Charitable Plutocracy: Bill Gates, Washington State and the Nuisance of
Democracy
Friday, 15 April 2016 00:00 By Joanne Barkan, Nonprofit Quarterly | Op-Ed
Bill Gates, co-chair of the Bill & Melinda Gates Foundation, addresses a
United Nations press conference. (UN Photo / Jean-Marc Ferré)
This article was first published in the Nonprofit Quarterly (spring 2016;
vol. 23, no. 1).
Once upon a time, the super-wealthy endowed their tax-exempt charitable
foundations and then turned them over to boards of trustees to run. The
trustees would spend the earnings of the endowment to pursue a typically
grand but wide-open mission written into the foundation's charter -- like
The Rockefeller Foundation's 1913 mission "to promote the well-being of
mankind throughout the world." Today's multi-billionaires are a different
species of philanthropist; they keep tight control over their foundations
while also operating as major political funders -- think Michael Bloomberg,
Bill Gates, or Walmart heiress Alice Walton. They aim to do good in the
world, but each defines "good" idiosyncratically in terms of specific public
policies and political goals. They translate their wealth, the work of their
foundations, and their celebrity as doers-of-good into influence in the
public sphere -- much more influence than most citizens have.
Call it charitable plutocracy -- a peculiarly American phenomenon,
increasingly problematic and in need of greater scrutiny. Like all forms of
plutocracy, this one conflicts with democracy, and exactly how these
philanthropists coordinate tax-exempt grantmaking with political funding for
maximum effect remains largely obscure. What follows is a case study of the
way charitable plutocracy operates on the ground. It's a textbook example of
the tug-of-war between government by the people and uber-philanthropists as
social engineers.
The Case of Bill Gates and Washington State
This story begins in 1995, when the Washington State House of
Representatives first considered legislation that would enable private
individuals and organizations to obtain charters to create their own K–12
schools. These were to be taxpayer-funded schools, but privately run and
exempt from many of the regulations governing district (regular) public
schools. The funding would come from the resources of regular public
schools: each student would "carry" his or her per-child funding out of the
district system to a charter school.
The bill died in the state senate, so supporters went directly to voters
with a ballot initiative to enable charter schools. The campaign attracted
little money on either side, but turnout was high because the vote took
place on the same day as the 1996 presidential election. Washingtonians
rejected charter schools decisively: 64.4 percent against, 35.6 percent in
favor.1
State representatives kept trying. They proposed new bills in 1997, 1998,
and 1999, but got the same results: success in the lower chamber, failure in
the senate.2
Wariness of charter schools didn't mean that Washingtonians were completely
satisfied with existing schools or feared change. Voters had legitimate
concerns. Charter schools, they worried, would divert tax revenue from
already underfunded district schools, especially those serving low-income
and minority students. In addition, schools under private management might
be less transparent and less accountable to the public than Washington's
district schools, which were overseen by locally elected boards.
Charter supporters tried another ballot initiative in 2000, and, for the
first time, attracted the backing of a multi-billionaire philanthropist.
Paul Allen had cofounded Microsoft in 1975 and The Paul G. Allen Family
Foundation in 1988.3 The state places no limits on individual campaign
contributions for ballot measures, so Allen was able to give $3.275 million
of the total $3.4 million raised by the pro-charter side. Opponents raised
only about $11,000. Outspent 309 to 1, they still defeated the initiative,
although the millions given in support of charters shrank the margin of
victory. The vote was 51.8 percent against charters and 48.2 percent in
favor.4
In the next four years, the national context shifted. The debate around
public education intensified as a controversial market-based
education-reform movement grew stronger. "Ed-reformers" claimed that U.S.
public schools were failing; that the culprits were bad teachers, teachers
unions, and government bureaucracy; and that the private sector, using
public resources, could run better schools. They promoted competition among
schools to force out the weakest and measuring educational success via
students' standardized test scores.
The education-reform movement in general, and charter schools in particular,
attracted a new wave of philanthropists, many of whom had made fortunes in
high-tech industries and finance. Although they had no experience as
educators, they aimed to "disrupt" and rebuild public schooling for urban
low-income and minority children. They embraced the idea that giving grants
to K-12 reform projects corresponded with investing capital in a business.
They described their philanthropy in terms of strategic investments to
maximize returns and data collection to verify results. Having succeeded in
business, they reasoned, they would succeed in education. They came to see
funding education-reform candidates and ballot initiatives as part of the
same effort.
The Washington legislature finally passed a charter school law in 2004.
Opponents responded by petitioning for a ballot measure to repeal the law.
Mobilized by the teachers unions, League of Women Voters, state Democratic
Party, and the Seattle School Board, they raised $1.3 million for the
campaign. The unions contributed the most: the Washington Education
Association gave $601,000, and the National Education Association gave
$500,000.5
Charter school supporters raised three times as much -- $3.9 million. Most
of it came from three education-reform political funder-philanthropists, who
donated about $1 million each: Bill Gates, who had recently made education
reform the main focus of his domestic philanthropy; Walmart heir John T.
Walton (from Wyoming), who advocated charters and tax-funded vouchers for
parents to use for private-school tuition; and Donald Fisher (from
California), founder of Gap and a major donor to the KIPP chain of charter
schools.6
When philanthropists finance political campaigns, they act as individual
citizens spending their personal wealth, not as the heads of tax-exempt,
charitable foundations. Federal and state laws bar private foundations from
political activity. Although the regulations have ambiguities and loopholes,
high-profile philanthropists are usually careful about keeping foundation
and personal monies separate and using only the latter to fund political
campaigns.
Although outspent three to one, charter school opponents in Washington won
an impressive victory in 2004. The law was repealed by a vote of 58.3
percent to 41.7 percent.7
This big-money face-off -- multibillionaire philanthropists against teachers
unions -- turned out to be a prototype repeated across the country in scores
of education-reform campaigns in the last decade. Millions of dollars
regularly pour into races for local and state school boards and for district
and state school superintendents, as well as for education ballot
initiatives. The money comes from both in state and out of state. Twenty
years ago, these contests cost little to run; the stakes were limited. Now,
the money is huge, and the ramifications are national: the nature and
control of public education is being decided.
Education-reform philanthropists justify their massive political spending as
a necessary counterweight to the teachers unions;8 yet, the philanthropists
can, and consistently do, far outspend the unions. In 2004, Paul Allen had a
net worth of $21 billion, Bill Gates had a net worth of $46.6 billion, and
John T. Walton (who died in 2005) had a net worth of $20 billion.9 Donald
Fisher's net worth was $1.3 billion in 2005.10 In 2015, Allen had a net
worth of $17.8 billion, Gates had a net worth of $76 billion, and Doris
Fisher (Donald Fisher's widow and a charter school donor) had a net worth of
$2.9 billion.11 And the unions? According to the 2015 reports filed with the
Office of Labor-Management Standards, the National Education Association had
$388.8 million in total receipts; the American Federation of Teachers had
$327.6 million in total receipts.12 As political rivals, the
education-reform philanthropists and the teachers unions have never competed
on a level playing field.
In January 2012, charter school supporters in the Washington State
legislature introduced another bill. By then, the state was one of only nine
that didn't permit charter schools. Some states had bowed to pressure from
the Obama administration's Race to the Top program (2009–2011): by
committing to a list of specific reforms, including charter schools, they
had a chance to win additional federal funds. Despite resistance to the
reforms, resource-starved states were willing to sign on to almost anything
to get more funding.
