t. To say gifted students can just rely on their own domestic resources is unfair and unlike the way we try to help all other children attain their best. Tragically, it is often the talented low-income child who finds himself stifled and alienated at a low-expectations school. With neither school nor family in his corner, he faces seemingly impassable barriers to intellectual growth and development. He may languish or, worse, apply his intelligence to take himself down a path much less constructive and more dangerous than he would have trod in a more demanding school. In their book Genius Denied, philanthropists Jan and Bob Davidson note that while affluent families can always find supplemental programs for their kids, “Poor families are simply stuck with the schools and districts they get.” Indeed, research shows that bright impoverished students fall through the cracks and regress to the mean at higher rates than their more affluent peers. Donors can focus their efforts on catching these students before they fall. We’re unprepared for contests ahead Another key reason to help quick learners is to keep U.S. education competitive with other nations. International assessments of student performance show that the top American boys and girls now lag far behind international peers, especially in science, technology, engineering, and math (the STEM fields), where many of the highest-paying jobs and most important inventions of the future are expected

to emerge. Findings from the Program for International Student Assessment in 2009 showed the United States in 21st place in science and 30th place in math. More recent results from two other international assessments found that math and science achievement of American eighth graders was stagnant. According to the 2011 National Assessment for Educational Progress, only 2 percent of U.S. eighth graders scored at the “advanced” level in science. As one author recently noted, based on international assessment results, the top 10 percent of American students “would be considered middle-of-the-pack in top-scoring countries like South Korea, Finland, and Belgium.” There is a strong case, on competitiveness grounds alone, for enhanced philanthropic activity to accelerate high-potential students. A case study in helping high achievers Many small programs have demonstrated how philanthropists can help gifted students live up to their full potential. Started in 1998, Project EXCITE is a collaborative program between the Center for Talent Development at Northwestern University and Evanston/Skokie School District 65 in Illinois. The project was created to address the glaring underrepresentation of minority students in honors and Advanced Placement courses at Evanston Township High School. Project EXCITE begins working with students in third grade, providing supplemental education over six years to ensure that by the time participants reach high

Intellectually gifted students are often far from “privileged” economically, emotionally, or otherwise, and like every learner they have weaknesses and needs. FALL 2013

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school they will have completed Algebra I (the gateway to higher-level math courses like statistics and calculus), have had exposure to significant laboratory and science experiences, and are prepared for honors-level courses in math and science. The program currently ser ves approximately 130 students from five participating elementary schools in the district. At the beginning of the school year, minority students receive an invitation to participate in the selection process. Applicants take reading and math tests from the Iowa Test of Basic Skills (a nationally normed assessment) and the Naglieri Nonverbal Ability Test. From the initial pool, 20-25 students are chosen based on test performance, classroom achievements, and teacher recommendations. Students enroll in Project EXCITE and begin receiving services in late November of their third-grade year. These include after-school, weekend, and summer enrichment classes; tutoring; practice and preparation for high-school math placement exams; and educational guidance and counseling. The program’s after-school classes are held one afternoon per week at the local high school. Math and science teachers immerse participants in hands-on activities involving biology, chemistry, mathematics, and physics. Saturday Enrichment Programs are held on the Northwestern University campus for students in grades four through eight. Not only do the students get access to top-flight activities, they are also introduced to a college campus early in their academic careers—a strategy used by some of the most successful high-performing, high-poverty schools. Project EXCITE is free for participants. The cost of the program is underwritten primarily by Northwestern University, with additional funds from the Evanston/Skokie School District and donations from corporations like AT&T, Citicorp, Coca-Cola, and Morgan Stanley. The results have been tremendous. According to Rhoda Rosen of the Center for Talent Development, in third grade, 52

African-American and Latino students in this district lag behind their white peers in math by 39 and 37 points respectively. By seventh grade those gaps grow to 46 and 38 points for non-EXCITE students. But for EXCITE participants, the gap is only 4 points. The benefits continue: By ninth grade only 27 percent of non-participating minority students in the high school are working above grade level, compared to 77 percent of EXCITE participants. This type of locally focused partnership could be a model for donors across the nation. Identify useful supports for gifted kids, set a clear goal, tailor a program for a school or small district, and then engage local schools, colleges, external support organizations, and a range of donors. What’s working in Evanston could easily be replicated in Erie, Eureka, or El Paso. Other solutions Philanthropists seeking to help top students can draw inspiration from many other models. (For many examples and details, see the new Roundtable guidebook Closing America’s High-achievement Gap.) There are programs for bright students from underprivileged backgrounds such as Prep for Prep, the Jack Kent Cooke scholarships, and A Better Chance. There are a variety of university programs that offer gifted children of all backgrounds summer, after-school, or online enrichment learning. There are schools that offer advanced curricula and high expectations—places like the BASIS charter schools and Ohio’s Menlo Park Academy, or the 165 specialized public high schools that use entrance exams. There are accelerated tracks that keep quick students stimulated at conventional schools. There are programs like Project Lead the Way, 100kin10, and the National Math and Science Initiative, which can dramatically enhance STEM instruction at neighborhood schools. There are special schools for gifted artists and musicians. The exciting expansion of online offerings to bright students has the potential to transform the field. Innovators are aimPHILANTHROPY

