Bill and Melinda Will Divorce, but the Gates Brand of Venture Philanthropy Will Continue On

A month ago, this blog suggested that hubris is at the heart of today’s billionaire philanthropy but noted that Bill and Melinda Gates have so much power that, despite the tragic blindness of their privilege, there will be no tragic fall and no consequences. Now, with Bill and Melinda announcing their divorce, we continue to learn even more about how privilege in an unequal America insulates the super-rich who have the power to drive the public policy that shapes the institutions on which we all depend

The Washington Post‘s Valerie Strauss seized the occasion of the Gates’ pending divorce as an opportunity to review the ways Bill and Melinda have used their influence and their money to shape public education policy at the federal level and across the states: “The Bill & Melinda Gates Foundation has spent billions of dollars on numerous education projects—such as creating small high schools, writing and implementing the Common Core State Standards, evaluating teachers by standardized test scores—and the couple has had enormous influence on what happened in classrooms across the country. Their philanthropy, especially in the school reform area, has been at the center of a national debate about whether it serves democracy when wealthy people can use their own money to drive public policy and fund their pet education projects. The foundation’s financial backing of some of the controversial priorities of the Obama administration’s Education Department put the couple at the center of this national conversation. Critics have said that many of the foundation’s key education projects have harmed public schools because they were unworkable from the start and consumed resources that could have been better spent.”

Strauss doesn’t even mention some of the details. For example, when Education Secretary Arne Duncan wanted to encourage states to apply for Race to the Top Grants back in 2009—grants for which states could qualify only if they would agree to adopt Duncan’s (and the Gates’) favorite policies like removing caps on the authorization of new charter schools, adopting state standards, and evaluating teachers by students’ test scores—the Bill & Melinda Gates Foundation gave each state that wanted to apply $250,000 to hire experienced grant writers to prepare their federal applications.

And Tampa’s WFLA, News Channel 8 reported two weeks ago about the long term impact for Florida’ Hillsborough County School District of a 2009 Gates project to evaluate teachers by students’ standardized test scores and then provide bonuses to the best teachers. The Gates Foundation gave up on the experiment midstream: “The Hillsborough County Public School system is in a budget crisis. Florida Education Commissioner Richard Corcoran has given the school board just days to come up with a financial plan to fund an emergency reserve account…. to be used in case of emergency or disaster. Some school board members estimate the account will be more than $100 million dollars short this year. Now, some school board members are blaming a 2009 grant from the Bill & Melinda Gates Foundation for putting the county on a path to have a budget shortfall… When the grant was announced, the county understood they would receive 100 million dollars if the county put up matching funds. When the grant expired in 2016, the Gates Foundation had only provided 80 million dollars, the county put up 124 million dollars… After further review, the foundation said they found bonuses to teachers didn’t improve the quality of education for students.”

Strauss explains further that Bill and Melinda Gates have been candid about admitting mistakes which had repercussions for children, teachers and public school budgets but which had no real consequences for the Gates themselves: “In 2013, Bill Gates said, ‘It would be great if our education stuff worked. But that we won’t know for probably a decade.’ It didn’t take 10 years for them and their foundation to acknowledge that key education investments didn’t turn out as well as they hoped. In the Foundation’s 2020 annual letter, Melinda Gates said, ‘The fact that progress has been harder to achieve than we hoped is no reason to give up, though.  Just the opposite.’  That same annual letter had a rather remarkable statement from Melinda Gates about the role of the wealthy in education policy…. ‘We certainly understand why so many people are skeptical about the idea of billionaire philanthropists designing classroom innovations or setting education policy. Frankly, we are, too. Bill and I have always been clear that our role isn’t to generate ideas ourselves; it’s to support innovation driven by people who have spent their careers working in education: teachers, administrators, researchers, and community leaders.'”

Except that Melinda’s description isn’t how Gates’ philanthropy has worked. The Gates Foundation has regularly been the generator of the ideas.

Back in June of 2003, for example, their foundation put out a press release: “The Bill & Melinda Gates Foundation today announced a $22 million investment in the NewSchools Venture Fund to increase the number of high-quality charter schools around the country by creating systems of charter schools through nonprofit charter management organizations.” Certainly this was a Gates Foundation-initiated project, and we know how those nonprofit chains of charter schools have morphed today in too many instances into giant for-profit CMOs.

Despite their pending divorce, Bill and Melinda Gates both plan to continue as co-chairs and trustees of the Foundation. Is there a chance that their pending divorce will cause Bill and Melinda to reconsider the danger of their own power?  It doesn’t look like it. In a NY Times interview last December, Melinda Gates acknowledged that venture philanthropy does shape policy these days, but Melinda seems to have convinced herself that the partnership of philanthropy and government is a form of collaboration. What she misses is that Gates’ investments have regularly involved the wielding of vast sums of money to purchase public policy. The reporter asks: “Do you accept the line of criticism that says big philanthropy has too much power right now, that individuals, not governments, are making decisions that shape educational policy and public policy?”