More than five thousand charter schools were operating in the United States
in 2012, and researchers were finding some serious problems. Charter schools
were diverting funds from district schools while also enrolling a smaller
proportion of the most at-risk children (for example, children with
disabilities and English-language learners). These children remained at or
returned to district schools just as the districts were losing resources. In
addition, the quality of charter schools was extremely uneven, according to
the education reformers' own criterion: student scores on standardized
tests. A large-scale study, published in 2013 by the pro-education-reform
Center for Research on Education Outcomes at Stanford University, concluded
that about 27 percent of charters performed better than district schools
serving equivalent student populations; about 25 percent performed worse;
the rest were about the same.13
Despite the problems with charter schools, education-reform philanthropists
had no second thoughts about their drive to replace as many district schools
as possible. They had various motivations: the conviction that market
competition among schools could not fail to improve the quality of public
education; the desire to get government out of the business of running
schools (although taxpayers would still fund them); and determination to
weaken the teachers unions (only about 7 percent of charter schools are
unionized).14 Charter advocates also argued that low-income parents should
have a choice of schools for their children just as wealthier parents did --
no matter that most charters were no better than district schools and some
were worse, and that charters were weakening district schools and that
high-performing charters accommodated few students.
Meanwhile, the leadership of both houses of the Washington legislature
opposed the 2012 charter bill.15 When it died in committee, the activist
billionaires stepped in, with Gates in the lead: they would finance yet
another charter school ballot initiative -- the state's fourth.
In the first phase of Washington's initiative process, citizen sponsors
draft their legislation, and the Office of the Code Reviser certifies the
text. Thus, citizens, not legislators, write the proposed law. In phase two,
supporters collect a sufficient number of valid signatures to place the
measure on the ballot in the next state general election. Phase three is the
campaign and vote.16
Once the thirty-nine-page charter school measure was certified, the state's
Attorney General's office issued an official title, subject, and "concise
description" to be printed on the ballot. Here they are:
Initiative Measure No. 1240 concerns creation of a public charter school
system. This measure would authorize up to forty publicly-funded charter
schools open to all students, operated through approved, nonreligious,
nonprofit organizations, with government oversight; and modify certain laws
applicable to them as public schools.
Should this measure be enacted into law? Yes [ ] No [ ]17
The coalition of advocates behind the 2012 initiative included some
well-known grantees of the Bill & Melinda Gates Foundation: for example,
Stand for Children (about $9 million in grants from 2005 through 2012)18 and
the League of Education Voters, a subgrantee of the Alliance for Education
($733,285 in grants for 2011 and 2012).19
To collect the signatures, the coalition hired PCI Consultants, Inc., of
Calabasas, California, a "full service petition and field management firm"
with experience in Washington State.20 The drive began in mid-June, which
left just twenty-one days to collect 241,153 valid signatures -- the
shortest drive in state history (except for one in 1973).21 Success depended
on quick access to millions of dollars for an all-out effort.
The drive raised $2.3 million and delivered about 350,000 signatures by the
July 6 deadline.22 One signature gatherer from California told the Seattle
Times that he was among about four hundred out-of-staters who had been
hired. Coalition spokespeople declined to confirm or deny the information.23
According to the Public Disclosure Commission in Washington State, funders
for the signature drive included Gates ($1 million), Alice Walton (from
Arkansas, $600,000), Mike and Jackie Bezos (parents of Amazon.com founder
Jeff Bezos, $500,000), venture capitalist Nicolas Hanauer ($450,000),
Katherine Binder (chair of EMFCO Holdings, $200,000), Paul Allen's Vulcan,
Inc. ($100,000), and Reed Hastings, from California (Netflix cofounder and
KIPP charter schools board member, $100,000).24
As soon as Initiative 1240 was certified for the November vote, the race to
stockpile more money began.
The pro-charter side collected another $9.1 million for the fall campaign.
More than 70 percent of the additional money came from just six donors:
Gates ($2.075 million), Vulcan, Inc. ($1.5 million), Alice Walton ($1.1
million), Mike and Jackie Bezos ($600,000), Hanauer ($600,000), and Connie
Ballmer (wife of former Microsoft CEO Steve Ballmer, $500,000).25
Opposition to the charter initiative was broad but not deep-pocketed. The
organizations calling for a "no" vote included the Seattle King County
NAACP, El Centro de la Raza, the Japanese American Citizens League Board,
the League of Women Voters, the Washington State PTA, local elected school
boards, the Association of Washington School Principals, the Washington
Association of School Administrators, many district and county Democratic
Party organizations, the Washington State Labor Council, the Washington
Education Association, and other state and local unions.26
The "no" coalition raised just over $727,400.27 The largest donations came
from the National Education Association ($250,000) and the Washington
Education Association ($200,000).28 According to KUOW Puget Sound Public
Radio's blog, "Teachers' union officials say…when it comes to the big money
behind the charter school initiative, they just can't compete."29
No one disputes that big money sways voting outcomes or that superwealthy
philanthropists regularly spend millions to get the outcomes they want. The
vote on Washington's Initiative 1240 stands out for this reason: despite
outspending their opponents more than 12 to 1, the philanthropists barely
eked out a victory. The final tally was 50.69 percent in favor, 49.31
percent opposed.30 Citizens might well have asked whether the advent of
charter schools in their state expressed the will of the people.
Once the initiative was law, the backing for charter schools switched from
political contributions to tax-exempt philanthropy. The Bill & Melinda Gates
Foundation went into high gear for the next phase of the project. The
foundation disbursed more than $31 million in less than three years "to give
public charter schools in Washington State a strong start."31 In practice,
this meant selecting and financing individuals and organizations to start
schools, advise charter boards, and develop education programs.
The Gates Foundation spent more than $13.5 million to set up and run the
Washington State Charter Schools Association -- a private group whose work
includes awarding "fellowships" to educators who want to open schools. Green
Dot Public Schools, a charter management organization founded in Los
Angeles, received $8 million in 2013 to expand into Washington. Green Dot
has received about $24 million from Gates since 2006. Another charter
management organization, the Bay Area's Summit Public Schools, also received
$8 million in 2013 to branch into Washington. Charter Board Partners, a
DC-based nonprofit consultancy for charter school governance, received more
than $1.2 million to open a Washington office. The Gates Foundation gave
California's Seneca Family of Agencies almost $1 million to develop support
for at-risk students in Washington's charter schools.32
Thus, the schools were to be public in name and receive public funding for
each student, but the Gates Foundation, with no public oversight, stepped in
to shape the charter system.
Washington's first charter school opened in 2014 and was on probation for
compliance problems in the summer of 2015, when eight more charters were
about to launch.33 But on September 4, 2015, the Washington Supreme Court
halted the entire charter program by declaring the 2012 law
unconstitutional. This was the first time any court had struck down a
charter school law in its entirety.
The reasoning in the 6-3 decision is straightforward: The state constitution
stipulates that only common (public) schools can receive government funding,
and all common schools in the state must be subject to local voter control.
Because charter schools are run by appointed boards or private
organizations, they are not common schools and do not qualify for government
funding.34
Charter school supporters blamed the ruling on the bias of liberal activist
justices, but as Michael J. Fox, a retired superior court judge, wrote in a
letter to the Seattle Times, "I voted for the charter schools initiative.
[…] But I've read the court's decision thoroughly and am convinced it is
well-grounded and based on the pertinent constitutional provisions. Any
other decision could only have been based on political ideology and not our
supreme law."35
Charter activists -- some with Gates money -- filed motions asking the court
to reconsider its decision, but the court refused. Undeterred, three Gates
grantees -- the Washington State Charter Schools Association, Stand for
Children, and League of Education Voters -- partnered to create a PAC to
channel money to legislators willing to vote for a modified charter law.
