US public schools have been getting help from the New Schools Venture Fund since 1998. It ?seeks to transform public education by leveraging the power of entrepreneurs to effect change,? its Web site said. How? NSVF determines ?the most powerful levers for impact on public education.?
Apparently, raising the tax rate on corporations and the rich to increase public school funding is not a good lever. Wonder why? According to the Economic Policy Institute, ?Between 1960 and 2004, the average tax rate fell by nearly 14 percentage points for the top 1% of earners, while it has increased slightly (from 15.9% to 16.1%) for earners in the middle 20%. The shrinking share of corporate taxes combined with an increase in payroll taxes has helped widen income inequality.?
Against this backdrop of a growing gap between the ?have-mores? and the rest of the American people, NSVF welcomes small and big investors. You may have heard of the latter. Try the Bill & Melinda Gates Foundation, Eli and Edythe Broad Foundation, Robertson Foundation, Irvine Foundation and Walton Family Foundation.
According to Julie Petersen, NSVF communications director, ?We support both nonprofit and for-profit organizations, but tend to call this support “investment” in both cases because our financial support comes with the sort of active, hands-on guidance that a venture capital investor would provide to a tech startup. In both cases, our ultimate goal is social impact, rather than financial return?although in cases where one of our for-profit companies is sold or goes public, any returns we generate are returned to NSVF for re-use.?
Crucially, the NSVF helps investors identify ?the market they are addressing.? As in real estate, location is the key. Thus the best sites are ?several key cities, including New York City, Chicago, Los Angeles, Washington DC, Oakland, and New Orleans.? Why these communities? The answer is their ?size, history of underperformance and potential for transformative change.?
In plain English, education entrepreneurs can have their way with populations whose living and working lives are defined by an inequality of resources. Due to decades of falling public and private investment, such inequality is widespread in many big-city neighborhoods which the NSVF targets.
In a capitalist society, investment creates jobs for workers to produce goods and services for sale in the marketplace. Absent that process, poverty grows, with current joblessness for some at Depression-era levels. Take the 35.7 percent unemployment rate for African American teens this January versus a rate of 27.9 percent last October, the Labor Department’s household survey reported.
Meanwhile, in under-funded public schools in low-income communities, NSVF investments have increased the number of charter (contract) schools. The city of New Orleans is one example where this privatizing process is underway. Recall that inequality harmed people in this American city well before Hurricane Katrina struck there in 2005, which FEMA worsened.
In New Orleans and across the US, charter schools owners, politically connected to business leaders and elected officials, can and do void employees? labor union contracts. One NSVF investor, the Gates Foundation, knows the drill. It invested in the chartering of Sacramento High School five years ago. The St. Hope Corp. gained control of Sac High under the guidance of Kevin Johnson, ex-NBA all-star, current land developer and candidate for mayor in the capital city.
The trend of chartering public schools requires private funds. That, in turn, also sends a pro-market and anti-union message to parents, students and teachers. In this way, NSVF philanthropy helps to expand a kind of union-free efficiency for America?s new education entrepreneurs and for US society. It?s all about using ?powerful levers? for ?social impact.?