Supporters of Last Year’s Massachusetts Charter School Ballot Issue Caught Laundering Dark Money

For quite a while it has been clear that big money dominates our politics and too frequently overrides the will of citizens. In public education policy, the priorities of the One Percent have driven the laws and policy that shape the public schools serving 50 million children—the schools serving the 99 Percent.

Last year, however, in a heartening development, the voters of one state rejected a big-money effort to expand charter schools. In November 2016, in Massachusetts, voters rejected Question 2, a ballot issue that would have raised the cap on the number of charter schools that could be opened in the state. But new evidence now proves conclusively that hidden, big-moneyed interests certainly tried to sway Massachusetts voters.

We learned last week that Families for Excellent Schools-Advocacy, a group that raised 70 percent of the dollars contributed to the ballot committee behind Question 2, was not really a grassroots fundraising effort.  It was what is known these days as a Dark Money, Astroturf (fake-grassroots) organization.  The Massachusetts Office of Campaign and Political Finance just fined Families for Excellent Schools-Advocacy $426,500 for failing to disclose the donors of $15 million the group poured into political advocacy for Question 2 last November.

The nuances of campaign finance law and its enforcement from state to state are complicated, but in perfectly clear explanations from three different Massachusetts newspapers, it’s possible to parse out exactly what was illegal about the activities of Families for Excellent Schools-Advocacy:

From an editorial in the Gloucester Times: “It’s no surprise that Alice Walton, daughter of late Wal-Mart founder Sam Walton, gave a lot of cash to push a ballot question in Massachusetts that aimed to expand charter schools. Education generally, and charter schools in particular, are key interests of the Walton Family Foundation… It’s not surprising, either that Seth Klarman, the billionaire head of a Boston hedge fund and well-known GOP donor kicked in $3.3 million for the pro-charter question… Unfortunately it isn’t surprising either, that the public had no way to know about these contributions at the time, veiled as they were behind a nonprofit group funneling money into the campaign for Question 2…  Families for Excellent Schools-Advocacy gave $15 million to the unsuccessful question that would have allowed up to a dozen new charter schools in the state each year. The group was working with the New York-based Families for Excellent Schools, which lobbies for charters nationwide.  State campaign regulators deemed the group essentially worked as an unregistered ballot committee, passing donations from individuals to the campaign.  That arrangement meant donors’ identities were not disclosed….”

The Bay State Banner adds: “In general, nonprofits are not required to reveal donors so long as the nonprofit does not engage in political activity.  However, OCPF officials assert that during the 2016 ballot season, FESA specifically fundraised in order to donate to the political campaign committee—which would then only have to state FESA as its donor and not the original source of the money.”

And from the Boston Globe: “Families for Excellent Schools has promoted charter schools across the country. In New York, it spent $9.4 million on lobbying in 2014 and ran ads blasting Mayor Bill DeBlasio for his opposition to charters, while praising Governor Andrew Cuomo for supporting them.  The group was chaired last year by Paul Appelbaum, principal of Rock Ventures LLC, a New York investment firm.  Its vice chairman was Bryan Lawrence of Yorktown Partners, another New York investment firm.”

The Boston Globe adds that Massachusetts Governor Charlie Baker, a strong promoter of the now-defeated ballot issue to raise the cap on charter schools, defended the donors themselves and blamed Families for Excellent Schools-Advocacy: “But that’s on the group… Paul Sagan and Mark Nunnelly both complied with all state laws with respect to this.”

Maurice Cunningham, a political science professor at the University of Massachusetts, Boston, will have none of that explanation: “Are they kidding?  The entire reason to give to FESA was to keep their identities secret… And why, you ask, is it important for the donors to keep their identities secret?  It’s because, as political science research shows, if voters know that the real folks behind this idea are not poor families eager to improve their children’s schooling but billionaire financiers, the voters apply a deep discount to the message.”