When the PAC was announced, in December 2015, checks had already gone out to
twenty-four lawmakers.36 On March 10, 2016, the legislature passed a new
bill that would fund charter schools with state lottery revenue. Supporters
believe this will pass constitutional muster because lottery proceeds go
into an account that is separate from the state's general fund and the
lottery account is not restricted to common schools. Opponents argue that
the bill does nothing more than shift money from one account to another.37
Democratic Governor Jay Inslee, who is running for reelection against a
pro-charter Republican, allowed the bill to become law without his
signature, at the end of a special legislative session on April 2. A union
coalition plans to sue the state over the law. Meanwhile, the state remains
under a contempt order from the Washington Supreme Court, which ruled in
2012 that the state isn't meeting its constitutional duty to fully fund
basic education. There's no end in sight.
The Nuisance of Democracy
The Washington charter saga highlights the workings of charitable
plutocracy. Multibillionaire philanthropists use their personal wealth,
their tax-exempt private foundations, and their high-profile identities as
philanthropists to mold public policy to a degree not possible for other
citizens. They exert this excessive influence without public input or
accountability. As for the charitable donors who are trying to reshape
public education according to their favorite theories or ideological
preferences, they are intervening with too heavy a hand in a critical
institution that belongs to the public and requires democratic control. But
in any public domain, the philanthropist's will and democratic control are
often at odds.
Voters, their elected representatives, grass-roots activists, civic groups,
unions, public opinion -- all can thwart an uber-philanthropist's effort to
impose his or her vision of the common good on everyone else. Democracy can
be a nuisance for the multibillionaire -- a fact of life that Bill Gates has
often lamented.
In a CNBC panel, aired on May 4, 2015, and titled "If I were education
czar…," Bill Gates discussed the problems he's had in spreading the "best
practices" of charter schools throughout the United States: "It's not easy.
School boards have a lot of power, so they have to be convinced. Unions have
a lot of power, so teachers need to see the models that are working." Asked
about his broader goal to redo all of public education, Gates said, "We're
not making as much progress as I'd like. In fact, of all the foundation
areas we work in, I'd say this has proven to be the most difficult." The
interviewer followed up: "Why do you think that is?" Gates replied, "It's a
very big system…very resistant to change. The best results have come in
cities where the mayor is in charge of the school system. So you have one
executive, and the school board isn't as powerful."38
Gates has been making this point for years. During a CNN appearance in 2009,
according to the New York Post, Gates said, "The cities where our foundation
has put the most money is [sic] where there is a single person
responsible."39
During the Gates Foundation's US Education Learning Forum in October 2015,
journalist Gwen Ifill asked Bill and Melinda Gates to name "the least
pleasant surprise" during their previous fifteen years of education-reform
work. Bill answered, "For me the most disappointing is that the work can go
backwards. In the other areas we work, if we come up with a new malaria drug
or a new malaria vaccine, nobody votes to uninvent our malaria vaccine."40
This was an effective laugh line for Gates, but it's also a telling
formulation; no one has ever voted to "uninvent" a Gates offering. But, on
occasion, voters or their representatives have rejected a Gates plan. That's
ordinary democratic policy-making, not uninventing one of his creations.
At times, democracy seems to flummox Gates. In the same interview, he
reflected on why there's been strong opposition to the Common Core State
Standards -- a detailed set of K-12 benchmarks in math and language arts
that the Gates Foundation developed and marketed around the country at a
cost of about $263 million.41 "It's not like somebody's got some great
alternative in terms of the benefits to students," he said. "It's more about
'Oh, we'll show our autonomy' than it is about having something better for
learning."
Gates, who has no training as an educator or researcher, easily dismisses
the work of professionals in the field, but it's never been clear how well,
or even if, he knows their work. He appears continually in the media
promoting his chosen policies, but he doesn't engage in depth -- at least
not publicly -- with experienced educators or scholars who disagree with
him. His entrée into policy-making is money, not expertise. Talking to
Ifill, he brushes off opponents as obstructionists who merely want to flaunt
their autonomy -- as if disagreeing with him were an exercise in peskiness
rather than part of a necessary substantive debate. As for entering the fray
as a candidate and asking voters to endorse his ideas, Gates wants no part
of it. Questioned at the 2012 Abu Dhabi Media Summit about running for
president, he said his current job with the Bill & Melinda Gates Foundation
was "a very nice office" and that it didn't require him to raise funds to
"try to get elected," nor does it "have term limits of eight years…I
actually think, maybe I'm wrong, that I can have as much impact in that
[philanthropic] role as I could in any political role. In any case, I would
never run for political office."42
Multibillionaires who play the dual role of philanthropist and political
bankroller range ideologically from progressive to far right, and they spend
on myriad causes in addition to public education. At the progressive end are
George Soros and his Open Society Foundations. On the far right are the Koch
brothers and their David H. Koch Charitable Foundation and Charles Koch
Foundation. In addition to Gates, the most aggressive philanthropies in
market-based education reform are the Walton Family Foundation and the Eli
and Edythe Broad Foundation. (Walton supports publicly funded vouchers for
private school tuition but otherwise the major education-reform financiers
back similar policies.)
Regardless of political stands or projects, all philanthro-barons with their
own foundations are generously subsidized by taxpayers. When a baron says,
"It's my money to use as I please," he or she is wrong. A substantial
portion of every tax-exempt foundation's wealth -- 39.6 percent at the top
tax bracket for filing in 2016 -- is diverted each year from the public
treasury, where voters would have determined its use.43 Taxpayers subsidize
not only the philanthropy of the Koch brothers, Soros, and the others but
also their political work. Part of the megaphilanthropist's wealth goes into
a personal cache; part goes into a tax-exempt cache. The money saved by not
paying taxes goes wherever the philanthropist wants, including to political
work.
American democracy is growing ever more plutocratic -- a fact that should
worry all admirers of government by the people. Big money rules, but
multibillionaires acting as philanthropists aggravate the problem by
channeling vast sums into the nation's immense nonprofit sector. Their
top-down modus operandi makes this a powerful tool for shaping public policy
according to individual beliefs and whims. And they receive less critical
scrutiny than other actors in public life. Most people admire expressions of
generosity and selflessness and are loath to find fault. In addition, anyone
hoping for a grant -- which increasingly includes for-profit as well as
nonprofit media -- treats donors like unassailable royalty. The emperor is
always fully clothed.
So, what to do? The measures required to rein in plutocracy in the United
States are plain to see and difficult to achieve: radical campaign finance
reform to end the corruption of politics by money, and steeply progressive
taxation without loopholes to reduce inequality in wealth and power. Private
foundations, too, are due for reform. Congress hasn't overhauled their
regulation since 1969, and watchdog agencies are woefully underfunded. But
few, if any, megaphilanthropists give these reforms top priority, although
many talk endlessly about reducing inequality and providing everyone with a
chance at a good life. The interests and egos of philanthro-barons rarely
incline toward curbing plutocracy.
Questioning the work of megaphilanthropists is a tricky business. Many
readers of this article will be fuming in this way: Would you rather let
children remain illiterate, or allow generous people to use their wealth to
give them schools? Would you rather send more money to our bumbling
government, or let visionary philanthropists solve society's problems? Here
is a counterquestion: Would you rather have self-appointed social engineers
-- whose sole qualification is vast wealth -- shape public policy according
to their personal views, or try to repair American democracy?
Footnotes:
1. Sean Corcoran and Christiana Stoddard, "Local Demand For School
Choice: Evidence from the Washington Charter School Referenda" (working
paper #09-01, NYU Wagner Graduate School of Public Service and Steinhardt
School of Culture, Education, and Human Development, 2009), 31, Table 1.