Melinda answers: “I think that’s a critique that is well worth listening to and looking at. In our philanthropic work, there isn’t a single thing that we don’t work on in partnership with governments. Because at the end of the day, it is governments that scale things up and that can help the most people. There is a healthy ecosystem that needs to exist between government, philanthropy, the private sector and civil society… You know, if Bill and I had had more decision-making authority in education, maybe we would’ve gotten farther in the United States. But we haven’t. Some of the things that we piloted or tried got rejected, or didn’t work, and I think there’s a very healthy ecosystem of parents and teachers’ unions and mayors and city councils that make those education decisions. I wish the U.S. school system was better for all kids.”

Notice that Melinda Gates seems to consider the role of government as merely a check on the education reforms the Gates Foundation chooses to launch. Although, a long time ago, organizations used to apply for grants from philanthropies to meet specific needs envisioned by the applicants, today venture philanthropists themselves imagine how they want to disrupt existing institutions—designing, starting up, implementing, and marketing new ideas. Then the foundation’s staff evaluates the projects according to the foundation’s specifications to see whether the foundation will choose to continue the projects. Melinda Gates is correct that citizens working with government have sometimes stopped a Gates project, but in education, for example, the process of protecting public schools from damage has sometimes taken years.

Melinda Gates talks around the problem but fails to recognize how her vision and experience—from a  perch that the NY Times’ Nicholas Kulish, Rebecca R. Ruiz and David Gelles describe as the Gates’ 66,000-square-foot home on the shore of Lake Washington, with a foundation staff of 1,600—may leave her unable to grasp the realities where all the rest of us live. The reporters characterize the foundation as working on an ever growing and massive to-do list and describe policy wrestling between Bill and Melinda, who both have personal priorities. Maybe as Bill and Melinda Gates divorce, they will pursue different priorities and give up on corporate, accountability-based school reform. We can only hope!

But it appears that not much has changed in the eleven years since, in The Death and Life of the Great American School System, Diane Ravitch explored venture philanthropy’s role in launching corporate school reform: “Foundations themselves may not engage in political advocacy, but they may legally fund organizations that do. They may also support research projects likely to advance the foundation’s goals… There is something fundamentally antidemocratic about relinquishing control of the public education policy agenda to private foundations run by society’s wealthiest people… These foundations, no matter how worthy and high-minded, are, after all, not public agencies. They are not subject to public oversight or review, as a public agency would be. They have taken it upon themselves to reform public education, perhaps in ways that would never survive the scrutiny of voters in any district or state. If voters don’t like the foundations’ reform agenda, they can’t vote them out of office. The foundations demand that public schools and teachers be held accountable for performance, but they themselves are accountable to no one. If their plans fail, no sanctions are levied against them. They are bastions of unaccountable power.” (The Death and Life of the Great American School System, pp. 197-201)

Another Incisive Critique of Venture Philanthropy

This post is about today’s venture philanthropy, a world so foreign to most of us that I think we need a frame to help us get our bearings.  Here with some familiar principles is the gifted preacher, and longtime pastor of New York City’s Riverside Church, the late Rev. William Sloane Coffin:

“The way we are cutting taxes for the wealthy and social programs for the poor, you’d think the greedy were needy and the needy were greedy.” (CREDO, p. 61)

“One of the attributes of power is that it gives those who have it the ability to define reality and the power to make others believe in their definition. Thus it is that private property in America has come to be considered all but sacred. Obviously this makes its redistribution difficult, even through taxation.” (CREDO, p. 60)

“Given human goodness, voluntary contributions are possible, but given human sinfulness, legislation is indispensable.  Charity, yes always; but never as a substitute for justice.” (CREDO, p. 56)

These statements speak to the operations of today’s mega-foundations, the recipients of the fortunes of the super-rich.  Donations to philanthropic foundations are tax-free, the counter-democratic idea being that the rich can define, with the assistance of the staff they employ, what’s good for the rest of us. These days mega-foundations are defining the “solutions” to some of the world’s greatest challenges—global agriculture, global health, and in our own country, public school reform—in ways that many of us do not understand.  Foundations are defined as charities, but increasingly they influence the legislation that shapes our primary institutions and they drive the policies of international agencies like the World Health Organization.  According to Lindsey McGoey’s new piece in the fall Jacobin magazine, The Philanthropy Hustle, they blur the lines between between charity and business.  McGoey’s subject is the Bill and Melinda Gates Foundation, the world’s biggest philanthropy, whose endowment is $42 billion, and which every year makes grants of $3 billion.

