How Business Can Improve Education
Why scholarships and tutoring won’t cut it


On Monday, President Obama invited a group of CEOs from corporate giants including Intel, Time Warner, Bank of America, and Microsoft to a sit-down at the White House. In a time when cash-strapped states, districts, and schools are scrambling to plug budget shortfalls, the president’s message was clear: Business needs to open its pocketbook and do more to fund K–12 education.

White House policy adviser Melody Barnes and Secretary of Education Arne Duncan addressed the business leaders, echoing the president’s State of the Union speech, which stressed K–12 system improvement as vital to America’s economic growth. Barnes said business leaders were acutely aware of the need to better prepare students for today’s workforce, while Duncan noted that “business can be an amazing partner in driving reform.”

The roundtable has already spurred huge pledges. Bank of America, Microsoft, and the Nike School Innovation Fund have announced a combined $66 million in education donations since Monday. America’s Promise Alliance, the organization founded by Gen. Colin Powell and chaired by his wife, Alma Powell, pledged to raise $50 million through its Grad Nation Community Impact Fund to “support the goal of ending the dropout crisis and preparing young people for college and career.” Other CEOs and business groups, such as the Business Roundtable, the U.S. Chamber of Commerce, and the Business Coalition for Student Achievement, seem primed to pitch in as well.

There’s no question that these contributions are well-meant and will do some good. But business leaders should not be surprised when these types of efforts fail to have a widespread impact. Take Bank of America’s initial $4.5 million pledge, for example. If it were given directly to the public schools of Philadelphia, it would amount to just $37 for every student who’s eligible for free or reduced lunches. Even Bank of America’s total three-year pledge, $50 million, totals just 0.26 percent of the New York City Department of Education’s annual operating budget.

More important, it’s unlikely that any of the five recipients of Bank of America’s grant money — all respected organizations that have no doubt helped thousands of individual students — have the potential or inclination to fundamentally transform the way schools operate. While volunteer tutoring, youth-development efforts, and programs that place quality teachers into urban classrooms are all good things, they operate within the limits of today’s education system.

For years, business has been content to stay above the political fray of school improvement, happily delivering dollars to educational leaders when called upon. But if business is truly serious about driving reform, it needs to recognize that it is uniquely positioned to step up in more consequential ways than donating supplies or sponsoring scholarships. Business leaders have specific expertise when it comes to evaluating performance, streamlining costs in tough times, and building data systems — issues that educational leaders across the country are currently wrestling with. 

In Austin, Texas, for example, a group of elite CEOs meets regularly with the CFO of the Austin Independent School District. “In these meetings, we’re getting at what they’re trying to do and what we would do as business leaders if we were faced with these budgetary challenges,” said Ellen Wood, president of the professional-services firm vCFO and a member of the Austin Chamber of Commerce’s board of directors. The Austin Chamber has also brought in numerous experts, including Ranjit Nair, former director of incentive-pay strategies for Bank of America, to work with the school district on human resources. Building on these efforts, in the fall of 2010, the Chamber helped the district secure $62.3 million from the U.S. Department of Education — the largest Teacher Incentive Fund grant in the nation — to help scale up its incentive-pay program.

Efforts such as these highlight the key role business can play when it sticks to what it does best. But it’s also crucial to note that Austin’s business leaders were true partners — not pushovers. In the words of Drew Scheberle, senior vice president of education and talent development for the Austin Chamber of Commerce, “We had to have the moment when [Austin Independent School District] knew we were willing to walk away. We gave them a list of non-negotiables [and] said, ‘If you want [our support], then you have to do these things. If you don’t, we’re out.’”

So, while Secretary Duncan may be right about business’s potential to drive reform, these leaders would do well to remember that working with schools and educators doesn’t mean simply subsidizing the status quo. By insisting that schools meet certain goals in areas such as performance and cost efficiency in return for their support, businesses can help ensure that each dollar they donate is a dollar well spent. With the right approach, it’s possible to start spurring the transformational change needed to help our schools produce 21st-century talent.

— Whitney Downs is a researcher at the American Enterprise Institute. She is a co-author with Frederick M. Hess of the new report Partnership is a Two-Way Street: How Business Can Help Drive School Reform.”