Here is the substance of the agreement reached on September 11 between the Massachusetts Office of Campaign and Political Finance and Families for Excellent Schools-Advocacy: “FESA filed a statement of organization as a ballot question committee with OCPF, and then e-filed a campaign finance report disclosing all contributions and expenditures from July 1 to Dec. 31, 2016… FESA also agreed to dissolve as a 501(C)(4) social welfare organization with the IRS.  Families for Excellent Schools (FES), a 501(C)(3) tax exempt organization, agreed not to fundraise or solicit in Massachusetts, or engage in any election-related activity in the state for four years.”  Additionally Families for Excellent Schools-Advocacy paid the fine of $426,500.

The case may have longer term implications for organizations intending to skirt campaign finance laws to launder so-called dark money. Education writer, Rachel Cohen reported on Tuesday that, as part of the Massachusetts investigation into Families for Excellent Schools-Advocacy, evidence has emerged that $2.5 million of the $15 million Families for Excellent Schools-Advocacy raised to support Question 2 came directly from the New York nonprofit, Families for Excellent Schools: “A New York-based education reform nonprofit funneled nearly $2.5 million to a related group in Massachusetts, according to new disclosures unearthed as part of a legal settlement… FESA is a 501(C)(4) offshoot of the New York-based Families for Excellent Schools, a 501(C)(3). That connection raises the stakes for New York Attorney General Eric Schneiderman, who has jurisdiction over Families for Excellent Schools in New York and has made clean campaigns a centerpiece of his agenda. In exchange for their tax-exempt status, federal law bars 501(C)(3) organizations from engaging in political activity, and some are calling on Schneiderman to investigate why Families for Excellent Schools made a multimillion-dollar contribution, now that the Massachusetts Office of Campaign and Political Finance has acted.”  Schneiderman declined to comment on Cohen’s story.

Cohen quotes Adam Smith from the campaign finance advocacy group, Every Voice: “With so much shady money sloshing around politics these days, it’s critical that watchdogs have what they need to defend election and campaign finance laws and hold violators accountable.”

Maurice Cunningham believes last week’s ruling by the Massachusetts Office of Campaign and Political Finance will have a chilling effect on the solicitation of dark money political contributions at least in Massachusetts: “Now imagine the phone calls from donors to other Massachusetts dark money fronts like Massachusetts Fiscal Alliance and Democrats for Education Reform Massachusetts. Can their donors be sure their names will remain hidden?”

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Plutocrats in NYC Wielding Power, Buying the Airwaves, and Trashing Public Schools Again

Public schools are among the primary institutions that serve the families in the 99 Percent.  As primarily middle class institutions, they are coming under attack from the One Percent, the plutocrats—both Republican and Democrats—who control the levers of power.

In a piece earlier this week the NY Times profiled 158 families across the country who have provided nearly half of all the early money that has been underwriting the campaigns of the candidates currently vying for the 2016 Presidential nominations. The reporters quote the political analyst and demographic expert Ruy Teixeira: “The campaign finance system is now a countervailing force to the way the actual voters of the country are evolving and the policies they want.”

Last week, the NY Times op-ed page printed a commentary by Thomas Edsall on the same subject.  Edsall describes the conclusions of political scientist Martin Gilens on the impact of our increasingly plutocratic system: “The majority does not rule—at least not in the causal sense of actually determining policy outcomes.  When a majority of citizens disagrees with economic elites or with organized interests, they generally lose… Gilens notes that policies popular with the middle class but not with the affluent rarely win enactment: The majority are redistributive policies including raising the minimum wage or indexing it to inflation, increasing income taxes on high earners or corporations, or cutting payroll taxes on lower income Americans.  Conversely, policies opposed by the middle-class but backed by the affluent include ‘tax cuts for upper income individuals, spending cuts in Medicare, and roll-backs of federal retirement programs’—policies that have been adopted.”

So what does all this mean for education?  One need only look at television in New York City to get a sense of the power of money.  If you are a parent or a teacher or even a teachers’ union, you are unlikely to be able to run television ads in support of the public schools.  But if you contribute to the secretive Families for Excellent Education, nobody will even know that you are spending your money to undermine Mayor Bill deBlasio’s proposals to improve the traditional public schools that serve over 93 percent of New York City’s children and adolescents.

