School Foundations - financing of public education

School Administrator, Jan, 1997 by Carol Merz, Sheldon S. Frankel

One cautionary note emerged from our work. One foundation solicited most donations from school district employees in its early years. This practice caused hard feelings, and, as one observer put it, "School employees expect a foundation to give them money, not take money from them." While most educational foundations seek contributions from school district employees, they should be judicious in this regard.

Spending Money

A hallmark of the foundations we studied was that they try to return the money raised to the schools. They typically have little overhead. Only very large, well-established foundations have paid staff, and even then they typically are part-time and low-paid.

Foundations raising smaller amounts of money typically use it for mini-grants to teachers and for student scholarships. As foundations raise more money, they can target it toward projects that enhance the district's offerings. More than half the foundations reported using money for curricular support or enhancement. Twenty-three of the 219 foundations used the money to fund teaching positions and another 17 spent funds to raise teachers' salaries.

Most decisions about how to spend money are made by the foundation's board. Many invite suggestions from school administration and allow district personnel to apply to the foundation for grants for special projects.

Foundations report several benefits. The majority say one of their purposes is to increase involvement in the schools. Many foundations think they have had a positive impact on the ability of the school district to pass local tax measures.

Funding Inequities

Do foundations lead to inequities in school funding?

Foundations raise small amounts of money compared to school district budgets. The most successful may generate only about $100 per child, and most raise far less. The amount raised by the average foundation we studied was 0.3 percent of the school district budget. These amounts fall well within the variance allowed in most states with statewide equity requirements.

Despite the fact such funds comprise a tiny part of the educational budget, districts can make impressive program improvements with them because they can concentrate these funds in specially identified projects. Most districts do not allow foundation funds to be used for salary improvements.

Foundations also seem to be increasingly important as ways to connect the schools to their communities. More foundations are coming into existence and they are raising more money. In some communities they are beginning to function as voluntary tax assessments, replacing money that has left the community system through state equalization or tax-limitation legislation. Foundations seem to be just as important as other ways for citizens to voice their demands for school programs.

Time To Act

While foundations in affluent areas typically have the greatest ease in raising money, communities of all economic types have formed successful foundations. Fund-raising success increases with experience and depends upon having broad-based involvement of citizens. Foundations are most successful when they have clear notions of what they want to do and begin modestly. Even the most sophisticated educational foundations return a much higher proportion of funds to schools than the average non-profit organization.