2. Heather Cope, Charter Schools and Washington State (Seattle: League
of Education Voters Foundation, 2011).
3. "About the Foundation," Paul G. Allen Family Foundation, accessed
March 11, 2016.
4. Corcoran and Stoddard, "Local Demand For School Choice," 7–8nn7 and
31, Table 1.
5. Ibid., 8n8–9.
6. Ibid., 8n9.
7. Ibid., 31, Table 1.
8. John J. Miller and Karl Zinsmeister with Ashley May, Agenda Setting:
A Wise Giver's Guide to Influencing Public Policy (Washington, DC: The
Philanthropy Roundtable, 2015), 80, 88, 114, and 134.
9. "World's Richest People 2004," com, accessed March 11, 2016.
10. "World's Richest People 2005: Donald Fisher," com, 2005, accessed
March 11, 2016.
11. "Forbes 400: The List, 2015 Ranking," com, March 22, 2016.
12. Union Reporting History: 000-012 Teachers AFL-CIO National
Headquarters, United States Department of Labor, accessed March 11, 2016.
Accessible via "Online Public Disclosure Room" in Office of Labor-Management
Standards. (To find the 2015 AFT and NEA figures, click on "Union Reports
and Constitutions and Bylaws" > click on Union Search > fill in AFT-TEACHERS
AFL-CIO [drop-down menu will appear] and select Fiscal Year [2015] > click
on "submit" > find TEACHERS AFL-CIO NATIONAL HEADQUARTERS and Total Receipts
[three columns to the right]. For the NEA, fill in NEA-NATIONAL EDUCATION
ASN IND [drop-down menu] and 2015 > submit > find NATIONAL EDUCATION ASN IND
NATIONAL HEADQUARTERS and Total Receipts.)
13. CREDO (Center for Research on Education Outcomes), National Charter
School Study, Executive Summary 2013 (Stanford, CA: Center for Research on
Education Outcomes, 2013), 23. (Reading and math scores have been combined
for an average performance score.)
14. Rachel M. Cohen, "When Charters Go Union," American Prospect, Summer
2015, accessed March 23, 2016.
15. Seattle Times staff, "Washington's legislative education chairs
stalled reforms to improve education," Seattle Times, February 4, 2012.
16. Office of the Secretary of the State, Elections Division, Filing
Initiatives and Referenda in Washington State (Olympia, WA: Office of the
Secretary of State, 2013), 4–14.
17. "Proposed Initiatives to the People -- 2012," Elections & Voting
Division, Washington Secretary of State website, accessed March 13, 2016.
(Scroll down to and click on "5/22/2012, 1240.")
18. "Stand for Children" in Awarded Grants, Bill & Melinda Gates
Foundation, accessed March 13, 2016.
19. "League of Education Voters," in Awarded Grants, Bill & Melinda
Gates Foundation, accessed March 13, 2016.
20. Home page and "Client List," PCI Consultants, Inc., accessed March
13, 2016.
21. Erik Smith, "I-1240 May Not Tie Record After All -- 1973 Initiative
Likely Always to be the Fastest Signature Drive in State History,"
Washington State Wire, June 20, 2012.
22. Seattle Times staff, "$2M spent to gather signatures for
charter-school initiative," Seattle Times, July 11, 2012.
23. Brian M. Rosenthal, "Well-funded charter-school initiative has
nearly enough signatures to make ballot," Seattle Times, July 2, 2012.
24. "Cash Contributions for: YES ON 1240 WA COALITION FOR PUBLIC CHARTER
SCHOOLS," Public Disclosure Commission, accessed March 23, 2016. (Sort the
columns by "name" to see the date and amount of every contribution made by
each donor.) Contributions to the signature drive are dated from June 5
through July 11, 2012. Contributions to the ballot measure campaign are
dated later than July 11, 2012. Charter supporters spent a total of $11.4
million on both the signature drive and ballot measure campaign.
25. Ibid.
26. Melissa Westbrook, "No on 1240 Tent vs Yes on 1240 Tent," Seattle
Schools Community Forum, September 20, 2012.
27. Public Disclosure Commission, accessed March 13, 2016. (To find the
total amount raised by opponents, sort the columns by "ballot" and scroll
down to 1240.) "No on 1240" took in $26,302.43, and "People for Our Public
Schools" took in $701,101.17, creating a total of $727,403.60.)
28. "Cash Contributions for: PEOPLE FOR OUR PUBLIC SCHOOLS," Public
Disclosure Commission, accessed March 13, 2016. (To find the teachers
unions' contributions, sort the columns by "amount.")
29. Ann Dornfeld, "10 Donors Funded 91 percent Of Charter Schools
Campaign," KUOW.org, October 17, 2012.
30. "Initiative Measure No. 1240 Concerns creation of a public charter
school system," November 06, 2012 General Election Results, Washington
Secretary of State website, last updated on November 27, 2012.
31. Bill & Melinda Gates Foundation, "New Investments Build on Efforts
to Give Public Charter Schools in Washington State a Strong Start," press
release, January 29, 2014. (The list of donations and amounts in the Gates
Foundation's press release is incomplete. See the next paragraph in my
article for an account of the full amount -- more than $31 million.)
32. "Washington State Charter Schools Association" in Awarded Grants,
Bill & Melinda Gates Foundation, accessed March 13, 2016; "Green Dot Public
Schools" in Awarded Grants, Bill & Melinda Gates Foundation, accessed March
13, 2016; "Summit Public Schools" in Awarded Grants, Bill & Melinda Gates
Foundation, accessed March 13, 2016; "Charter Board Partners" in Awarded
Grants, Bill & Melinda Gates Foundation, accessed March 13, 2016; and
"Seneca Family of Agencies" in Awarded Grants, Bill & Melinda Gates
Foundation, accessed March 13, 2016.
33. Leah Todd, "Charter-school panel learns lesson from troubles at
First Place," Seattle Times, updated June 25, 2015.
34. League of Women Voters of Wash. v. State, 184 Wn.2d 393, 355 P.3d
1131 (2015).
35. Letters editor, "State Supreme Court's education rulings: our
unusual constitution at play," Seattle Times, September 15, 2015.
36. John Higgins, "Charter school advocates raise PAC money," Seattle
Times, December 18, 2015.
37. John Higgins, "Charter-school rescue plan heads to governor's desk,"
Seattle Times, March 10, 2016.
38. Becky Quick, "Gates, Munger & Buffett: If I were education czar…,"
Squawk Box, CNBC video, 7:34, May 4, 2015.
39. Carl Campanile, "Gates' $4 Mil Lesson," New York Post, August 17,
2009.
40. Gwen Ifill, "Conversation with Bill Gates, Melinda Gates, and Gwen
Ifill -- U.S. Education Learning Forum," YouTube video, 31:26, from U.S.
Education Learning Forum held on October 7, 2015, posted by
"GatesFoundation," October 9, 2015.
41. Michael Rothfeld, "Financial Woes Plague Common-Core Rollout," Wall
Street Journal, November 2, 2015.
42. Michael Casey, "Bill Gates For President? 'I Would Never Run For
Political Office,' He Says," Huffington Post, October 9, 2012, accessed
March 13, 2016.
43. Kyle Pomerleau, 2016 Tax Brackets, Fiscal Fact No. 486 (Washington,
DC: Tax Foundation, 2015), 1.
This piece was reprinted by Truthout with permission or license. It may not
be reproduced in any form without permission or license from the source.
JOANNE BARKAN
Joanne Barkan is a writer based in New York City and Truro, Massachusetts.
Her other articles on the education reform movement and big philanthropy can
be found here.
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Error! Hyperlink reference not valid.