Families for Excellent Schools is what Politico NY calls a “charter school advocacy group,” affiliated for several years now with Eva Moskowitz’s chain of Success Academy Charters.  Politico explains: “Charter school advocacy group Families for Excellent Schools is attacking Mayor Bill de Blasio in a television ad for the second time in just a few weeks, this time by targeting his K-12 education agenda.  The new ad, called ‘Reality,’ started airing on Friday and attempts to rebut the educational policies de Blasio announced during a recent speech… FES, which is closely aligned with Success Academy and its CEO, Eva Moskowitz, has been one of de Blasio’s most relentless antagonists over the last two years.” This is the third anti-public schools ad aired on television by Families for Excellent Schools in the past 18 months.

Here is what Families for Excellent Schools is attacking in its new ad.  In a recent major address, De Blasio committed to extending school improvement well beyond his vast expansion of pre-school over the past year.  Well over 65,000 children in New York City are now enrolled in pre-K programs, including many low income children, even children living in shelters for homeless families.  The district is also engaged in the ongoing transformation of New York City’s lowest-achieving schools into full-service, wraparound Community Schools.  In the recent address de Blasio promised to ensure reading specialists across the city’s second grades and access to algebra for all students by ninth grade.  He also promised that all of the small high schools created by Mayor Bloomberg will offer courses in advanced sciences and math.  Many of these schools that have offered a more personalized education have not, until now, provided a curriculum with enough courses for students to earn a Regents diploma.

So, who are the contributors to Families for Excellent Schools, the organization that is attempting to undermine the mayor’s progressive education agenda?  Nobody knows, though everyone suspects it is the hedge fund supporters who are known to support Success Academy Charters.  Chris Bragg reported a year ago for Crain’s NY Business: “Lobbying records… show how Families for Excellent Schools was able to shield its donors’ names.”  Critics have called it the “hedge-fund loophole.”  “Founded several years ago by business executives including four Wall Street players, Families for Excellent Schools has two components: an apolitical 501(c)(3) tax-exempt nonprofit and a politics-focused 501(c)(4).  The group’s 2012 tax returns reflect a heavy overlap between the staffs of the two entities, which share an office suite… New York’s 2011 ethics law requires issue-oriented nonprofits that spend more than $50,000 a year on lobbying to disclose sources of funds of more than $5,000… But the bulk of Families for Excellent Schools’ spending is not by its political arm but rather its 501(c)(3)—which does not have to disclose donors under state law.”  Much of the organization’s expenditures have been for television advertising, but Bragg points out the ads do not explicitly advocate for legislation, and hence skirt the law.

More recently in the Albany Times Union, Bragg reports that in 2014, Families for Excellent Schools spent $9.7 million without disclosing its donors. He explains that at a meeting in February of 2015, the New York Joint Commission on Public Ethics acknowledged that some organizations have been able to “construct funding mechanisms that may avoid disclosure while still technically complying with the law and the regulations.”  Bragg adds that, “David Grandeau, an attorney for Families for Excellent Schools and former top state lobbying regulator, has maintained that the IRS definition of lobbying is far narrower than the one found in New York law, a distinction that he says makes the heavy New York lobbying spending by the group permissible under federal regulations.”

We know that political advertisements distort the views of political candidates, but what if it became widespread for people to run TV ads focused on distorting the work of core civic institutions?  Consider what it would be like to live in New York City these days with a bunch of wealthy plutocrats sponsoring political ads designed to trash your community’s public schools.  Mayor de Blasio has committed to making significant improvements in the way the city’s public schools serve over 90 percent of the city’s young people. What are a few rich friends committed to helping Eva Moskowitz grow her charter network doing undermining the public interest?

This blog has covered the impact of hedge fund lobbying to promote charters and undermine public education here, here, and here.

Common Cause Takes on Wealthy NY School Privatizers and ALEC

Common Cause New York has just published a scathing report that, “shows how political spending around education issues has spiraled in New York State, making it virtually impossible for everyday New Yorkers not already aligned with either side of the issue to obtain objective information or have their voices heard.  While in the past, education union political strength has resulted in the adoption of measures favored by teachers, the infusion of direct campaign contributions on the part of privatizers has resulted in (proposed) education scholarship tax credit bills that significantly advantage the wealthy in ways not seen in other states….”