“(M)ore and more, corporate philanthropy is not about corporations giving money to charity,” explains McGoey. “Corporate philanthropy today is about private, tax-exempt donors such as the Gates Foundation giving their charity to corporations.”  McGoey continues: “(I)t’s not true that foundations must direct grants only to charitable entities.  They are free to offer donations to for-profits that fulfill the foundation’s charitable mission—an extremely permissive criterion that donors such as the Gateses are interpreting in novel and unprecedented ways.” Much of McGoey’s  discussion is unrelated to education—the Gates’s Foundation’s gift of $11 million in 2014 to Mastercard to create a wireless payment system in Kenya—gifts to international organizations that encourage the use of expensive hybridized seeds in the developing world, seeds that may be unaffordable for farmers.

Then there are the “gifts” to for-profits that have been shaping what has become understood in the United States as “corporate education reform.”  “In 2010, the Gates Foundation offered $1.5 million to ABC News and a little over $1.1 million to NBC in 2011 ‘to support the national education summit.’  The following year, the Gates Foundation gave another million to NBC, this time for the more vague purpose of ‘inform(ing) and engag(ing) communities.'”  McGoey reports that in 2011 the Gates Foundation granted Scholastic $4,463,541 to support “‘teachers’ implementation of the Common Core State standards in Mathematics.” Gates donated $817,468 in 2012 to Tutor.com, a large on-line tutoring company that charges school users for its services, “to create an ‘on-demand’ professional development system geared at math training for middle and high school teachers.” Gates has granted more than $3.5 million to BetterLesson Inc., which “circulates free online lesson plans to teachers but charges schools a service fee.” All of this is justified because these services are said to help teachers implement the Common Core Standards across the nation’s public schools, a Gates priority, but at the same time Gates is directly supporting the bottom line of these businesses.

McGoey wonders whether all this matters: “Obviously, a number of Gates Foundation’s grants have directly benefited private companies, their management teams, and their shareholders.  The question is, even if this contravenes IRS private benefit rules, does it really matter?  On the one hand, the money going to for-profits is a lot less than grants geared to non-profit organizations—the foundation has given away over $33 billion to date, and the vast majority has gone to non-profits.  On the other hand, it’s not just about the money—it’s the precedent.  If a grant to Scholastic or Mastercard can be justified as charity—then why not a tax-deductible donation to Goldman Sachs or News Corp or Monsanto?”

McGoey concludes her piece with a hundred-year-old warning from the Guilded Age about philanthropy’s limitations: “‘I can conceive of no greater mistake,’ commented William Jewett Tucker, a theologian who went on to to become president of Dartmouth College, ‘than that of trying to make charity do the work of justice.'”

I encourage you to read McGoey’s article.  Here are posts on this blog on the subject of the Bill and Melinda Gates Foundation.

Must Read: How Bill Gates’ Power Drives Education Policy

The Common Core Standards are the culmination of the wave of accountability-based school reform that has swept the country since the A Nation At Risk report in 1983.  Like the other test-and-punish reforms, the Common Core Standards fail to address the deep and seemingly intractable problems in American public schooling—inequality—shocking and immoral opportunity gaps in a society that supposedly believes in equality of opportunity—high dropout rates among the poorest and most vulnerable adolescents.  This blog focuses on these deeper issues, and you can read recent posts here on opportunity gaps, and here on reducing the dropout rate.

But Lindsey Layton’s recent blockbuster piece in the Washington Post, How Bill Gates Pulled Off the Swift Common Core Revolution, is a Common Core story that relates to all the deeper issues, because Layton addresses the issue of power and money in policy-making these days.  How is it that the school “reformers” can get programs established that lack a research base?  And how can it be done in a way that skirts the checks and balances of our democratic system and that even rearranges the prescribed roles of the federal government and the states in school policy? What is the role of today’s mega-philanthropy, especially these days when, ironically, relatively low taxes for the wealthiest Americans allow them to amass fortunes they can spend to impact policy in an underfunded public sector.

