Newark Charter School Fund spending more on itself than it's giving out
Ohanian Comment: I used to live in New Jersey. This story brought back a lot of memories, but in the old days corruption stories were usually about Mafia connections to garbage removal.
Here's my favorite New Leaders for New Schools quote: In a 2004 NPR interview New Leaders CEO Jon Schnur explained that if you can lead an Army unit in Iraq, you can turn around a failing school in New York City.
From September 2008 to June 2009, Jon Schnur, Chief Executive Officer and Co-Founder of New Leaders for New Schools, was on leave from New Leaders for New Schools, serving as an advisor to Barack Obama's Presidential campaign, a member of the Presidential Transition Team, and a Senior Advisor to U.S. Secretary of Education Arne Duncan. (He was also an education advisor to vice president Gore.)
From an April 4, 2008 press release:
Four national family foundations -- the Bill & Melinda Gates Foundation, The Doris & Donald Fisher Fund, The Robertson Foundation, and The Walton Family Foundation -- have pledged $4 million each, and their commitments will be administered through a newly established charitable entity, the Newark Charter School Fund.
Did they know that in Newark, charity begins at home?
By Joe Tyrrell
In its first two years of operation, the Newark Charter School Fund spent more on consultants and internal compensation than it gave in grants to local schools.
Tax records show that administrative expenses accounted for 42.6 percent of the fund's expenditures in 2008-09, which non-profit monitors describe as an unusually high amount.
While putting almost $2.4 million into compensation for its own officers, staff salaries and consulting fees, the fund gave barely half that to individual schools.
Charity Navigator of Glen Rock, N.J., analyzes more than 5,500 non-profits with at least $1 million in annual revenues. "Most of them spend only about 15 percent on administration," said Sandra Miniutti, the organization's vice president for marketing.
In an era when some non-profits try to create the appearance of efficiency by classifying overhead costs as projects or services, "it's almost refreshing that someone is admitting that so little is going to programs," said Mike Elmaleh, an accountant and auditor of non-profit groups. "In a twisted way, it's very honest."
The largest single recipient of NCSF money over the two years was the New York-based New Leaders for New Schools, where fund partner Mashea Ashton was executive director and remains a senior advisor. The organization recruits and trains aspiring principals, often through year-long residencies with mentors.
Launched with fanfare in April 2008 with the backing of deep-pocket private foundations, the NCSF has seen the limelight stolen by an even more dramatic bit of philanthropy, Facebook billionaire Mark Zuckerberg's $100 million pledge to Newark schools in September 2010.
The fund's record illuminates the challenges facing the Partnership for Education in Newark as it begins implementing the Zuckerberg program by spending $1 million on public outreach.
While PEN seeks public input, the fund has adopted an increasingly low profile. For almost two years prior to the Zuckerberg announcement, the NCSF did not post a news release, press report or staff interview on its website.
Asked earlier this year what grants the fund was providing to Newark schools and groups, fund officials declined to answer. After back-and-forth over why the question was being asked, fund spokesman Bruno Tedeschi said, "We're conducting an internal review as to how much information we have to give out."
The NCSF did not respond to requests for comment on this story.
The NCSF is one of a growing network of philanthropic groups formed with the backing of Newark Mayor Cory Booker. The city needed a "portfolio of excellent options to best meet the needs of kids," the mayor said as the fund was announced.
Booker's education aide, De'Shawn Wright, left to become a partner in the fund, although his future there is uncertain after being named deputy mayor for education in Washington, D.C. on December 22.
The fund's tangible support comes from well-heeled philanthropists. It began with pledges from some big names: $4 million apiece from the Bill & Melinda Gates Foundation, Donald & Doris Fisher Fund, Robertson Foundation and the Walton Family Foundation, which have made annual contributions.
Three Newark-based organizations, the Prudential Foundation, MCJ Amelior Foundation and Victoria Foundation, each agreed to put up $1 million, although none were listed on either the 2008 or 2009 reports to the IRS.
In their place, Laurene Powell Jobs contributed $882,799 over the two years. The wife of Apple co-founder Steve Jobs serves on the boards of Achieva, a study and testing company, and numerous educational organizations.
Neither Miniutti nor Elmaleh initially knew they were talking about the NCSF when they commented on the numbers, drawn from the fund's 990 reports to the Internal Revenue Service. Both said it makes some difference if a group is privately funded, like the NCSF, instead of seeking donations from the public.
"If they want to spend their money on consultants, it's up to those private donors to raise the questions," said Elmaleh, a finance and accounting instructor who runs www.understand-accounting.net.
In 2008, the fund started with pro-rated contributions of $650,000 apiece from the four national contributions, plus $325,000 from Jobs.
Its largest expenditures for the year were $432,566 New Leaders for New Schools $432,566 to train four "residents" for the 2008-09 school year, plus $45,000 in salaries for seven others.