ing to attract new teaching talent and to better train existing teachers to handle quick learners. Opportunities abound for philanthropists to sponsor smart research and advocacy. Buttressing reform One final reason to invest in high-achieving children is that doing so could help sustain the broader education-reform effort, on which struggling students also depend. Schools for high performers can act as cultural magnets for big cities, preventing affluent and middle-income families from feeling like they have to leave the area or shift to private schools to find an academically demanding setting for their children. That works against the pernicious effects of segregation and concentrated poverty. For more than a decade, the vast portion of resources dedicated to K-12 reform has been funneled into improving outcomes among today’s least successful students. There is little thought given to suburban, rural, or middle-class families by today’s school-reform movement, least of all to children who are fast learners. We are starting to see a backlash. First there were murmurs that the Education Department’s billions of dollars of “Race to the Top” programs offered nothing to suburban communities. Then as state budgets tightened, suburban leaders groused more and more about the tax dollars sucked out of their districts. Determined efforts to redistribute great educators from high-achieving schools into low-achieving schools maddened parents. In short, the larger reform movement may be in jeopardy because it ignored the interests of too many families for too long. All American children and communities need improved education. A set of initiatives aimed at producing and supporting high-achieving students will add a much-needed balance to the current reform agenda. It will signal the reform community’s interest in helping all schoolchildren, and thereby strengthen a movement that is vital to students at every level. P

Learning from the Sunset Five lessons for lasting impact from foundations that spent down B Y A M Y M A R KHA M AN D S U SAN W O LF DIT K O F F

After more than three decades as a philanthropist, in 2012 Swanee Hunt decided to give out the remainder of her foundation’s assets throughout the next ten years. As founder and chairwoman of the Hunt Alternatives Fund, the politically progressive daughter of oilman H. L. Hunt has committed more than $120 million to social change initiatives since 1981. Much of that support has gone to stopping global sex trafficking and inspiring women to achieve political leadership positions. Now 63, Hunt wants to enact a “big, big push” on behalf of the women’s issues she has long championed. “The reason I chose to spend down was because a lot of my contacts are retiring or dying,” she explains. “Working on a project with someone you’ve known for 25 years is very different from working with her replacement, whom you’ve known for six months.” A former U.S. ambassador to Austria and founder of the Women and Public Policy Program at Harvard’s Kennedy School, Hunt has a personal network of potential collaborators spanning the globe that creates powerful opportunities for her foundation—opportunities that are greater now than they will ever be again. Hunt’s decision to spend down puts her in good company. As advisers to many of today’s most active philanthropists, we at the Bridgespan Group see a growing number of donors resolving to give away most or all of their resources within a defined time frame. “The trends are unmistakable. Not only are today’s newly established foundations announcing the intention to spend down at an increased pace, but they are also dwarfing their mid-20th century counterparts with respect to the assets they intend to disburse,” says Joel Fleishman, faculty

chairman of the Duke University Center for Strategic Philanthropy and Civil Society, who has spearheaded pioneering research in this field. “These newer philanthropists (like Omidyar, Gates, Marcus, Blank, and Feeney) have assets at the billion-dollar or higher levels.” Fifty years ago, only 5 percent of the total assets of America’s largest 50 foundations were held by spend-downs, compared to 24 percent in 2010. Spend-downs are even more influential when measured as a percent of giving, since they disburse money at a higher annual rate than foundations that aim to last forever. In 2010, 31 percent of giving from the largest foundations came from spend-downs. And these foundation statistics do not begin to encompass the total appetite for giving while living, since many philanthropists donate directly rather than through foundations. For instance, David Rubenstein, co-founder of the Carlyle private equity group, has pledged to give away the majority of his $2.5 billion personal wealth without a foundation. Bridgespan recently interviewed more than 50 major philanthropists and found that four in ten have decided to spend down much or all of their resources. (Videos from these interviews are available at GiveSmart.org.) Why are so many donors now electing to give away their money over a defined interval rather than in perpetuity? Discipline, creativity, and focus The decision to spend down appeals to donors for many reasons, but one stands out: results. Many philanthropists believe that going big during a short period of time, particularly while they are living, will afford them greater influence. They can spend more each year than a perpetual foundation with similar resources, and the declared deadline provides discipline in achieving results. FALL 2013

In addition, many active philanthropists relish the chance to use their skills, networks, and reputation to multiply the impact of their funds. “The wonderful feeling of helping somebody—how am I going to get that from the coffin? Why wouldn’t I want to do it while I’m alive?” asks Bernie Marcus, co-founder of Home Depot. “I consider myself to be a pretty good businessman, so when I give money now, I try to make something better.” Other donors disburse their money during their lifetimes to avoid the possibility that a perpetually endowed foundation might drift away from their intent, shun risk-taking, or lapse into mediocrity without the donor’s active oversight. When you’ve fixed a date to turn out the lights, every grant is an attempt to make a lasting difference now—before the money runs out. “I tell foundation trustees to act as if they were sunsetting starting day one, because of the focus and hyper-vigilance and due diligence about every dollar spent,” said Lauren Merkin, a board member of the AVI CHAI Foundation, which will close in 2020. As the number of sunsetting foundations grows, so too do the lessons on how to do it well. Those lessons have value for all philanthropists, because even if a foundation plans to continue in perpetuity, no grant, strategy, or program lasts forever. Nearly every philanthropist regularly decides to exit certain strategies or causes, and thus has the opportunity and responsibility to think with the self-imposed discipline and acute focus of a spend-down. From our decade-plus of experience advising results-oriented philanthropists, we have distilled five pathways that can lead to enduring change: investing in the people who will become the field’s future leaders, building the capacity of powerful instiSusan Wolf Ditkoff is a partner and the co-leader of the philanthropy practice in the Bridgespan Group’s Boston office, where Amy Markham is a manager. Special thanks to Bridgespan associate consultant Colin Murphy who assisted with this research. 53