Who are the top ten political donors and privatizers who have made donations—between 2005-and 2014—to organizations supporting privatization of public education, expansion of charter schools, and stiff accountability for teachers tied to test scores? Common Cause identifies these donors: Michael Bloomberg who launched corporate school reform during his three terms—$9,203,195;  David Koch—$1,609,627; James Simons—$3,007,350; Paul Singer (board member of Success Academy Charters and Manhattan Institute)—$2,202,770; Daniel Loeb (chair of Success Academy Charter Board, co-founder of Students First New York, contributor to New Yorkers for a Balanced Albany)—$1,941,367; Paul Tudor Jones, II (founding member of Students First New York,  founder of Excellence Charter School, supporter of charter schools through his Robin Hood Foundation, funder of New Yorkers for a Balanced Albany PAC)—$1,547,750; Bruce Kovner (founder of School Choice Scholarship Fund, funder of Bronx Preparatory Charter School and the Brighter Choice Foundation), $1,445,100; Roger Hertog (founding chair of Foundation for Opportunity in Education, board member of StudentsFirst New York, supporter of New Yorkers for a Balanced Albany PAC—$1,445,735; Julian Robertson, Jr. (founder of PAVE charter schools)—$1,113,477; and Joel Greenblatt (Chair of Success Academy Charter School Board, co-founder Democrats for Education Reform, contributor to New Yorkers for a Balanced Albany PAC)—$934,740.

While education unions and their allies spent $117.4 million in lobbying and non-candidate expenditures from 2005-2014, giving by advocates for privatization was only $44 million, but donations from those who favor privatization have grown rapidly since 2010 and have come from fewer than 400 wealthy individuals.  In contrast, union donations have been made by, “at least 75,000 contributions to Union PACS from well over 18,000 individuals, associated organizations and PACS.”  According to Common Cause, “Pro-privatization spending in substantial amounts is a recent phenomenon, showing exponential growth in the last five years, while union spending has remained at a fairly high constant level over the last 10 years.  In 2014, education privatization interests outspent education unions on contributions by $3.15 million.”

Here is what happened in 2014 to transform educational lobbying in the state of New York: “2014 was a game changer for privatizer spending, not only in campaign contributions, but also in lobbying.  Families for Excellent Schools (FES) yet another charity-advocacy organization created by the same hedge fund billionaires active throughout the country (which shares office space with StudentsFirst NY) registered as a lobbyist for the first time in NYS (New York State) in March, 2014.  FES’s lobbying expenditures eclipsed all other (New York donor) organizations in every industry, placing it at the top of the JCOPE annual list of lobbying entities ranked by total lobbying expenditures.  The $9,670,372 FES spent lobbying is almost $5 million more than NYSUT (New York State United Teachers) and UFT (United Federation of Teachers) combined lobbying for 2014.  What is even more incredible is that the majority of the FES lobbying spending was spent in March and April of 2014… This tidal wave of money was directly aimed at influencing how the 2014 NYS budget handled education policy, and FES added muscle to another privatizer player backed by hedge fund billionaire Bruce Kovner, The Foundation for Opportunity in Education…  FES has received millions of dollars in combined funding from the Walton Foundation, the Peter and Carmen Lucia Buck Foundation and the Eli and Edythe Broad Foundation—the very same foundations funding Democrats for Education Reform, the Success Charter School network, StudentsFirst, and ALEC—to name just a few.”

Common Cause has made the exposure of the American Legislative Exchange Council (ALEC) the centerpiece of its work, and this report covers ALEC in some depth, especially in relation to the bills that Governor Andrew Cuomo is supporting that would bring tuition tax credit school vouchers to New York.  Here is how Common Cause describes ALEC: “Through the American Legislative Exchange Council (ALEC), some of the nation’s largest companies invest millions of dollars each year to pass state laws putting corporate and private interests ahead of the interests of ordinary Americans. ALEC’s membership includes some 2,000 state legislators, corporate executives and lobbyists.  ALEC brings together corporate lobbyists and state legislators to vote as equals on model bills, behind closed doors and without any public input, that often benefit the corporations’ bottom line.  These model bills are then introduced in the state legislatures across the country…. Among ALEC’s legislative portfolio are bills to privatize public schools and prisons, weaken voting rights, eviscerate environmental protections and cripple public worker unions.  Common Cause has filed a ‘whistleblower’ complaint against ALEC with the Internal Revenue Service, accusing the group of violating its tax-exempt status by operating as a lobby while claiming to be a charity.”  Common Cause’s New York report concludes that ALEC model bills including “The Great Schools Tax Credit Program Act” and the “Parental Choice Scholarship Accountability Act” appear to be the templates for the tuition tax credit school voucher program Governor Cuomo is trying to get New York’s legislature to include in next year’s budget, currently being debated.