Charitable Plutocracy: Bill Gates, Washington State and the Nuisance of
Democracy
Friday, 15 April 2016 00:00 By Joanne Barkan, Nonprofit Quarterly | Op-Ed
• font size Error! Hyperlink reference not valid. Error! Hyperlink
reference not valid.Error! Hyperlink reference not valid. Error! Hyperlink
reference not valid.
• Bill Gates, co-chair of the Bill & Melinda Gates Foundation,
addresses a United Nations press conference. (UN Photo / Jean-Marc Ferré)
• This article was first published in the Nonprofit Quarterly (spring
2016; vol. 23, no. 1).
Once upon a time, the super-wealthy endowed their tax-exempt charitable
foundations and then turned them over to boards of trustees to run. The
trustees would spend the earnings of the endowment to pursue a typically
grand but wide-open mission written into the foundation's charter -- like
The Rockefeller Foundation's 1913 mission "to promote the well-being of
mankind throughout the world." Today's multi-billionaires are a different
species of philanthropist; they keep tight control over their foundations
while also operating as major political funders -- think Michael Bloomberg,
Bill Gates, or Walmart heiress Alice Walton. They aim to do good in the
world, but each defines "good" idiosyncratically in terms of specific public
policies and political goals. They translate their wealth, the work of their
foundations, and their celebrity as doers-of-good into influence in the
public sphere -- much more influence than most citizens have.
Call it charitable plutocracy -- a peculiarly American phenomenon,
increasingly problematic and in need of greater scrutiny. Like all forms of
plutocracy, this one conflicts with democracy, and exactly how these
philanthropists coordinate tax-exempt grantmaking with political funding for
maximum effect remains largely obscure. What follows is a case study of the
way charitable plutocracy operates on the ground. It's a textbook example of
the tug-of-war between government by the people and uber-philanthropists as
social engineers.
The Case of Bill Gates and Washington State
This story begins in 1995, when the Washington State House of
Representatives first considered legislation that would enable private
individuals and organizations to obtain charters to create their own K–12
schools. These were to be taxpayer-funded schools, but privately run and
exempt from many of the regulations governing district (regular) public
schools. The funding would come from the resources of regular public
schools: each student would "carry" his or her per-child funding out of the
district system to a charter school.
The bill died in the state senate, so supporters went directly to voters
with a ballot initiative to enable charter schools. The campaign attracted
little money on either side, but turnout was high because the vote took
place on the same day as the 1996 presidential election. Washingtonians
rejected charter schools decisively: 64.4 percent against, 35.6 percent in
favor.1
State representatives kept trying. They proposed new bills in 1997, 1998,
and 1999, but got the same results: success in the lower chamber, failure in
the senate.2
Wariness of charter schools didn't mean that Washingtonians were completely
satisfied with existing schools or feared change. Voters had legitimate
concerns. Charter schools, they worried, would divert tax revenue from
already underfunded district schools, especially those serving low-income
and minority students. In addition, schools under private management might
be less transparent and less accountable to the public than Washington's
district schools, which were overseen by locally elected boards.
Charter supporters tried another ballot initiative in 2000, and, for the
first time, attracted the backing of a multi-billionaire philanthropist.
Paul Allen had cofounded Microsoft in 1975 and The Paul G. Allen Family
Foundation in 1988.3 The state places no limits on individual campaign
contributions for ballot measures, so Allen was able to give $3.275 million
of the total $3.4 million raised by the pro-charter side. Opponents raised
only about $11,000. Outspent 309 to 1, they still defeated the initiative,
although the millions given in support of charters shrank the margin of
victory. The vote was 51.8 percent against charters and 48.2 percent in
favor.4
In the next four years, the national context shifted. The debate around
public education intensified as a controversial market-based
education-reform movement grew stronger. "Ed-reformers" claimed that U.S.
public schools were failing; that the culprits were bad teachers, teachers
unions, and government bureaucracy; and that the private sector, using
public resources, could run better schools. They promoted competition among
schools to force out the weakest and measuring educational success via
students' standardized test scores.
The education-reform movement in general, and charter schools in particular,
attracted a new wave of philanthropists, many of whom had made fortunes in
high-tech industries and finance. Although they had no experience as
educators, they aimed to "disrupt" and rebuild public schooling for urban
low-income and minority children. They embraced the idea that giving grants
to K-12 reform projects corresponded with investing capital in a business.
They described their philanthropy in terms of strategic investments to
maximize returns and data collection to verify results. Having succeeded in
business, they reasoned, they would succeed in education. They came to see
funding education-reform candidates and ballot initiatives as part of the
same effort.
The Washington legislature finally passed a charter school law in 2004.
Opponents responded by petitioning for a ballot measure to repeal the law.
Mobilized by the teachers unions, League of Women Voters, state Democratic
Party, and the Seattle School Board, they raised $1.3 million for the
campaign. The unions contributed the most: the Washington Education
Association gave $601,000, and the National Education Association gave
$500,000.5
Charter school supporters raised three times as much -- $3.9 million. Most
of it came from three education-reform political funder-philanthropists, who
donated about $1 million each: Bill Gates, who had recently made education
reform the main focus of his domestic philanthropy; Walmart heir John T.
Walton (from Wyoming), who advocated charters and tax-funded vouchers for
parents to use for private-school tuition; and Donald Fisher (from
California), founder of Gap and a major donor to the KIPP chain of charter
schools.6
When philanthropists finance political campaigns, they act as individual
citizens spending their personal wealth, not as the heads of tax-exempt,
charitable foundations. Federal and state laws bar private foundations from
political activity. Although the regulations have ambiguities and loopholes,
high-profile philanthropists are usually careful about keeping foundation
and personal monies separate and using only the latter to fund political
campaigns.
Although outspent three to one, charter school opponents in Washington won
an impressive victory in 2004. The law was repealed by a vote of 58.3
percent to 41.7 percent.7
This big-money face-off -- multibillionaire philanthropists against teachers
unions -- turned out to be a prototype repeated across the country in scores
of education-reform campaigns in the last decade. Millions of dollars
regularly pour into races for local and state school boards and for district
and state school superintendents, as well as for education ballot
initiatives. The money comes from both in state and out of state. Twenty
years ago, these contests cost little to run; the stakes were limited. Now,
the money is huge, and the ramifications are national: the nature and
control of public education is being decided.
Education-reform philanthropists justify their massive political spending as
a necessary counterweight to the teachers unions;8 yet, the philanthropists
can, and consistently do, far outspend the unions. In 2004, Paul Allen had a
net worth of $21 billion, Bill Gates had a net worth of $46.6 billion, and
John T. Walton (who died in 2005) had a net worth of $20 billion.9 Donald
Fisher's net worth was $1.3 billion in 2005.10 In 2015, Allen had a net
worth of $17.8 billion, Gates had a net worth of $76 billion, and Doris
Fisher (Donald Fisher's widow and a charter school donor) had a net worth of
$2.9 billion.11 And the unions? According to the 2015 reports filed with the
Office of Labor-Management Standards, the National Education Association had
$388.8 million in total receipts; the American Federation of Teachers had
$327.6 million in total receipts.12 As political rivals, the
education-reform philanthropists and the teachers unions have never competed
on a level playing field.
In January 2012, charter school supporters in the Washington State
legislature introduced another bill. By then, the state was one of only nine
that didn't permit charter schools. Some states had bowed to pressure from
the Obama administration's Race to the Top program (2009–2011): by
committing to a list of specific reforms, including charter schools, they
had a chance to win additional federal funds. Despite resistance to the
reforms, resource-starved states were willing to sign on to almost anything
to get more funding.