Compensation, salary and wages and benefits totaled $437,447, with $195,125 going to founding partner Stig Leschley, $85,683 to Wright. The fund also paid $182,061 in "other professional fees" to unidentified consultants.
The NCSF targeted University Heights Charter School, which opened in 2006 and initially fell short in state student test scores. The fund funneled $160,000 to the New Jersey Community Foundation for information technology at the school, which brought in new administrators trained by New Leaders for New Schools.
Two smaller grants went to charter schools for consultants, $14,225 to the Adelaide Sanford School and $6,200 to Robert Treat. On the other hand, the fund spent $41,353 on travel, conferences and meetings.
Some other spending helped lay the groundwork for schools. The major expenditure was $200,000 to Building Excellent Schools of Boston to provide a fellowship for 2008-09 to Paula Bradley-White. In 2010, she opened Newark Legacy Charter School to kindergarten and first-grade students.
With full funding in 2009 -- $1,115,596 from the four big donors and $557,799 from Jobs -- activity picked up at the NCSF.
Again, New Leaders for New Schools got the most money, $423,865 to train four residents in 2008-09 as well as $221,933 to select, train and pay two for 2009-10. Building Excellent Schools got another $49,000 for the fellowship.
But some money stayed with Newark organizations. The fund provided $448,000 to the local office of Teach for America to recruit and place teachers at charter schools. Robert Treat received $248,906 toward a four-year expansion plan.
University Heights got another 160,000 to fill two positions. The fund also gave Team Charter Schools $125,000, Adelaide Sanford $60,000 and Discovery Charter School $50,000 to fill individual jobs.
The concentration on recruitment and training, particularly administrators, addresses a perceived need.
According to a November report by the National Charter School Research Project at the University of Washington, turnover is a problem at charter schools, particularly in leadership positions. While the rate is no lower at traditional schools, they usually have hiring and promotion systems that make for smoother transitions, according to the study.
In Newark, the largest windfall went to Lady Liberty Charter School: $346,665 to recruit and pay two new administrators; $30,000 to search for a new executive director; and $53,335 to the Efficacy Institute of Waltham, Mass., for a professional development plan for the school.
At the time, the NCSF was bringing in a high-profile principal from New York, and wresting control of Lady Liberty's board away from the New Community Foundation.
As the fund was making these investments, its spending on officer and staff compensation grew to $848,804. Of that, Leschley received $244,900 and Wright $146,438. Consultants got $902,170, with four making $109,500 or more. (New Leaders for New Schools reported paying Ashton $198,325 in salary and benefits in 2009.)
While the CEO of a typical non-profit makes about $150,000, salaries can range much higher and education-related organizations generally pay more than the average, according to Charity Navigator.
Pat and Marion Dugan of Garrison, N.Y., launched the group in 2001 out of frustration about the lack of information available to donors. Charity Navigator pioneered evaluations of non-profit operations, with an emphasis on efficiency. In recent years, there has been push-back from some agencies, who contend results achieved make a better, if not always obvious, measuring stick.
"There are some very good groups, like the American Civil Liberties Union and Amnesty International, which have high fixed costs because they operate on a large scale, with travel and legal expenses," Elmaleh said. "But you can see their results."
In response to such points, "our standards are evolving," Miniutti said. For example, Charity Navigator now rates museums and other organizations with buildings and inherent fixed costs differently than it does those with fewer tangible assets, she said.
For a community foundation, one key criteria is now "sustainability," whether it has wide-ranging financial support or is heavily dependent on one or a few large donors, Miniutti said.
"We're also starting to look more closely at accountability and transparency, those good governance issues," she said. "Whether or not a non-profit makes its information readily available to the public, so people can see where the money is going and whether the goals are being met."
Unless a non-proft organization diligently provides such information, Elmaleh said lax reporting standards often make it difficult for the public to gauge whether its results match its press releases.
It is not unusual to find interlocking boards or officers in either the corporate or non-profit worlds, the analysts said, as in the case of Ashton and New Leaders for New Schools. The existence of a close relationship does not necessarily mean services are not being received as purchased, according to Miniutti and Elmaleh. But both said transparency is the key to credibility.
"The ideal thing is for a non-profit to have a completely independent board," Elmaleh said.
"The sector is really abuzz with the idea" of providing more operating information to the public, Miniutti said. "Some charities are really getting out in front on this, including some big ones, posting their financial information on their websites."
The Gates Foundation is one of the leaders in posting information on its website, but a spokesman said no one would be available until next month to discuss the NCSF.
— Joe Tyrrell
New Jersey Newsrom.com
-12-28
http://www.newjerseynewsroom.com/state/newark-charter-school-fund-spending-more-on-itself-than-its-giving-out
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