Common Cause concludes: “The current trend of market-based education proposals can be seen as interrelated to the ideology and policy goals that contributed to the pre-2008 deregulations of the financial industry and to the Supreme Court ruling in Citizens United v. FEC.  Using a long term, multi-pronged strategy, the self-styled ‘education reform’ organizations (whose boards are populated by the very hedge fund executives who have dominated Super PAC contributions since the Citizens United decision) are framing this issue.  They have used their wealth to access and infiltrate the policy landscape on almost every front except one: the teachers’ unions.  In an increasingly polarized debate, these camps are battling for ideological control of the future of education policy at all levels of government.”

I encourage you to read this lucid report packed with information.

Big Money Politics Distorts Public Education Policy

Before 2002, when the federal testing law No Child Left Behind inserted the federal government deeply into the way public schools operate, it wasn’t so urgently important that people think about the role of Congress and the U.S. Department of Education in making the laws and rules that demand accountability, evaluate teachers and determine whether they can keep their jobs, and even close and privatize schools in particular school districts.  But No Child Left Behind and programs created by the Obama administration—Race to the Top, School Improvement Grants, and other competitive grant programs run by the U.S. Department of Education—have changed all that.  Federal policy is deeply implicated in the creation of a punitive, accountability-based wave of policy that is shaping public schools and neighborhoods all across the country and that is also making some suburbs desirable and accelerating the exodus of families from other communities.

So why does public education policy virtually never get discussed seriously in presidential campaigns or even very much among candidates for Congress?  Why, no matter how hard many of us try to elevate educational injustice into the national political conversation, is there so little serious political conversation about significant reforms that would help children and support public education?  It isn’t as though our population has abandoned the idea of public education. Public schools continue to educate 50 million children.

Here is what Elizabeth Drew explains in a recent piece in the New York Review of Books: “Today a presidential candidate has to have two things and maybe three before making a serious run: at least one billionaire willing to spend limitless amounts on his or her campaign and a ‘Super PAC’—a supposedly independent political action committee that accepts large donations that have to be disclosed.  The third useful asset is an organization that under the tax code is supposedly ‘operated exclusively to promote social welfare.’  The relevant section of the tax code, 501(c)(4), would appear to be intended for the Sierra Club and the like, not political money.  But the IRS rules give the political groups the same protection. The contributions to these last groups have come to be called ‘dark money’ because the donors can remain secret.  The very wealthy can contribute to such dark money groups in the knowledge that people won’t know who is trying to buy a candidate.”

“We are now at the point,” writes Drew, “where, practically speaking there are no limits on how much money an individual, a corporation, or a labor union can give to a candidate for federal office (though the unions can hardly compete).”  Drew examines the emerging campaigns for the 2016 presidential election: “At this stage of the campaign, while some politicians are ostensibly still agonizing over whether or not to run, the would-be candidates are engaged in setting up the ‘independent’ fundraising groups that will support them; they aren’t even bothering to call mere millionaires.  And the idea that campaign contributions aren’t intended as a quid pro quo is fast crumbling. Fortunately for the candidates, given the way the benefits of the economy are concentrated there’s an adequate supply of billionaires….”  Candidates in both political parties have their billionaire underwriters, and we read here about several of them—Sheldon Adelson; Alice Walton; Marc Benioff; Jeffrey Katzenberg; Haim Saban; Charles and David Koch, who operate the “dark money” group, Americans for Prosperity; John Menard Jr.; Robert Mercer; Norman Braman.  Not exactly household names. While as a group these people lack experience with public education, they and others like them are actively involved in shaping the candidates’ presidential campaign strategies. With business tycoons driving politics, it shouldn’t be surprising that the language of business and privatization dominate much of the conversation about education these days.