Diane Ravitch answers these questions theoretically in her 2010 book, The Death and Life of the Great American School System.  “It is worth reflecting on the wisdom of allowing education policy to be directed or, one might say, captured by private foundations.  There is something fundamentally antidemocratic about relinquishing control of the public education policy agenda to private foundations run by society’s wealthiest people….  These foundations, no matter how worthy and high-minded, are after all, not public agencies.  They are not subject to public oversight or review, as a public agency would be.  They have taken it upon themselves to reform public education, perhaps in ways that would never survive the scrutiny of voters in any district or state.  If voters don’t like the foundations’ reform agenda, they can’t vote them out of office… If their plans fail, no sanctions are levied against them.  They are bastions of unaccountable power.” (pp. 200-201)

In her blockbuster article this past weekend, Layton provides an example of the power of venture philanthropy—the real-life story of how Bill Gates, the most powerful member of Ravitch’s Billionaire Boys Club, accomplished the adoption of the Common Core.  While many of us have known parts of this story, Layton pulls together all the characters, adds a timeline and tracks a bit of a plot.  It all began in the summer of 2008 when Gene Wilhoit, director of the national organization of chief state school officers, and David Coleman, a primary supporter of common standards and now head of the College Board, approached Bill Gates with an idea they had hatched.  Layton describes the pitch they made based on their theory of the problems of our public schools today: “Coleman and Wilhoit told the Gateses that academic standards varied so wildly between states that high school diplomas had lost all meaning…. The pair also argued that a fragmented education system stifled innovation because textbook publishers and software developers were catering to a large number of small markets instead of exploring breakthrough products.”

Then, because of Gates’ power to shape research, market ideas, and influence those making policy, “What followed was one of the swiftest and most remarkable shifts in education policy in U.S. history.  The Bill and Melinda Gates Foundation didn’t just bankroll the development of what became known as the Common Core State Standards.  With more than $200 million, the foundation also built political support across the country, persuading state governments to make systemic and costly changes. Bill Gates was de facto organizer, providing the money and structure for states to work together on common standards in a way that avoided the usual collision between states’ rights and national interest….”

According to Layton, Gates Foundation money was invested in work by the conservative U.S. Chamber of Commerce and on the politically liberal side, the National Education Association and American Federation of Teachers.  Gates invested in work to support the standards by the Democrat-leaning Center for American Progress and the very conservative American Legislative Exchange Council (ALEC).  “The result was astounding. Within just two years of the 2008 Seattle meeting, 45 states and the District of Columbia had fully adopted the Common Core State Standards.”  “And yet, because of the way education policy is generally decided, the Common Core was instituted in many states without a single vote taken by an elected lawmaker.”  “The speed of adoption by the states was staggering by normal standards.  A process that typically can take five years was collapsed into a matter of months.”

Arne Duncan’s U.S. Department of Education also helped.  “Several top players in Obama’s Education Department who shaped the administration’s policies either came straight from the Gates Foundation in 2009 or from organizations that received heavy funding from the Foundation.”  Margot Rogers, direct from Gates, was Arne Duncan’s first chief of staff.  Jim Shelton, a Gates program officer, came to Washington to head up education innovation.  Today he is deputy secretary.  Joanne Weiss, who led the development of Race to the Top was previously head of the NewSchools Venture fund, a Gates-backed effort.  The Race to the Top competition rewarded states with points if their applications emphasized college and career-ready standards (Today to qualify for No Child Left Behind Waivers states also have to adopt college and career-ready standards.)  “Applications for the first round of Race to the Top were due in January 2010, even though the final draft of the Common Core wasn’t released until six months later.  To get around this, the U.S. Department of Education told states they could apply as long as they promised they would officially adopt standards by August.”

According to Layton, Gates “sees himself as a technocrat trying to foster solutions to a profound social problem—gaping inequalities in U.S. public education—by investing in promising new ideas… ‘This is about giving money away.  This is philanthropy.  This is trying to make sure students have the kind of opportunity I had… and it’s almost outrageous to say otherwise, in my view.'”  A serious challenge, of course, is that sometimes the neat, technocratic solution may entirely miss issues like poverty, racial segregation, and the political morass of unequal school funding that a mass of social science research identifies as causes of achievement gaps.

Layton’s piece is so comprehensive, it dwarfs one other important piece of investigative journalism published last week on the subject of Bill Gates’ wielding of influence and power.  In Revealed: Gates Foundation Financed PBS Education Programming Which Promoted Microsoft’s Interests, David Sirota reports that the Gates Foundation actively promoted the Common Core Standards by paying for extensive programming by the Public Broadcasting System via the Teaching Channel.  Sirota points out that “the agenda being promoted also happens to dovetail with Microsoft’s commercial interests in the Common Core.”  According to Sirota, “In February (2014), Microsoft joined up with education publisher and technology firm Pearson on a joint Common Core venture. According to a Pearson press release, the project aims ‘to create new applications and advance a digital education model’… combining ‘Pearson’s Common Core System of Courses with the groundbreaking capabilities of the Windows 8 touchscreen environment.'”   Sirota lists Teaching Channel board members who are also affiliated with the Gates Foundation, including Ted Mitchell, who recently left the Gates-funded NewSchool Venture Fund to become an under-secretary in the U.S. Department of Education and Vicki Phillips who directs education work at the Gates Foundation.