More than five thousand charter schools were operating in the United States
in 2012, and researchers were finding some serious problems. Charter schools
were diverting funds from district schools while also enrolling a smaller
proportion of the most at-risk children (for example, children with
disabilities and English-language learners). These children remained at or
returned to district schools just as the districts were losing resources. In
addition, the quality of charter schools was extremely uneven, according to
the education reformers' own criterion: student scores on standardized
tests. A large-scale study, published in 2013 by the pro-education-reform
Center for Research on Education Outcomes at Stanford University, concluded
that about 27 percent of charters performed better than district schools
serving equivalent student populations; about 25 percent performed worse;
the rest were about the same.13
Despite the problems with charter schools, education-reform philanthropists
had no second thoughts about their drive to replace as many district schools
as possible. They had various motivations: the conviction that market
competition among schools could not fail to improve the quality of public
education; the desire to get government out of the business of running
schools (although taxpayers would still fund them); and determination to
weaken the teachers unions (only about 7 percent of charter schools are
unionized).14 Charter advocates also argued that low-income parents should
have a choice of schools for their children just as wealthier parents did --
no matter that most charters were no better than district schools and some
were worse, and that charters were weakening district schools and that
high-performing charters accommodated few students.
Meanwhile, the leadership of both houses of the Washington legislature
opposed the 2012 charter bill.15 When it died in committee, the activist
billionaires stepped in, with Gates in the lead: they would finance yet
another charter school ballot initiative -- the state's fourth.
In the first phase of Washington's initiative process, citizen sponsors
draft their legislation, and the Office of the Code Reviser certifies the
text. Thus, citizens, not legislators, write the proposed law. In phase two,
supporters collect a sufficient number of valid signatures to place the
measure on the ballot in the next state general election. Phase three is the
campaign and vote.16
Once the thirty-nine-page charter school measure was certified, the state's
Attorney General's office issued an official title, subject, and "concise
description" to be printed on the ballot. Here they are:
Initiative Measure No. 1240 concerns creation of a public charter school
system. This measure would authorize up to forty publicly-funded charter
schools open to all students, operated through approved, nonreligious,
nonprofit organizations, with government oversight; and modify certain laws
applicable to them as public schools.
Should this measure be enacted into law? Yes [ ] No [ ]17
The coalition of advocates behind the 2012 initiative included some
well-known grantees of the Bill & Melinda Gates Foundation: for example,
Stand for Children (about $9 million in grants from 2005 through 2012)18 and
the League of Education Voters, a subgrantee of the Alliance for Education
($733,285 in grants for 2011 and 2012).19
To collect the signatures, the coalition hired PCI Consultants, Inc., of
Calabasas, California, a "full service petition and field management firm"
with experience in Washington State.20 The drive began in mid-June, which
left just twenty-one days to collect 241,153 valid signatures -- the
shortest drive in state history (except for one in 1973).21 Success depended
on quick access to millions of dollars for an all-out effort.
The drive raised $2.3 million and delivered about 350,000 signatures by the
July 6 deadline.22 One signature gatherer from California told the Seattle
Times that he was among about four hundred out-of-staters who had been
hired. Coalition spokespeople declined to confirm or deny the information.23
According to the Public Disclosure Commission in Washington State, funders
for the signature drive included Gates ($1 million), Alice Walton (from
Arkansas, $600,000), Mike and Jackie Bezos (parents of Amazon.com founder
Jeff Bezos, $500,000), venture capitalist Nicolas Hanauer ($450,000),
Katherine Binder (chair of EMFCO Holdings, $200,000), Paul Allen's Vulcan,
Inc. ($100,000), and Reed Hastings, from California (Netflix cofounder and
KIPP charter schools board member, $100,000).24
As soon as Initiative 1240 was certified for the November vote, the race to
stockpile more money began.
The pro-charter side collected another $9.1 million for the fall campaign.
More than 70 percent of the additional money came from just six donors:
Gates ($2.075 million), Vulcan, Inc. ($1.5 million), Alice Walton ($1.1
million), Mike and Jackie Bezos ($600,000), Hanauer ($600,000), and Connie
Ballmer (wife of former Microsoft CEO Steve Ballmer, $500,000).25
Opposition to the charter initiative was broad but not deep-pocketed. The
organizations calling for a "no" vote included the Seattle King County
NAACP, El Centro de la Raza, the Japanese American Citizens League Board,
the League of Women Voters, the Washington State PTA, local elected school
boards, the Association of Washington School Principals, the Washington
Association of School Administrators, many district and county Democratic
Party organizations, the Washington State Labor Council, the Washington
Education Association, and other state and local unions.26
The "no" coalition raised just over $727,400.27 The largest donations came
from the National Education Association ($250,000) and the Washington
Education Association ($200,000).28 According to KUOW Puget Sound Public
Radio's blog, "Teachers' union officials say…when it comes to the big money
behind the charter school initiative, they just can't compete."29
No one disputes that big money sways voting outcomes or that superwealthy
philanthropists regularly spend millions to get the outcomes they want. The
vote on Washington's Initiative 1240 stands out for this reason: despite
outspending their opponents more than 12 to 1, the philanthropists barely
eked out a victory. The final tally was 50.69 percent in favor, 49.31
percent opposed.30 Citizens might well have asked whether the advent of
charter schools in their state expressed the will of the people.
Once the initiative was law, the backing for charter schools switched from
political contributions to tax-exempt philanthropy. The Bill & Melinda Gates
Foundation went into high gear for the next phase of the project. The
foundation disbursed more than $31 million in less than three years "to give
public charter schools in Washington State a strong start."31 In practice,
this meant selecting and financing individuals and organizations to start
schools, advise charter boards, and develop education programs.
The Gates Foundation spent more than $13.5 million to set up and run the
Washington State Charter Schools Association -- a private group whose work
includes awarding "fellowships" to educators who want to open schools. Green
Dot Public Schools, a charter management organization founded in Los
Angeles, received $8 million in 2013 to expand into Washington. Green Dot
has received about $24 million from Gates since 2006. Another charter
management organization, the Bay Area's Summit Public Schools, also received
$8 million in 2013 to branch into Washington. Charter Board Partners, a
DC-based nonprofit consultancy for charter school governance, received more
than $1.2 million to open a Washington office. The Gates Foundation gave
California's Seneca Family of Agencies almost $1 million to develop support
for at-risk students in Washington's charter schools.32
Thus, the schools were to be public in name and receive public funding for
each student, but the Gates Foundation, with no public oversight, stepped in
to shape the charter system.
Washington's first charter school opened in 2014 and was on probation for
compliance problems in the summer of 2015, when eight more charters were
about to launch.33 But on September 4, 2015, the Washington Supreme Court
halted the entire charter program by declaring the 2012 law
unconstitutional. This was the first time any court had struck down a
charter school law in its entirety.
The reasoning in the 6-3 decision is straightforward: The state constitution
stipulates that only common (public) schools can receive government funding,
and all common schools in the state must be subject to local voter control.
Because charter schools are run by appointed boards or private
organizations, they are not common schools and do not qualify for government
funding.34
Charter school supporters blamed the ruling on the bias of liberal activist
justices, but as Michael J. Fox, a retired superior court judge, wrote in a
letter to the Seattle Times, "I voted for the charter schools initiative.
[…] But I've read the court's decision thoroughly and am convinced it is
well-grounded and based on the pertinent constitutional provisions. Any
other decision could only have been based on political ideology and not our
supreme law."35
Charter activists -- some with Gates money -- filed motions asking the court
to reconsider its decision, but the court refused. Undeterred, three Gates
grantees -- the Washington State Charter Schools Association, Stand for
Children, and League of Education Voters -- partnered to create a PAC to
channel money to legislators willing to vote for a modified charter law.