Elizabeth Drew’s subject is national politics, but big money operates increasingly at the state level as well.

Drew mentions the 501(c)(4) Americans for Prosperity. At the state level other 501(c)(4) organizations are actively funneling big money into political advocacy, despite that in Drew’s words,  these organizations are supposedly “operated exclusively to promote social welfare.”  The American Legislative Exchange Council (ALEC) comes to mind.  ALEC is a membership organization and a sort of matchmaking service that pairs two classes of members—the corporate lobby members and the representatives and senators from the state legislatures. ALEC’s corporate members help the legislators write so-called “model” legislation—template laws that can be adjusted and introduced from state to state. ALEC’s model bills are anti-immigrant, pro-National Rifle Association, and anti-labor.  Stand-your-ground laws come from ALEC.  ALEC’s model state bills that shape policy in education include the Parent Trigger law, laws that institute tuition-tax credits (a form of vouchers), vouchers for special education students, and states’ rating their public schools and school districts with A-F grades. Many of these laws were originally passed in Florida when Jeb Bush, an active member of ALEC, was governor (See Mercedes Schneider’s research in A Chronicle of Echoes (2014), pp. 387-402,  or here.)

Another example of a 501(c)(4) so-called “charitable” organization is Families for Excellent Schools in New York City.  Families for Excellent Schools has sponsored the “Don’t Steal Possible” television ads that promote the Success Academy Charter School Network and have opposed New York Mayor Bill de Blasio’s strategy for improving the public schools. This so-called “charitable organization” has bused thousands of students and parents from NYC charter schools to Albany to lobby for the expansion of charter schools.  Families for Excellent Schools is the project of a group of New York hedge fund managers who support charter schools, particularly those in Eva Moskowitz’s charter chain.  (This post has links to coverage of the activities of Families for Excellent Schools.)

Public schools are the quintessential institution of the 99 Percent—families with the 50 million children and adolescents who fill 90,000 public elementary schools, middle schools, and high schools across the country.  The moneyed interests buying American politics these days at the federal level are not worrying much about public education in era when high finance, international trade, and foreign policy fill the national news, and increasingly the interests of “big money” oppose government schools which they castigate as bureaucratic and overly regulated.  At the state level the increasingly organized power of money is unlikely to be supportive of a public system of education that was designed in simpler times to serve the needs and protect the rights of a mass of children.

Elizabeth Drew concludes: “As a nation we’ve drifted very far from our moorings of truly representational government.  Because of what has become known about the large sums of money being invested in the candidates by the super-wealthy at an early stage of the 2016 campaigns, the fact that something has gone wrong has begun to take hold.”  What to do about it all isn’t quite so clear, though Drew suggests a couple of beginning steps. I’ll let you read her article to see what she suggests.

“Social Welfare Agencies” Spending Millions to Push Privatization of Education

While states continue to spend less money on public education than they did in 2007 prior to the Great Recession, lots of people are spending lavishly to promote what is frequently called the corporate school reform movement that features various forms of privatization. It is virtually impossible to follow and master all the details of what is happening.  Every once in awhile, however, this blog highlights some examples of the ways money is being spent to buy the policies that shape the education of our children.  This is one of those posts.

The recent and startlingly lavish publicity campaign against New York Mayor Bill de Blasio’s effort to reign in the excesses of Mayor Michael Bloomberg’s favored charter schools is a good place to start. Yesterday the New York Daily News reported that in the past three weeks a not-for-profit organization called Families for Excellent Schools has spent $3.6 million airing TV ads that attack Mayor de Blasio for denying Eva Moskowitz’s Success Academy Charter Schools the right to co-locate three schools into public school facilities in New York City.  Mayor de Blasio had granted co-location rights to the majority of Moskowitz’s schools that applied for free space, but denied these three because they would endanger very young children by placing them with much older students in high schools or would infringe on the rights of students with disabilities by taking the rooms used for physical therapy and other special services.  To provide a little context, the Daily News reporter described the $3.6 million add buy: “the amount candidates typically spend in three weeks of a heated mayoral primary.”

