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Charting the Charters

March 11, 2015

We’re not conspiracy theorists. In fact, everything we know about government, politics, business and life itself is that people have enough trouble keeping their own lives together without being master manipulators of others.

That said, we’ve always wondered why hedge fund guys are so heavily invested in the charter school movement.  Why the hell do they care so much about it? Why have a handful of elites from the financial sector gotten together to underwrite a sophisticated campaign to promote charter schools?

Think about it: We’re talking about very rich white guys who got together and picked this particular cause.  What does it have to do with them? They aren’t getting involved because they want to train a better labor force. Hedge funds aren’t labor intensive businesses. They don’t hire high schools grads at all. They recruit from the nation’s best finance and business schools.

If they were having a problem recruiting talent, they’d endow a department at a top tier university or offer scholarships for the best college students to do graduate work in finance.

Instead, the hedge fund guys are organizing minority communities to support charters.

Huh? The richest of the rich are organizing the poorest of the poor? Yeah, that’s what’s going on right now.

Again, why?

Well, pure altruism is a possibility. Throughout history, there are many examples of men who amassed great fortunes and then became great philanthropists.  In our time, it’s Gates, Buffett, Soros and Zuckerberg. In an earlier time, it was J. Paul Getty, Andrew Carnegie and the Rockefellers.

Consider their efforts. Carnegie funded libraries. Getty preserved art. Gates promotes a concept of the global citizen – and underwrites everything from AIDS campaigns to water purity efforts in third world countries.  Others on our list of notables funded medical research, scholarships for the disadvantaged or internet access.

What is it about all of these efforts? One common thread is that the efforts are largely beyond reproach. Who can argue with improving sanitation in third world countries?

Now consider the philanthropic efforts of the hedge fund guys.  These efforts are different in that they are controversial – becoming more so all the time. Their efforts have been criticized sharply by the left. The charge is that they are undermining public schools.  The charge is that their massive contributions to elected officials are corrupting the political process.

There’s increasing scrutiny of the big hedge fund names like Paul Tudor Jones, Dan Loeb and Paul Singer and their political involvement, specifically their contributions to influence politicians, including the Governor of New York.

Maybe it’s the case that these guys think they are doing the right thing. Maybe they really believe that charters are the answer. That’s possible, but it’s goofy, too. These guys have to know that charters don’t work miracles.  They have to know that when all the relevant factors (like funding) are equalized, charters may produce marginal improvement in outcomes. They have to know that countries that lead the world in educational performance simply do not have raging controversies about charter schools. In fact, it’s only in the U.S. that this has become so incredibly divisive. In fact, it’s only in the U.S. that people are even arguing about it.

They have to know that, don’t they?

So again, the question: Why the massive investment in charters? Why the huge contributions to pols who support charters? Why the sophisticated campaign that is spinning mixed results on charters as an unqualified success?

And,  why do the hedge fund guys continue to what they do – even when it’s becoming such a headache for them?

Some people believe the answer is simple self interest. Folks on the left – who are bitter enemies of the hedge fund guys and who sometimes go overboard in their criticisms – say that the industry accrues extraordinary tax benefits from charter school advocacy.

This supposedly involves a federal law passed in 2000 that allows entities that invest in educational projects in underserved areas with a 40 percent tax credit. It’s said that these entities can combine this tax credit with other incentives and double the return on the money they invest in charters.

This can’t be the answer, can it?

3 Comments leave one →
  1. March 11, 2015 10:33 PM

    I have always had the same question and still can’t get a satisfactory answer.

  2. March 11, 2015 10:38 PM

    A piece I wrote last year, mainly about the co-location issue and how we were inundated with those commercials from Success Academy.

  3. March 29, 2015 4:00 PM

    Maybe they truly believe it’s worth the financial risk if it gives families a chance to choose what’s best for their children rather than be settle for schools that are sub-par for starters…

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