A number of Michigan school districts are trying to instill new life into
nonprofit educational foundations they established years ago, in hopes of
bringing in money simply by asking for it.
While even the most ambitious programs generate only a drop in the bucket
compared to a district’s overall budget, foundation directors say the advantage
is that the drop can be earmarked for specific academic programs. Donors like
knowing that their money is going directly to the classroom, foundation
officials say, where even a few thousand dollars can have a large impact.
Voters across Michigan have said no to additional public funding for schools
in many ways over the past year. Proposal 5, on the statewide ballot last
November, would have mandated annual funding increases. It was rejected by a
margin of 62-38. More recently, voters said no in February to 13 of 17
funding-related elections in districts throughout the state, including requests
for buildings, infrastructure and an override of the caps on local millage
But those same voters are sometimes willing to make a private donation to
their local school district because, "It’s voluntary. They know exactly where
their money is going," said Rich Howard, senior consultant with the McCormick
Group, a national consulting firm that works with school districts on foundation
"We are seeing a resurgence of new foundations … as well as foundations we
set up previously coming back. It’s not just in Michigan. It’s happening across
the country," he said.
One example is Ann Arbor, where Wendy Correll is the executive director of
the Ann Arbor Public Schools Educational Foundation, a privately operated,
nonprofit corporation established to support the school district. Correll
previously served on the district’s board of education and was hired for the
half-time foundation position in May 2006. Like many districts, Ann Arbor has
had an educational foundation for years. But in recent years it has shifted from
passive to active fundraising, setting a goal for itself in the hundreds of
thousands of dollars.
"The waters are untested in Ann Arbor for significant private support of K-12
(public) education," Correll said, but a feasibility study showed that there is
potential for a foundation to bring in $250,000 to $500,000 annually over the
"The reality is, we need to educate the public. It’s easy not to pay
attention to how school financing works," she said. "We’ve cut so much."
The effects of Proposal A increased the role of state government in funding
public schools. Because of the state’s increased role, the extent to which local
school districts may add to their budgets by levying local property taxes is
more limited than it was before Proposal A passed in 1994.
PROPOSAL A CHANGES SYSTEM
Under Proposal A, each school receives state funding on a per-pupil basis,
called a foundation allowance. The amounts per pupil have increased under
Proposal A, but decreasing enrollment combined with increased retirement and
health benefit costs has squeezed many district budgets. Like other foundation
directors, Correll doesn’t expect more money from the state. Other ways to
generate revenue would include passing a countywide millage, which Correll said
would be an "uphill battle," or to attract more students.
"People are not coming to Michigan. People are leaving Michigan," she said.
The district could lose up to 200 students not only from cutbacks in the
automotive industry, but also the closing of Pfizer Inc.’s Ann Arbor site, which
will displace 2,100 workers. "The implication is huge," Correll said.
The point of establishing a school foundation is to draw support from the
community at large, not just parents, according to Howard. Booster clubs for
sports or music, and parent-teacher organizations, already rely heavily on
parent contributions, and school foundations are not meant to intrude on that
"The community member gives money because there is a huge correlation between
the perception of the local schools and property values," Howard said.
Correll echoed that, saying that in presentations to community leaders, she
emphasizes that "Strong schools support strong communities and strong
communities support strong schools. … The opportunity arose with Pfizer to say
‘Do you understand the draw of a great school system?’"
One of the appeals of foundations is that donations made to them are
tax-deductible. Foundations generally operate as tax-exempt organizations under
section 501(c) 3 of the Internal Revenue Code, which prohibits them from paying
dividends or profits, but makes them eligible to accept public or private
grants. Some school foundations operate under the umbrella of a larger community
foundation, such as the local United Way.
Tax-deductible status "plays an important role in our fundraising,
particularly for contributions over $25," Correll told Michigan Education
Report. "For large contributions, over $10,000, some contributors may find a tax
advantage in making a contribution through our local Ann Arbor Area Community
Foundation. I can say that people are more willing to give because of the tax
Most donations to foundations are not large grants from businesses, according
to Howard, but small amounts from individuals. Educational foundations operate
independently of their local school districts and have their own boards of
trustees and financial accounts, but usually work closely with the district to
define the foundation’s purpose and activities.
Howard said it is difficult to say how much money foundations bring in to
Michigan schools in any given year, because those that take in less than $25,000
do not have to file annual financial reports with the state. The total is
"certainly tens of millions of dollars," he said.