When the PAC was announced, in December 2015, checks had already gone out to
twenty-four lawmakers.36 On March 10, 2016, the legislature passed a new
bill that would fund charter schools with state lottery revenue. Supporters
believe this will pass constitutional muster because lottery proceeds go
into an account that is separate from the state's general fund and the
lottery account is not restricted to common schools. Opponents argue that
the bill does nothing more than shift money from one account to another.37
Democratic Governor Jay Inslee, who is running for reelection against a
pro-charter Republican, allowed the bill to become law without his
signature, at the end of a special legislative session on April 2. A union
coalition plans to sue the state over the law. Meanwhile, the state remains
under a contempt order from the Washington Supreme Court, which ruled in
2012 that the state isn't meeting its constitutional duty to fully fund
basic education. There's no end in sight.
The Nuisance of Democracy
The Washington charter saga highlights the workings of charitable
plutocracy. Multibillionaire philanthropists use their personal wealth,
their tax-exempt private foundations, and their high-profile identities as
philanthropists to mold public policy to a degree not possible for other
citizens. They exert this excessive influence without public input or
accountability. As for the charitable donors who are trying to reshape
public education according to their favorite theories or ideological
preferences, they are intervening with too heavy a hand in a critical
institution that belongs to the public and requires democratic control. But
in any public domain, the philanthropist's will and democratic control are
often at odds.
Voters, their elected representatives, grass-roots activists, civic groups,
unions, public opinion -- all can thwart an uber-philanthropist's effort to
impose his or her vision of the common good on everyone else. Democracy can
be a nuisance for the multibillionaire -- a fact of life that Bill Gates has
often lamented.
In a CNBC panel, aired on May 4, 2015, and titled "If I were education
czar…," Bill Gates discussed the problems he's had in spreading the "best
practices" of charter schools throughout the United States: "It's not easy.
School boards have a lot of power, so they have to be convinced. Unions have
a lot of power, so teachers need to see the models that are working." Asked
about his broader goal to redo all of public education, Gates said, "We're
not making as much progress as I'd like. In fact, of all the foundation
areas we work in, I'd say this has proven to be the most difficult." The
interviewer followed up: "Why do you think that is?" Gates replied, "It's a
very big system…very resistant to change. The best results have come in
cities where the mayor is in charge of the school system. So you have one
executive, and the school board isn't as powerful."38
Gates has been making this point for years. During a CNN appearance in 2009,
according to the New York Post, Gates said, "The cities where our foundation
has put the most money is [sic] where there is a single person
responsible."39
During the Gates Foundation's US Education Learning Forum in October 2015,
journalist Gwen Ifill asked Bill and Melinda Gates to name "the least
pleasant surprise" during their previous fifteen years of education-reform
work. Bill answered, "For me the most disappointing is that the work can go
backwards. In the other areas we work, if we come up with a new malaria drug
or a new malaria vaccine, nobody votes to uninvent our malaria vaccine."40
This was an effective laugh line for Gates, but it's also a telling
formulation; no one has ever voted to "uninvent" a Gates offering. But, on
occasion, voters or their representatives have rejected a Gates plan. That's
ordinary democratic policy-making, not uninventing one of his creations.
At times, democracy seems to flummox Gates. In the same interview, he
reflected on why there's been strong opposition to the Common Core State
Standards -- a detailed set of K-12 benchmarks in math and language arts
that the Gates Foundation developed and marketed around the country at a
cost of about $263 million.41 "It's not like somebody's got some great
alternative in terms of the benefits to students," he said. "It's more about
'Oh, we'll show our autonomy' than it is about having something better for
learning."
Gates, who has no training as an educator or researcher, easily dismisses
the work of professionals in the field, but it's never been clear how well,
or even if, he knows their work. He appears continually in the media
promoting his chosen policies, but he doesn't engage in depth -- at least
not publicly -- with experienced educators or scholars who disagree with
him. His entrée into policy-making is money, not expertise. Talking to
Ifill, he brushes off opponents as obstructionists who merely want to flaunt
their autonomy -- as if disagreeing with him were an exercise in peskiness
rather than part of a necessary substantive debate. As for entering the fray
as a candidate and asking voters to endorse his ideas, Gates wants no part
of it. Questioned at the 2012 Abu Dhabi Media Summit about running for
president, he said his current job with the Bill & Melinda Gates Foundation
was "a very nice office" and that it didn't require him to raise funds to
"try to get elected," nor does it "have term limits of eight years…I
actually think, maybe I'm wrong, that I can have as much impact in that
[philanthropic] role as I could in any political role. In any case, I would
never run for political office."42
Multibillionaires who play the dual role of philanthropist and political
bankroller range ideologically from progressive to far right, and they spend
on myriad causes in addition to public education. At the progressive end are
George Soros and his Open Society Foundations. On the far right are the Koch
brothers and their David H. Koch Charitable Foundation and Charles Koch
Foundation. In addition to Gates, the most aggressive philanthropies in
market-based education reform are the Walton Family Foundation and the Eli
and Edythe Broad Foundation. (Walton supports publicly funded vouchers for
private school tuition but otherwise the major education-reform financiers
back similar policies.)
Regardless of political stands or projects, all philanthro-barons with their
own foundations are generously subsidized by taxpayers. When a baron says,
"It's my money to use as I please," he or she is wrong. A substantial
portion of every tax-exempt foundation's wealth -- 39.6 percent at the top
tax bracket for filing in 2016 -- is diverted each year from the public
treasury, where voters would have determined its use.43 Taxpayers subsidize
not only the philanthropy of the Koch brothers, Soros, and the others but
also their political work. Part of the megaphilanthropist's wealth goes into
a personal cache; part goes into a tax-exempt cache. The money saved by not
paying taxes goes wherever the philanthropist wants, including to political
work.
American democracy is growing ever more plutocratic -- a fact that should
worry all admirers of government by the people. Big money rules, but
multibillionaires acting as philanthropists aggravate the problem by
channeling vast sums into the nation's immense nonprofit sector. Their
top-down modus operandi makes this a powerful tool for shaping public policy
according to individual beliefs and whims. And they receive less critical
scrutiny than other actors in public life. Most people admire expressions of
generosity and selflessness and are loath to find fault. In addition, anyone
hoping for a grant -- which increasingly includes for-profit as well as
nonprofit media -- treats donors like unassailable royalty. The emperor is
always fully clothed.
So, what to do? The measures required to rein in plutocracy in the United
States are plain to see and difficult to achieve: radical campaign finance
reform to end the corruption of politics by money, and steeply progressive
taxation without loopholes to reduce inequality in wealth and power. Private
foundations, too, are due for reform. Congress hasn't overhauled their
regulation since 1969, and watchdog agencies are woefully underfunded. But
few, if any, megaphilanthropists give these reforms top priority, although
many talk endlessly about reducing inequality and providing everyone with a
chance at a good life. The interests and egos of philanthro-barons rarely
incline toward curbing plutocracy.
Questioning the work of megaphilanthropists is a tricky business. Many
readers of this article will be fuming in this way: Would you rather let
children remain illiterate, or allow generous people to use their wealth to
give them schools? Would you rather send more money to our bumbling
government, or let visionary philanthropists solve society's problems? Here
is a counterquestion: Would you rather have self-appointed social engineers
-- whose sole qualification is vast wealth -- shape public policy according
to their personal views, or try to repair American democracy?
Footnotes:
1. Sean Corcoran and Christiana Stoddard, "Local Demand For School
Choice: Evidence from the Washington Charter School Referenda" (working
paper #09-01, NYU Wagner Graduate School of Public Service and Steinhardt
School of Culture, Education, and Human Development, 2009), 31, Table 1.