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tutions and networks to continue making progress, influencing other philanthropists, funding proven programs that create lasting results, or supporting pioneering research to develop new solutions. Choosing the best pathway is a complex decision that depends on many factors, and the pathways can be mutually reinforcing. So it can be tempting to pursue all or most of them simultaneously. However, just as no single non-profit or company can execute five lines of business with excellence, no one philanthropist (or foundation) can make outstanding grants across all five pathways. Evaluating a research proposal requires very different skills than partnering with other philanthropists, for example. Since each pathway requires distinct expertise, the key is to avoid spreading resources too thinly. Having a clear, focused approach allows philanthropists to hire appropriate staff, develop deep expertise, and form strong partnerships in the most critical areas. To help clarify the tradeoffs, in the examples that follow we describe a philanthropist who has successfully pursued each of the pathways. Path One: People Invest in people who will carry your values and priorities into the future. Zalman Chaim Bernstein, founder of Sanford Bernstein & Co. and the AVI CHAI Foundation, believed strongly that his money should be given away by people he knew and trusted. He meticulously selected trustees who shared his passionate commitment to strengthening Jewish community, literacy, and observance. Bernstein directed the trustees to spend down his foundation’s resources within a short period after his death so that there would be no need to select replacements who might take it in a different direction.

As AVI CHAI approaches its sunset in 2020, it has followed Bernstein’s principles and invested heavily in developing leaders for Jewish institutions. In particular, it has supported Jewish day schools and camps, which research shows play a crucial role in engaging the next generation. To this end, AVI CHAI helped create the Day School Leadership Training Institute. This 15-month program of summer sessions, retreats, individual mentoring, and peer support deepens participants’ knowledge of Judaism, personal commitment to Jewish values, and practical skills for infusing Judaism into schools. Most alumni become principals or division heads at day schools. Even after AVI CHAI closes, the foundation expects that the people it has trained will continue to shape the next generation. Investing in people is most effective in fields that rely primarily on a flow of talented individuals. It’s also useful if the chosen issue is evolving over time, and will thus need leaders who can react to changing circumstances. Path Two: Institutions Invest in a powerful institution or network so it can continue to meet evolving challenges. John Olin believed passionately in the American free-enterprise system, and decided to use his family fortune “to help to preserve the system which made its accumulation possible in only two lifetimes, my father’s and mine.” The John M. Olin Foundation, which spent down between 1953 and 2005, built powerful pro-market institutions that have shifted the national conversation. In 1982, the foundation gave seed money to a loosely organized collection of law students at Yale, Harvard, Stanford, and the University of Chicago to fund a national symposium on federalism. Out

We see a growing number of donors resolving to give away most or all of their resources within a defined time frame. 54

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of this conference, keynoted by Robert Bork and attended by rising stars such as Antonin Scalia and Richard Posner, the Federalist Society was born. Soon, chapters at nearly all prominent law schools sought to challenge “the prevailing liberal orthodoxy on campus” and to help connect and support conservative students. The Olin Foundation provided more than half the budget of the Federalist Society in the early years, and granted more than $5.5 million throughout the following two decades. Today, almost a decade after the foundation closed, the Federalist Society continues to thrive, actively promoting limited government and judicial restraint. It has chapters at more than 200 law schools, and its membership includes four current Supreme Court justices. Conservatives consider it an influential counterweight to the liberal-leaning American Bar Association. The decision to endow law and economics centers bearing Olin’s name at top law schools, including the University of Chicago, Harvard, Stanford, Virginia, and Yale, has also paid off in lasting influence on legal scholarship and analysis. Supporting an institution, either existing or new, can be an effective way to lastingly influence complex or evolving issues. A strong organization or network can provide a valuable base where like-minded individuals can build on each other’s efforts over time. Path Three: Philanthropists Cultivate other philanthropists who will support the field or program in the future. In 1998, John Hunting decided to give his foundation, the Beldon Fund, his $100 million windfall from taking office-furniture manufacturer Steelcase public. At the same time, he set a goal of spending down the entire endowment over ten years. Hunting decided to focus on environmental problems. It is “important to promote collaboration among foundations, which makes all of our work more effective,” he argued.