PAYING FOR TEACHERS?
An article in the American School Board Journal in July said that foundations
are becoming more visible in states where local property taxes are capped, the
state has primary responsibility for funding schools, and there has been a
downturn in state revenue from income or sales taxes.
In Los Gatos, Calif., a small community near Silicon Valley, a six-day
telephone campaign brought in enough donations to replace 10 teaching positions
that would have been cut, the article said. "These communities no longer simply
add enrichments to the basic, state-funded program," the article stated. "They
pay a de facto voluntary tax to the school district to fund the level of
education they desire."
Most donations to foundations are not large grants from businesses, according to Howard, but small amounts from individuals.
While Proposal A lowered local school property taxes for most homeowners,
substituting a higher sales tax, it did not do the same for business owners.
Asked if Michigan’s business tax load affects donations from that sector,
Correll said, "That is not something I hear. Quite simply, I think it’s hard to
get dollars out of businesses in the overall declining economic climate of
Michigan. They continue to be willing to give us time and small dollars that
provide them with advertising, but not large impact dollars. We will be
rethinking our strategy on this idea. ‘Give for the greater good’ doesn’t seem
to work in the overall business world; perhaps in coming years if the economic
climate changes, their attitude may change."
GAVE AT THE OFFICE
One businessman told Michigan Education Report that school taxes and school
performance both affect his decisions on donations.
"When it comes to public schools, I already gave at the office. It’s called
taxes," Detroit businessman Steven Thomas said. "And I think too many schools
fail to get much bang for the bucks they now have. Like many of my colleagues in
business, I am far more interested in a tax credit for contributions to
scholarship funds or private schools. At least then the money goes directly to
help the student and his parents’ choices, not business-as-usual bureaucracy."
"If people want to give money, they can do it," said Jim Sandy, executive
director of the Michigan Business Leaders for Education Excellence, a statewide
coalition of business leaders which has proposed various education reform
measures. There are some tax advantages in making a contribution, he pointed
out, but donors should be aware of how the money is being spent. Even if
foundation dollars are earmarked for specific academic projects, the effect is
to support the district’s general fund budget, he pointed out. The question is
whether that takes pressure off districts to operate efficiently.
"It’s just creating more and more pots of money and as we’ve seen in the
past, schools with more pots of money don’t always manage them well," he said.
Foundations use a number of ways to raise money, among them solicitations by
mail, personal contacts and fundraising events like golf outings. Many of them
also receive investment earnings from endowments. Whatever the method, Howard
said the most successful campaigns give donors a specific idea of how the money
will be used and how it will impact education now and in the future. Foundation
money is typically spent on academic projects, arts and music, science and
technology, professional development or capital improvements, he said. Some
foundations also pay for college scholarships.
When the Forest Hills Educational Foundation was established in 1986, it was
led by parents who wanted to be sure children "would be provided with what we
fondly considered ‘the icing on the cake,’" Executive Director Amy Clark said.
Today, the mission statement calls for the organization to support core academic
programs, "which is vastly different," she said. One school gala hosted by the
foundation brought in $86,000, of which half went into an endowment and half was
spent on instructional materials, including new math textbooks. "The Forest
Hills Foundation has transitioned from a bake-sale mentality," she said.
In Ann Arbor, the foundation’s major recent project was a $50,000 writing
literacy program at the high school level, Correll said. A similar program
already is under way in the lower grades. The foundation, like many others, also
awards smaller amounts of money to teachers through a mini-grant process.
The Portage Education Foundation has been in operation since 1990, but this
year announced a $1 million endowment campaign called "Putting Excellence
The campaign brochure says, "It’s no secret that school systems across
Michigan — Portage included — are at a crossroads; rely on public funding —
becoming more unstable each year — for an adequate education. Or seek
alternative, private financing to guarantee an amazing education. For Portage,
the choice is easy." The money would be used for start-up costs for innovative
academic projects, fine and performing arts programming, and instructional
The Portage foundation gave $23,000 in grants to students, faculty and
school- or district-based programs last year, according to its annual report. It
received $35,000 in donations.
The Michigan Association of School Boards also has seen increased interest in
school foundations among its members, according to Kathy Hayes, co-director of
board leadership and development.
"In these tough economic times, there seems to be more interest in getting
foundations going again," she said. The MASB has developed a training program
for foundation board members, staff and volunteers in conjunction with The
McCormick Group and the National School Foundation Association.