2. Heather Cope, Charter Schools and Washington State (Seattle: League
of Education Voters Foundation, 2011).
3. "About the Foundation," Paul G. Allen Family Foundation, accessed
March 11, 2016.
4. Corcoran and Stoddard, "Local Demand For School Choice," 7–8nn7 and
31, Table 1.
5. Ibid., 8n8–9.
6. Ibid., 8n9.
7. Ibid., 31, Table 1.
8. John J. Miller and Karl Zinsmeister with Ashley May, Agenda Setting:
A Wise Giver's Guide to Influencing Public Policy (Washington, DC: The
Philanthropy Roundtable, 2015), 80, 88, 114, and 134.
9. "World's Richest People 2004," com, accessed March 11, 2016.
10. "World's Richest People 2005: Donald Fisher," com, 2005, accessed
March 11, 2016.
11. "Forbes 400: The List, 2015 Ranking," com, March 22, 2016.
12. Union Reporting History: 000-012 Teachers AFL-CIO National
Headquarters, United States Department of Labor, accessed March 11, 2016.
Accessible via "Online Public Disclosure Room" in Office of Labor-Management
Standards. (To find the 2015 AFT and NEA figures, click on "Union Reports
and Constitutions and Bylaws" > click on Union Search > fill in AFT-TEACHERS
AFL-CIO [drop-down menu will appear] and select Fiscal Year [2015] > click
on "submit" > find TEACHERS AFL-CIO NATIONAL HEADQUARTERS and Total Receipts
[three columns to the right]. For the NEA, fill in NEA-NATIONAL EDUCATION
ASN IND [drop-down menu] and 2015 > submit > find NATIONAL EDUCATION ASN IND
NATIONAL HEADQUARTERS and Total Receipts.)
13. CREDO (Center for Research on Education Outcomes), National Charter
School Study, Executive Summary 2013 (Stanford, CA: Center for Research on
Education Outcomes, 2013), 23. (Reading and math scores have been combined
for an average performance score.)
14. Rachel M. Cohen, "When Charters Go Union," American Prospect, Summer
2015, accessed March 23, 2016.
15. Seattle Times staff, "Washington's legislative education chairs
stalled reforms to improve education," Seattle Times, February 4, 2012.
16. Office of the Secretary of the State, Elections Division, Filing
Initiatives and Referenda in Washington State (Olympia, WA: Office of the
Secretary of State, 2013), 4–14.
17. "Proposed Initiatives to the People -- 2012," Elections & Voting
Division, Washington Secretary of State website, accessed March 13, 2016.
(Scroll down to and click on "5/22/2012, 1240.")
18. "Stand for Children" in Awarded Grants, Bill & Melinda Gates
Foundation, accessed March 13, 2016.
19. "League of Education Voters," in Awarded Grants, Bill & Melinda
Gates Foundation, accessed March 13, 2016.
20. Home page and "Client List," PCI Consultants, Inc., accessed March
13, 2016.
21. Erik Smith, "I-1240 May Not Tie Record After All -- 1973 Initiative
Likely Always to be the Fastest Signature Drive in State History,"
Washington State Wire, June 20, 2012.
22. Seattle Times staff, "$2M spent to gather signatures for
charter-school initiative," Seattle Times, July 11, 2012.
23. Brian M. Rosenthal, "Well-funded charter-school initiative has
nearly enough signatures to make ballot," Seattle Times, July 2, 2012.
24. "Cash Contributions for: YES ON 1240 WA COALITION FOR PUBLIC CHARTER
SCHOOLS," Public Disclosure Commission, accessed March 23, 2016. (Sort the
columns by "name" to see the date and amount of every contribution made by
each donor.) Contributions to the signature drive are dated from June 5
through July 11, 2012. Contributions to the ballot measure campaign are
dated later than July 11, 2012. Charter supporters spent a total of $11.4
million on both the signature drive and ballot measure campaign.
25. Ibid.
26. Melissa Westbrook, "No on 1240 Tent vs Yes on 1240 Tent," Seattle
Schools Community Forum, September 20, 2012.
27. Public Disclosure Commission, accessed March 13, 2016. (To find the
total amount raised by opponents, sort the columns by "ballot" and scroll
down to 1240.) "No on 1240" took in $26,302.43, and "People for Our Public
Schools" took in $701,101.17, creating a total of $727,403.60.)
28. "Cash Contributions for: PEOPLE FOR OUR PUBLIC SCHOOLS," Public
Disclosure Commission, accessed March 13, 2016. (To find the teachers
unions' contributions, sort the columns by "amount.")
29. Ann Dornfeld, "10 Donors Funded 91 percent Of Charter Schools
Campaign," KUOW.org, October 17, 2012.
30. "Initiative Measure No. 1240 Concerns creation of a public charter
school system," November 06, 2012 General Election Results, Washington
Secretary of State website, last updated on November 27, 2012.
31. Bill & Melinda Gates Foundation, "New Investments Build on Efforts
to Give Public Charter Schools in Washington State a Strong Start," press
release, January 29, 2014. (The list of donations and amounts in the Gates
Foundation's press release is incomplete. See the next paragraph in my
article for an account of the full amount -- more than $31 million.)
32. "Washington State Charter Schools Association" in Awarded Grants,
Bill & Melinda Gates Foundation, accessed March 13, 2016; "Green Dot Public
Schools" in Awarded Grants, Bill & Melinda Gates Foundation, accessed March
13, 2016; "Summit Public Schools" in Awarded Grants, Bill & Melinda Gates
Foundation, accessed March 13, 2016; "Charter Board Partners" in Awarded
Grants, Bill & Melinda Gates Foundation, accessed March 13, 2016; and
"Seneca Family of Agencies" in Awarded Grants, Bill & Melinda Gates
Foundation, accessed March 13, 2016.
33. Leah Todd, "Charter-school panel learns lesson from troubles at
First Place," Seattle Times, updated June 25, 2015.
34. League of Women Voters of Wash. v. State, 184 Wn.2d 393, 355 P.3d
1131 (2015).
35. Letters editor, "State Supreme Court's education rulings: our
unusual constitution at play," Seattle Times, September 15, 2015.
36. John Higgins, "Charter school advocates raise PAC money," Seattle
Times, December 18, 2015.
37. John Higgins, "Charter-school rescue plan heads to governor's desk,"
Seattle Times, March 10, 2016.
38. Becky Quick, "Gates, Munger & Buffett: If I were education czar…,"
Squawk Box, CNBC video, 7:34, May 4, 2015.
39. Carl Campanile, "Gates' $4 Mil Lesson," New York Post, August 17,
2009.
40. Gwen Ifill, "Conversation with Bill Gates, Melinda Gates, and Gwen
Ifill -- U.S. Education Learning Forum," YouTube video, 31:26, from U.S.
Education Learning Forum held on October 7, 2015, posted by
"GatesFoundation," October 9, 2015.
41. Michael Rothfeld, "Financial Woes Plague Common-Core Rollout," Wall
Street Journal, November 2, 2015.
42. Michael Casey, "Bill Gates For President? 'I Would Never Run For
Political Office,' He Says," Huffington Post, October 9, 2012, accessed
March 13, 2016.
43. Kyle Pomerleau, 2016 Tax Brackets, Fiscal Fact No. 486 (Washington,
DC: Tax Foundation, 2015), 1.
This piece was reprinted by Truthout with permission or license. It may not
be reproduced in any form without permission or license from the source.
Joanne Barkan
Joanne Barkan is a writer based in New York City and Truro, Massachusetts.
Her other articles on the education reform movement and big philanthropy can
be found here.
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