He selected Beldon’s board members with an eye toward building donor partnerships. Beldon’s staff worked closely with fellow donors and took leadership roles in two collaborations with other funders, the Health and Environmental Funders Network and the Environmental Grant Makers Association. To influence peers, Beldon funded projects demonstrating the effectiveness of its grantees’ work. As one measure of success, the foundation tracked how much other donors invested in its grantees and issue areas. In a survey completed in Beldon’s final year by the Center for Effective Philanthropy, 75 percent of the foundation’s grantees said that they expected to be able to continue the work Beldon had supported, thanks to funding received from parallel sources. Cultivating new funders or new approaches by existing funders begins with building relationships that allow you to understand and motivate other donors, who have their own personal values and priorities. Path Four: Programs Expand proven programs to increase impact. Spend-down philanthropist Josh Bekenstein, a managing director at Bain Capital, first encountered Year Up through an intern hired by his firm’s information technology department. Founded by entrepreneur Gerald Chertavian, Year Up provides low-income young adults with six months of intensive classroom training in professional skills, followed by a six-month corporate internship. Its graduates receive roughly 20 college credits and are qualified for entry-level corporate jobs in fields like technology and finance. One rigorous study found that Year Up participants earned 30 percent more than control-group members in the year after the program. Year Up is now tracking how its alumni fare over the longer term, and preliminary results are promising. “Year Up is an incredible program. If you’re an 18- to 24-year-old not trained

Fear, prejudice, and confusion were hindering government and institutional investments in AIDS research. for any skilled jobs, what’s your future?” says Bekenstein. “How are you going to build a good life for yourself and your family? After Year Up, many participants get jobs making $30,000 to $40,000 a year. And Year Up graduates are a great example and inspiration for other kids in the community. It’s one of the most effective models I’ve seen.” Many philanthropists invest in programs with high hopes, but while many interventions have a great idea and a few dramatic success stories, anecdotes aren’t always representative. The key to this pathway is investing in programs that actually change the long-term trajectory of beneficiaries as evidenced by rigorous data. Path Five: Research Support pioneering research that can accelerate the field. In the mid-1980s, philanthropist Irene Diamond was alarmed by the AIDS epidemic beginning to ravage her hometown of New York City. Fear, prejudice, and confusion were hindering government and institutional investments in AIDS research, she learned. A few years earlier, Irene and her husband Aaron, a real estate developer, had decided to give most of their assets to their foundation and committed to spending down. After his death, she founded the Aaron Diamond AIDS Research Center, or ADARC, making the Diamond Foundation the largest private funder of AIDS research in the United States. The new center opened in 1991 and soon began making valuable scientific advancements. ADARC pioneered the use of combination “cocktail” drug therapy to treat AIDS, which has helped reduce the death rate from HIV in America to one fifth of what it was 20 years ago. The FALL 2013

center also developed protease inhibitors, clarified the virus’s path in the body, and identified a gene mutation that confers immunity to HIV. In 1996, the year the Diamond Foundation closed, Time magazine selected ADARC’s director Dr. David Ho as Man of the Year for his team’s groundbreaking AIDS research, which saved millions of lives. Investing in research can be a powerful lever for lasting influence if information gaps or urgent questions are impeding progress. The urgency of deadlines In all of these examples, the donors’ knowledge that their giving would soon cease was a compelling motivator to use time and money wisely. Faced with the urgency of a hard sunset deadline, they sought a clear, direct path between their investments and lasting impact. Determining which pathway to follow is a complex decision in which values and beliefs, data and analysis, and time frame and resources all must be considered. For instance, if the spend-down date is 30 years away, the best path might entail incubating a new institution or evaluating a program’s long-term effects. If the foundation or program is ending in two years, cultivating partnerships may be a better focus. If conditions are likely to evolve after the investment ends, supporting institutions or leaders who can adapt may provide more flexibility than investing heavily in unproven programs. Carefully thinking through goals and pathways takes time and hard work, but spend-down philanthropists who have done it can testify that the payoff is worth the effort. The result is a clear strategy and better odds of results that will endure long after the last dollar is spent. P 55

books Where Boys Flounder

Today’s schools are inhospitable to many young males BY DAN F ISHM A N A N D MAT T B AZ I K

The suggestion that men are becoming a “lesser sex” can seem absurd in America, which has yet to elect a female president and where male CEOs head 95 percent of the top 500 companies. Yet the overwhelming male dominance in these and other areas masks a startling truth: The percentage of men thriving in school at all levels has declined significantly and continues on a disconcerting downward trend. Two books show us that this educational decay will mean worse things to come if we don’t restore excellence in the schooling of both sexes. In a recently updated version of The War Against Boys, Christina Hoff Sommers warns against unintentionally privileging girls in education. A resident American Enterprise Institute scholar, “equity feminist,” and former philosophy professor, Sommers published the original edition of her book in 2001. At that time she was one of very few noting the plight of boys in the modern American classroom, but the problem has since been more widely recognized. A lively debate has sprung up in books, essays, and editorials over the drooping trajectory of boys, as well as the struggles of young males entering adulthood. Despite this, Sommers argues in the new edition, little progress has been made in improving the fate of boys in school today. This problem is not unique to the United States, but the national inaction is. Great Britain and Australia have recognized and confronted their “boy crises,” calling for greater emphasis on purposefully-structured classrooms, physically active learning opportunities, male teachers and role models, and targeted efforts to improve phonics and engage male students in reading. Playing the role of skeptical reporter, Sommers scrutinizes assertions of bias against female students by “women’s lobby” organizations, including the American Association of University Women, the Ms. Foundation, and the National Women’s Law Center. Exposing faulty assumptions and research, she claims the crisis of underserved girls is more smoke than fire, noting that female students have matched 56

The War Against Boys: How Misguided Policies Are Harming Our Young Men By Christina Hoff Sommers Simon & Schuster, 2013 (updated edition) 288 pp., $25

