No less than the White House was the venue for an announcement the late media magnate Walter Annenberg made to the country back in 1993. The news: He would give America's public schools a $500 million grant to help spark an era of reform. At the time, this stirred enormous hopes for the most ambitious educational effort ever by a business leader. Combined with matching grants, the Annenberg Challenge would pump $1.1 billion into troubled schools. "People thought this would transform education in the U.S.," recalls Gail C. Levin, executive director of the Annenberg Foundation.
But today, years after the last dime was spent, the Annenberg Challenge is widely viewed as a crushing disappointment. The five-year grants, sprinkled across a range of initiatives in New York, Chicago, and 16 other cities, were too diffuse to have much impact. "While students in some schools surely benefited, very little came of this," says Chester E. Finn Jr., president of the Thomas B. Fordham Foundation, which studied Annenberg's gift.
That was the way business long tried to help schools. Large companies would raise cash and armies of classroom volunteers, but with barely any effect on national student achievement. Meanwhile, China, India, and other countries have been taking big educational strides. "It has been a long and frustrating history," says John J. Castellani, president of the Business Roundtable, many of whose 165 CEO members are veterans of school reform. "By every measure, progress has not been as robust as we would have liked."
Rather than throw up their hands, though, business leaders are rethinking their approach. Corporate giving to education amounts to $2 billion a year, a small fraction of the $425 billion the U.S. spends annually. But companies like General Electric Co. (GE ) and IBM (IBM ) now are aiming to catalyze systemwide changes that will improve what students learn and the ways they're taught. Says Education Secretary Margaret Spellings: "The business community has reinvented almost every industry in this country, but education still looks almost exactly like it did 25 years ago." Despite past frustrations, "business is becoming the voice of reform," she says.
Driving the more demanding stance is a new generation of business philanthropists supplanting the older-money foundations begun by Ford, Rockefeller, and Carnegie. The Gates Foundation is the largest, followed by outfits like the Broad Education Foundation (founded by Eli Broad), which has committed $375 million to school reform since 1999. The Milken Family Foundation, launched by former junk-bond king Michael Milken and his brother Lowell, tries to combat the alarming teacher attrition rate -- about half of teachers flee the profession in the first five years. Meanwhile, the philanthropic arm of America's wealthiest family, the Walton Family Foundation Inc., promotes giving low-income families more choices among schools.
To avoid repeating yesterday's errors, some business leaders are replacing even worthy initiatives that focus on individual schools with those that have broader scope. Since 2004, GE has pulled back from a program at 22 schools in 17 cities that was aimed at increasing the percentage of students going to college. It had been a success, with three-fourths of seniors heading to college from those schools, up from less than 40%. But when the GE Foundation asked experts to assess the program, they pointed out that it had done little for all the other schools in those districts.
In response, GE Foundation president Robert L. Corcoran began winding down the school-by-school approach in favor of an attempt to transform entire districts. The first is in Louisville, where the drastic shrinking of GE's famed Appliance Park industrial complex has constricted options for high school grads. GE is aiding the city's struggling schools much as it would a failing business unit: This spring it sent in one of its experts to train two dozen or so top officials on how to build support for change. In the process, GE officials discovered that each of Louisville's 150-odd schools chooses its own curriculum, so that the district is using seven or eight different math programs. "Why is that?" Corcoran asks. "One has to be the best." So GE brought in curriculum specialists to help the district decide which it should be. It also underwrites much of the cost of training teachers to use it.
Now the plan will expand to Cincinnati, Stamford, Conn., and perhaps two other districts, at a cost of $100 million over the next five years. That's more than triple what the foundation spent on the earlier program over 17 years. But by attacking the problem more broadly, Corcoran expects to affect some 200,000 students. That's eight times as many as before.