So… what is Families for Excellent Schools and who are its financial supporters?  In March 2014, Robert Lewis, of WNYC News, reported: “Families for Excellent Schools’ most recent tax filings are from 2012, so it’s unclear how much they’ve raised in recent years or where that money is coming from.  The organization is technically two entities—a standard charity and a tax exempt group that can accept anonymous contributions for advocacy.”  Managed by the 27-year-old Jeremiah Kittredge, Families for Excellent Schools shares an address with New York’s affiliate of Michelle Rhee’s StudentsFirst.  According to Zoe Carpenter, writing for The Nation,  Families for Excellent Schools is chaired by a venture capitalist named Paul Applebaum, although its website lists neither its board members nor its funders.  Stu Loeser, former spokesman for Mayor Michael Bloomberg, is now the organization’s press official.  Lewis reports that Students for Excellent Schools  has received grant funding from the Walton and Broad Foundations, although from the organization’s website one can discern neither what its standard charity functions are nor how the organization’s money is allocated for charity and advocacy.

New York City is not the only place where big money is being used for political advocacy and where the donors of that money are hidden today by the tax code.  Thomas Edsall, writing for the NY Times, explains: “The explosion in secret financing of political advertising has turned tax-exempt nonprofit organizations into the weapon of choice for those who want to influence elections without leaving fingerprints.  Campaign spending by these groups, which do not disclose donors, has grown from a modest $5.8 million in the 2003-4 election cycle to $310.8 million in 2011-2012, an increase of more than 5000 percent with further growth expected in 2014 and 2016…  Most of the money raised from undisclosed contributors flows through nonprofits claiming tax-exempt status under Section 501 of the Internal Revenue Code…. The most common tax-exempt organizations are 501(c)(4) “social welfare” groups, although there is also substantial political cash channeled through 501(c)(6) groups, which are nonprofit trade associations like the United States Chamber of Commerce.”

Writing for The Center for Public Integrity, Rachel Baye traces the role of secretive big-money donations to so-called “social welfare” groups that support privatization of education and that are not required to report their donors:  “StudentsFirst—created by former Washington, D.C. schools chief Michelle Rhee—is leading a new wave of ‘education reform’ organizations, funded largely by wealthy donors, that are challenging teachers’ unions and supporting mostly conservative candidates up and down the ticket in dozens of states…  Among the biggest spenders: the American Federation for Children, 50CAN, Stand for Children and Democrats for Education Reform… They have been funded by a slew of billionaire donors, like philanthropist Eli Broad, former New York Mayor Michael Bloomberg, hedge fund manager Dan Loeb and Netflix CEO Reed Hastings.  However, the full list of funders opening their checkbooks for the education reformers remains a mystery since StudentsFirst and many of the other groups are so called social welfare nonprofit organizations, which fall under section 501(c)(4) of the U.S, tax code.”

This blog explored a new web campaign, Stinktanks.org, from Wisconsin’s Center for Media and Democracy—a campaign designed to expose the quiet linkage through an organization called the State Policy Network, of a tightly connected web of think tanks across the states that are being funded by far-right ideologues with the purpose of promoting privatization and unfettered free markets, and undermining government, regulation and the public good. Many of the state think tanks described by Stinktanks.org and the State Policy Network itself are promoting privatization of public education.  Once again in many instances, the donors are shielded by the tax code.

Rachel Baye quotes University of Wisconsin professor Michael Apple’s explanation of why so many powerful people are donating to the “social welfare” 501(c)(4) agencies that are investing in the political campaigns of local school board candidates and state legislators who seek to  privatize public education: “‘If you look at Broad, Bloomberg, they’re in favor of strong mayoral control of education.  Some of it is also this belief that the corporate sector is the last remaining set of institutions that form the engine of our society.’ But changing the way public education functions also opens windows for private corporations and individuals to make a profit, which is likely a factor in at least some donor’s decisions to open their wallets, he said.”

Potential for profits is huge, according to Baye: “In 2002, the education sector spent an estimated $146 million on technology.  By 2011, that number was estimated at $428 million…”