The Trouble with Boys: A Surprising Report Card on Our Sons, Their Problems at School, and What Parents and Educators Must Do By Peg Tyre Harmony, 2009 320 pp., $15

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and surpassed their male peers in many categories and that the success of one gender need not come at the expense of another. She asserts that flawed studies, anecdotal evidence, and unfounded declarations underlie several “expert findings.” For those seeking a less confrontational take on boys’ educational woes, Peg Tyre’s The Trouble with Boys provides an interesting read. The book, which grew out of her eponymous Newsweek cover story in 2006, offers the sort of window into the psyche and development of boys that only a journalist can provide. A series of stitched vignettes, The Trouble with Boys explores in compelling narrative the modern circumstances that diminish and sometimes defeat young men. Tyre’s book carries less zeal and, contra Sommers, doesn’t place significant blame on the feminist movement for the current state of male achievement, but makes it clear that boys’ academic struggles are real. She urges wise readers to recognize the educational crisis facing boys and discuss the issue in ways that address the struggles of both sexes. There are few easy solutions to widespread male underperformance, as Tyre acknowledges again and again when exploring various experiments to improve achievement. Single-sex schooling, for example, enjoys vocal support among proponents, but has demonstrated relatively modest academic advantages. (Though according to her research, single-sex education does increase the likelihood that a boy or girl will study subjects traditionally seen as more apt for the opposite sex.) Tyre generally discounts wholesale solutions, such as reorganizing schools, and looks for change on a classroom by classroom basis, with teachers crafting more engaging lesson plans, administrators reinstituting outdoor recess, and schools allowing for greater movement during the day. Some of her ideas require systemic change, such as increasing the number of male teachers, while others simply call for an adjustment of mindset—for instance, training educators not to misinterpret a boy’s gruff exterior for disrespect or lack of interest in academic subjects. In The War Against Boys, Sommers also proposes remedies for what ails male students that thoughtful donors may wish to consider. Rigorous back-to-basics schools, character education programs, and hands-on lessons are all suggested as

ways to help male students thrive. These can be cultivated on a local basis and need not await some national movement. Both Tyre and Sommers have a knack for exposing the faulty assumptions that can produce untoward social effects. Philanthropists dismayed by the declining academic state of boys should dig into the meaty stories in Tyre’s narrative, and the sharp data in Sommers’s volume. In both places they will find a powerful challenge to the educational status quo. Dan Fishman is director and Matt Bazik is coordinator of The Philanthropy Roundtable’s K-12 education program.

Reinvented in California Howard Ahmanson’s golden touch BY CHRIS WE I N KO PF

It is true, as generations of gold-rushers, dust-bowlers, and entrepreneurs can attest, that California is the land of reinvention. It is the place where, having shed the encumbering routines and reputations of elsewhere, the transplant can start anew. Near-perfect weather provides solace, and a never-ending flow of newcomers affords, as needed, companionship or anonymity. Such is the California dream, of which Howard Ahmanson (1906-1968) was both a product and an architect. Ahmanson was a 19-year-old college student when he and his mother moved to Los Angeles in 1925. A double tragedy brought them from their native Omaha: the death of Howard’s father and the subsequent loss of the family’s business at the hands of unscrupulous partners. Grieving, and humbled by his inability to stave off the corporate jackals, Howard sought a fresh start. His ill mother sought a more temperate climate. They headed west. Later Ahmanson would reinvent not only himself, but also southern California. As the owner of what would become the nation’s largest savings and loan, he financed many of the single-family homes that made the Golden State’s rapid postwar expansion possible. Thanks to Ahmanson’s mortgages, millions of GIs and other easterners seeking comfort and opportunity would find it in the region. And thanks to his generosity, the metropolis they populated would come to boast of some of the nation’s finest cultural institutions.

Building Home: Howard F. Ahmanson and the Politics of the American Dream By Eric Abrahamson University of California Press, 2013 368 pp., $34.95

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In Building Home: Howard F. Ahmanson and the Politics of the American Dream, historian Eric Abrahamson skillfully documents how Ahmanson became California’s wealthiest man and one of its most prolific philanthropists. The story begins at the University of Southern California, where Ahmanson enrolled and, as a student, launched an insurance business, H. F. Ahmanson & Co. As Abrahamson tells it, Ahmanson had a sixth sense for economic trends. He cashed out of the stock market in mid-1929—after his portfolio had doubled in four years—just months before the Great Crash. He then grew rich during the Great Depression by selling fire-insurance policies on foreclosed homes to repossessing banks. “It was like being an undertaker at a plague,” he wrote. “The worse things got, the better I was.” In time, the economy would turn, but not Ahmanson’s fortunes. During World War II, Los Angeles served as a manufacturing center and embarkation point for the Pacific theater. As a result, southern California experienced an infusion of nearly 500,000 new residents by 1945, but few analysts expected this growth to continue after the war’s end. Major commercial banks declined to extend housing loans in the region, fearing that it would soon become a peacetime “ghost town.” Ahmanson, who contributed to the war effort as a naval procurement officer, knew better. He anticipated that when the war was over, the state’s new residents, having tasted paradise, would not want to leave. What’s more, he expected additional new arrivals to follow, seeking fresh horizons after the hardships of depression and war. For these newcomers, the American dream of home ownership and the California dream of reinvention would be one and the same. Abrahamson describes how Ahmanson aided these dreams by investing both in the properties upon which new homes were built and in the cement companies that poured their foundations. In 1947, he purchased his first savings and loan, thereby entering the mortgage business. In the ensuing years, he bought additional S&Ls whenever they became available, establishing branches of Home Savings & Loan throughout southern California. The investment paid off. Drawn by jobs in the burgeoning aviation industry, veterans and others flooded in, just as Ahmanson predicted. At the same time, California became the epicenter 57