Other business leaders are striving for wholesale change, too. One standout: the Teacher Advancement Program (TAP), started by the Milken Family Foundation in 1999, which provides guidance to new teachers well after they're hired. It was launched in Arizona, where several schools agreed to adopt TAP, which includes promoting senior teachers to be mentors or "master teachers" who work with junior colleagues to improve their skills, especially in tough subject areas like writing and math. TAP also encourages pay-for-performance concepts; principals at participating schools have more flexibility to pay higher salaries to attract math and science teachers and bonuses to instructors who boost achievement.
TAP is catching on nationally because its schools tend to earn higher test scores and their overall teacher turnover rate is half the national average. Other foundations, including the Waltons' and Broad's, offered to bankroll TAP's expansion, so Milken spun off the program into a separate foundation, the National Institute for Excellence in Teaching (NIET). Today, 106 TAP schools serve more than 50,000 students in 14 states. "Research shows that teacher quality is more important than most other factors," says NIET President Lewis Solmon.
The Broad Foundation is banking on the training of experienced executives to run troubled school districts as a way to achieve systemic change. In 2002 it set up a Superintendents Academy to train a new generation of leaders who had already proven themselves in business, the military, or education. The free, 10-month program, held around the country, has produced 78 new administrators so far, almost all now working in public education, 22 as superintendents. After all, "the superintendent is the CEO of a multibillion-dollar enterprise, but many don't have any real management experience," says Broad, who moved into full-time philanthropy in 1999 after making billions founding SunAmerica and KB Home (KBH ).
No question, business savvy can help. Paula Dawning, who attended the academy after 23 years as a sales executive at AT&T Inc., (T ) quickly put her skills to work in 2002, when she took over the troubled Benton Harbor (Mich.) 4,300-student school system, where 90% of students are low-income. To upgrade crumbling buildings, Dawning relied on her sales experience to persuade voters to approve the city's first school maintenance tax levy since 1986. She got $1 million a year to replace leaking roofs, upgrade electrical systems, and open a new school for severely impaired children. Dawning talked the former chairman of Benton Harbor-based Whirlpool Corp. (WHR ) into setting up a $1 million scholarship fund to help students attend college. And she persuaded the mayor and the Rotary Club to endorse her Drive for Success, which asks all students to read 20 books a year. Today, 77% of fourth graders read at grade level, double the number when she took charge.
The Walton family of Wal-Mart Stores Inc. (WMT ) fame aims to shake up the education system with a dose of competition intended to force public schools to improve. Last year, some 70% of the $150 million they gave away went to alternatives like charter schools and scholarships that help poor kids attend private schools. "We view parents as the ultimate education consumer, and we're trying to ensure that they are able to choose from a variety of options," says Wal-Mart Chairman Rob Walton.
Another way to spark broad change is by giving teachers new tools -- IBM's (IBM ) approach. Since 1995, Big Blue has donated $442 million to its K-12 efforts, including a program it calls Reinventing Education. In North Carolina's sprawling Charlotte-Mecklenburg school district, which has 125,000 students and nearly 9,000 teachers spread across 150 schools, IBM has worked with teachers for years, flying them to its research center in Yorktown Heights, N.Y., for training. That led to a "learning village" Web site where teachers work together to plan classes, share concerns, and draw from outstanding lesson plans. In all, Reinventing Education now involves more than 90,000 teachers around the U.S. and in 10 other countries.
The impact has been huge, says Charlotte-Mecklenburg regional superintendent Ann Clark. "It has moved teachers out of their silos," she says, getting them to collaborate on lesson plans and share ideas. Partly as a result, she says, Charlotte last year bested other urban districts participating in fourth-grade exams in the National Assessment of Educational Progress program.
Now IBM researchers are inventing a host of other tools. At the Mary McDowell Center for Learning in Brooklyn, an elegant private school for learning-disabled children, IBM is perfecting software that can increase font sizes, alter backgrounds, and even read the text aloud. Once the software is perfected, IBM will make it available to learning-disabled kids around the country for free via the Internet. "This is a really smart example of corporate philanthropy," says Harvard University education professor Robert B. Schwartz. "By working with schools and teachers, they're achieving systemic change."
By William C. Symonds