books of the American baby boom. While the national birthrate increased by 31 percent during the 1940s, California’s climbed by 40 percent, reflecting regional optimism. Because of this heightened migration and fecundity, the population of southern California grew by more than 50 percent in the 1940s. Average income tripled. Using wartime techniques of mass production and efficiency, homebuilders erected 3.3 million new, mostly inexpensive houses in Los Angeles County in just five years. It is from this postwar period that Abrahamson’s book draws its title. Ahmanson was indeed building home, in manifold ways. He was building the Home Savings & Loan empire, while at the same time building the homes that housed California’s new residents. Then, during the next two decades, he would begin building home in a sense that transcends mere shelter, helping to establish the civic and cultural infrastructure that makes neighborhoods out of housing tracts and communities out of cities. As Abrahamson puts it, “Howard Ahmanson contributed to Los Angeles’s transformation from a cultural backwater to a world-class city for the arts.” This renaissance began with a personal change of perspective. Early in his career, Ahmanson had little interest in the arts, or even aesthetics, maintaining a corporate headquarters that his soon-to-be favorite architect, Millard Sheets, would denounce as “the worst sweatshop I have ever seen in my life.” By the mid-1950s, Ahmanson’s attitude shifted. He hired Sheets to build a new headquarters as well as several branch offices for Home Savings & Loan, all in the neoclassical style, heavy with marble. To Ahmanson’s surprise, these new structures boosted revenues for Home Savings. Their fortress-like trappings conveyed strength, allaying the fears of customers who still harbored Depression-era memories of catastrophic bank failure. Aesthetics mattered. Sheets, in turn, recruited Ahmanson to the board of the Los Angeles County Art Institute, where the financier began collab58

orating with several of L.A.’s early patrons. Working with Richard “Ric” Fargo Brown, Norton Simon, and Edward William Carter, he gave $2 million for the construction of a new Los Angeles County Museum of Art. Dorothy Buffum Chandler enlisted his support for the Ahmanson Theater at the downtown Music Center. Ahmanson’s alma mater, the University of Southern California, was also a major beneficiary of his largesse, as was the Museum of Science and Industry. Through it all, Ahmanson was steadfastly loyal to his adopted state. He rejected invitations to expand his business nationally or beyond, saying, “I made my fortune here in California. There’s no reason to go international. There’s no reason to go to New York. I’m staying right here.” With the exception of some early gifts to interests in his native Nebraska, the fruits of his generosity also stayed in the Golden State. In 1952, he began endowing the Ahmanson Foundation, which to this day funds art, medical, educational, and human-service projects almost exclusively in his new home of Los Angeles County. For Ahmanson, philanthropy was about making California homey for his fellow citizens. This approach was, Abrahamson argues, consistent with Ahmanson’s overall philosophy of public life, shared by most business and government elites of his day. That philosophy, described alternately as the consensus society or the managed economy, consisted of a mutual relationship between big business and government: Corporate leaders helped politicians achieve their public-policy goals in exchange for regulatory collegiality. Whether he was cooperating with thrift regulators in Sacramento and Washington, or planning museums with the county supervisors in Los Angeles, Ahmanson exemplified the sort of collaboration upon which his idea of the consensus society depended. Although Abrahamson’s insights into this social vision are perceptive and even, at times, inspiring, his pining for its restoration often distracts him from what ought to be a biography’s main purpose—telling the story of its protagonist. Nowhere is PHILANTHROPY

this fixation more pronounced than in the book’s concluding paragraph, which scarcely mentions Ahmanson and reads like a paean to an economic order whose demise Abrahamson plainly mourns. Even when he goes adrift, however, Abrahamson is honest and thorough in his historical presentation. He acknowledges, for example, that the consensus society had its flaws, for instance its exclusion of racial minorities. He likewise relates a story in which Ahmanson and other lending tycoons delivered $100,000 in unmarked envelopes to a powerful Senate aide—hardly a shining moment in the history of the managed economy, and one that a less forthright author might have excised from the final draft. Abrahamson's transparency is to be commended. This consistent candor gives Building Home enduring credibility— no small feat for a biography funded by its subject’s own son. Abrahamson notes that when philanthropist Howard Ahmanson Jr. commissioned him to write this book, he made it clear that he did not want a hagiography, and Abrahamson does not give us one. Instead, Building Home offers an objective depiction that neither hides nor sensationalizes Ahmanson’s failings, professional or personal. Abrahamson is also honest about his book’s limitations. In the acknowledgments, he admits that there was a “paucity” of research material available in Ahmanson’s own voice. As such, the author had to rely on other sources, mostly secondary and financial, to produce a nonetheless remarkably well-rounded, if somewhat impersonal, portrait. The result is a rough sketch of Howard Ahmanson standing before a vividly detailed backdrop of the culture, politics, and economy that once sustained the California dream—a dream that shaped the man as surely as he shaped it. Chris Weinkopf is the communications manager at Thomas Aquinas College in Santa Paula, California.

{books in brief } Reign of Error: The Hoax of the Privatization Movement and the Danger to America’s Public Schools BY DIANE RAVITCH

Education historian Diane Ravitch, who was once a prominent advocate for school choice and who began her political career in the administration of George H. W. Bush, has dramatically changed her tune in recent years. She has become a staunch defender of conventional schools and teachers unions, positioning herself as a foil to reform advocates like Michelle Rhee. In Reign of Error, Ravitch unleashes an attack on voucher programs, charter schools, and so-called “corporate reformers.” Her arguments, while flawed, are not without nuance. Her injunctions against the U.S. Department of Education for its bureaucratic management of public schools will resonate with pro-reform readers. Ravitch has also been an unlikely voice of support for Catholic schools, and her calls for diverse, localized approaches to education give her a patch of common ground with the pro-reform movement, even as its fiercest critic. However, Ravitch applies few of the complexities of her philosophy in Reign of Error, and instead offers tired, politicized talking points designed to galvanize public-school apologists. The book suffers first and foremost from a strident tone. Ravitch does not entertain the possibility that reformers genuinely want to help students, instead painting them as conspiratorial villains who knowingly deceive the public for personal gain. “They mask their agenda with rhetoric that is soothing and deceptive,” she writes, with no supporting evidence. Instead, she reels off lists of prominent individuals and corporations that have backed reform efforts, as if the involvement of wealthy donors is inherently suspicious. Such tactics may play well with her core audience, but they do nothing to expose any actual drawbacks of the “choice and competition” reform model.

Setting up straw men just to knock them down, Ravitch routinely misrepresents the goals of the reform movement. She insists that reformers are working toward total privatization of schools, portraying a dystopian future in which “community schools” disappear and children are exploited by greedy investors. In reality, even the most fervent reform advocates are not seeking to eliminate district schools. Ravitch’s assessment of problems and unintended consequences associated with federal standardized testing offers some salient points, but suggests no alternatives that will hold schools accountable for student success. As a steadfast advocate for teachers unions, she unsurprisingly places little value on accountability. This is especially evident in her cursory chapter on tenure. She portrays tenure as a safeguard for teachers who wish to test innovative methods in their classrooms, but glosses over its role in allowing substandard or misbehaving teachers to continue working at the public’s expense. Diane Ravitch advocates for local, community-based solutions in education, but does not recognize that school choice and competition are crucial parts of these solutions. —Dustin Petzold

The Robin Hood Rules for Smart Giving BY MICHAEL WEINSTEIN AND RALPH BRADBURD

In the wake of the stock market crash of 1987, a group of hedge-fund savants led by Paul Tudor Jones came together to plan for what they anticipated would be a widespread economic meltdown, creating a foundation that would use quantitative tools to alleviate poverty in New York City. Although their gloomy expectations for the U.S. economy did not come to pass, the Robin Hood Foundation’s analytical method emerged as one of the leading models of data-driven philanthropy. Disbursing approximately $1.1 billion since 1988, the Robin Hood Foundation claims FALL 2013

impact that other funders dream of: an average social return of $15 for every dollar in grants. In The Robin Hood Rules for Smart Giving, senior vice president Michael Weinstein and longtime metrics consultant Ralph Bradburd pull back the curtain on the foundation’s “relentless monetization” practice, leading readers through the basics of their algorithm and describing how they rely on numbers to achieve desired results. Weinstein and Bradburd argue it is possible, albeit difficult, to evaluate all kinds of social interventions, even those that defy easy comparison: Should you make a $10 million donation to teach female high-school dropouts carpentry, or invest the same amount in on-campus psychological services for disadvantaged middle-schoolers? The authors claim relentless monetization can help you decide, and compare it to other “smart metrics,” including cost-effectiveness analysis, social return on investment, expected return, and even Charity Navigator. In each case, they note that effective systems count demonstrated benefits, not just spending, and attend closely to “counterfactuals”— whether an outcome would have happened regardless of the intervention. Replete with equations and numbers, this book is not for the data-averse. But math aside, the book’s underlying assumption—that there is a measurably “right” way to spend philanthropic dollars—is a challenge to anyone entrenched in familiar and comfortable giving patterns. For the Robin Hood Foundation, the formula is certainly gaining public support. In June, the foundation’s annual gala raised more than $80 million, and its first-ever Investors Conference in November will feature Henry Paulson, Stan Druckenmiller, Julian Robertson, Daniel Loeb, David Einhorn, and many more financial leaders who are fighting poverty with data, one exact equation at a time. —Ashley May 59

president’s note Misconceptions about “Dark Money”

A long legal tradition protects the rights of Americans to make charitable contributions without publicly disclosing them. This right to confidentiality in charitable giving is grounded in our constitutional freedom of association, and it is one of the most important elements of philanthropic freedom. The Supreme Court ruled unanimously in NAACP v. Alabama in 1958 that “freedom to engage in association for the advancement of beliefs and ideas is an inseparable aspect of the ‘liberty’ assured by the Due Process Clause of the Fourteenth Amendment.” In a landmark judgment written by Justice John Marshall Harlan II, the court held that the state of Alabama could not compel the NAACP to reveal the names and addresses of its members because doing so would expose its supporters “to economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility” and thereby restrain “their right to freedom of association.” This right of confidentiality applies to members of all associations, whether they be religious, educational, cultural, ideological, or devoted to other causes. As professor Anita Allen of the University of Pennsylvania Law School has put it, “Thanks to NAACP v. Alabama, government may not force even a controversial group to identify its members, absent a compelling state interest in disclosure.” Our tax code similarly protects the confidentiality of individual contributions to public charities. In their 990 tax returns, public charities have to disclose their largest contributors, but this is for purposes of tax administration only. The 60

Internal Revenue Service is strictly forbidden by statute from revealing these names to the public or even, with a very limited number of exceptions, to other government agencies. The same prohibitions apply when individual taxpayers have to provide the IRS with documentation about their charitable contributions. Indeed, one of the most disturbing allegations in the current IRS scandal is the charge that the agency in recent years has violated its rules and long tradition protecting donor privacy. Donors do have to disclose publicly their contributions to private grant-making foundations, which in turn have to disclose their grants to public charities. These transparency requirements help to protect against self-dealing and to make sure that foundation grants support genuinely charitable organizations. Donor-advised funds, America’s most rapidly growing charitable vehicle, receive donations from individuals and then make grants to other public charities on the recommendations of the original donors. Like foundations, the sponsors of donor-advised funds (which include regional community foundations; Christian and Jewish funds; and for-profits such as Fidelity and Schwab) are required to disclose the grants they make to other charities; this helps ensure that the grants are going to charities and not to for-profit or partisan political operations. But consistent with America’s historic confidentiality protection for individual donors to public charities, the sponsors can keep private their own donors as well as those donors’ individual grant recommendations. This protection is sometimes misunderstood. For instance, conservative critics of the Tides Foundation, a liberal-left donor-advised-fund sponsor, have called it a system “to PHILANTHROPY

evade transparency.” Liberal critics of DonorsTrust, a donor-advisedfund sponsor for “organizations that promote liberty,” have labeled it as a “secretive funding network” and “dark-money ATM.” But the right to privacy enjoyed by contributors to donor-advised funds is no different than the right to privacy that governs the overwhelming majority of charitable giving. Most donors of course are happy to see their contributions publicized. But a sizable minority want their philanthropy to be anonymous and will not give unless they can keep their donations confidential. There are multiple reasons to give privately. The great 12th-century Jewish theologian Maimonides held that the second highest form of giving was “to give to the poor without knowing to whom one gives, and without the recipient knowing from whom he received.” In the Gospel of Matthew, Jesus taught that “when you give to the needy, sound no trumpet before you…do not let your left hand know what your right hand is doing, so that your giving may be in secret.” Many anonymous donors want to protect themselves from unwanted solicitations, to protect their children from knowledge of their family’s wealth, or to be able to visit prospective grantees and “kick the tires” without anyone knowing they are a funder. Still others, like the 1960s NAACP donors, want the freedom to support controversial organizations without fear of reprisal or ostracism. So-called “dark money” illuminates our free society.

Adam Meyerson President The Philanthropy Roundtable

JUST RELEASED CLOSING AMERICA’S HIGH-ACHIEVEMENT GAP

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The Philanthropy Roundtable

Closing America’s High-achievement Gap A Wise Giver’s Guide to Helping Our Most Talented Students Reach Their Full Potential Andy Smarick

A Wise Giver’s Guide to Helping Our Most Talented Students Reach Their Full Potential This intriguing new book argues powerfully for a school reform that no one else has put into words—though experienced observers know it is sorely needed.

Available at no charge to Philanthropy magazine readers. To order your free printed copy of Closing America’s High-achievement Gap: A Wise Giver’s Guide to Helping Our Most Talented Students Reach Their Full Potential e-mail main@PhilanthropyRoundtable.org or call (202) 822-8333 To download an e-book or PDF, please visit PhilanthropyRoundtable.org/guidebook

With all of the recent focus on pulling America’s weakest students up to minimum competency, another group of children has gotten lost in the shuffle: Our highest-potential students. In all regions, incomes, and social groups there are children with special intellectual gifts. Programs aimed at stretching and stimulating these quick learners have been neglected over the last generation. As a result, many of these gifted children are now falling far short of their potential. This is unfair to hundreds of thousands of children. And in an era where America’s most inventive citizens are in high-stakes competition with millions of high achievers overseas, neglect of our top students also threatens our nation’s success and security. Philanthropists are perfectly situated to lead productive reforms in this area. This guidebook is packed with practical ideas they can put into action immediately.

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The Philanthropy Roundtable extends its most sincere thanks to the following foundations for their generous support of our 2013 Annual Meeting The Ahmanson Foundation Annenberg Foundation Anonymous Kathy and Ambassador Frank Baxter S. D. Bechtel Jr. Foundation H. N. and Frances C. Berger Foundation Gibbs Family Foundation Conrad N. Hilton Foundation Intelligence Squared U.S. Foundation The James Irvine Foundation Irvine Health Foundation M. J. Murdock Charitable Trust Bill and Susan Oberndorf Foundation The Ralph M. Parsons Foundation The Riordan Foundation Rogers Family Foundation Arthur N. Rupe Foundation Taube Philanthropies Triad Foundation The Wasie Foundation

Thank you

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