INVESTIGATION: Philanthro-philes – meet the donors propping up our education system

INVESTIGATION: Philanthro-philes - meet the donors propping up our education system

Tens of millions of pounds in charitable donations are poured into schools every year from the pockets of multi-millionaires.

But where does this cash go and what impact does it make?
What influence do charitable donations bring? And have they created an uneven playing field in school funding?

A Schools Week investigation delves into school finances and questions education leaders to establish whether charitable
cash from philanthropists  is now propping up our education system

 

Meet the philanthro-philes

Nearly £20 million in charitable donations has been handed over to just 12 academy trusts in the past two years, a Schools Week analysis of annual accounts has found.

However, there were huge variations between trusts, with the largest donations, unsurprisingly, going to the chains founded by wealthy donors who were some of the first to invest in the academies programme.

The largest donation by some way was from the Absolute Return for Kids (Ark) charity to the trust it sponsors, Ark Schools.

Ark, set up to distribute donations  from hedge fund financiers to improve the life chances of disadvantaged children across the world, donated £3.6 million to Ark Schools in 2015, on top of £4.7 million in 2014.

Lord Nash

Lord Nash, who paid £2 million to sponsor a school now run by his Future Academies trust

Put into perspective, the money given to Ark’s 34 schools was more than the combined voluntary donations for Academies Enterprise Trust, School Learning Partnership and the Kemnal Academy Trust (three of the country’s largest trusts running 150 schools between them).

The David Ross Education Trust, which runs 33 schools, received £4.2 million in the past two years from its sponsor, the David Ross Foundation. The charity was set up by philanthropist David Ross, the co-founder of Carphone Warehouse, who is reportedly friends with prime minster David Cameron and former London mayor Boris Johnson.

Alan Howard, the co-founder of one of the world’s richest hedge funds, donated £5 million to the United Learning trust, which runs 42 schools.

Howard, estimated to be worth $1.6 billion, is a former director of the Conservative Friends of Israel and now lives in Geneva, Switzerland.

Cameron described his donation as one of the most generous to schools ever in the UK.

The cash is now held in the United Learning Partnership Fund, which donated £2.2 million to United Learning last year.

Harris Federation, which runs 37 schools in and around London, is sponsored by Lord Philip Harris, who founded the country’s largest flooring retailer, Carpetright.

It is not possible from the trust’s 2014-15 accounts to see whether Harris donated money in the past academic year, although they do show the trust benefited from a £400,000 donation. Its source is not known.

When approached for comment, the trust said it did not comment on sources of charitable donations, but that Harris had contributed significantly, both “financially and personally”, in supporting initiatives at the trust.

Other notable contributions found by Schools Week include £148,000 from Sir Theodore Agnew to the Inspiration Trust, which he founded and which he now chairs.

A total of £40,000 was  from personal funds and another £100,000 from the Public Interest Foundation, a grant-making charity set up by Agnew, alongside Clare Agnew and David Tibble. The latter is also a trustee at Inspiration.

 

Where does this cash go and is it making a difference?

The cash normally goes towards funding initiatives and activities for pupils – examples found by Schools Week include sending youngsters to the Caribbean or to perform opera across the country.

Allan Hickie (pictured), an academies specialist from accountancy firm UHY Hacker, says large donations from sponsors are normally classed as “restricted income”, meaning they should not be used to fund “core activities”, such as paying wages.

For example, United Learning funds partnerships with independent schools, described on the trust’s website as “among the most prestigious in the country”.

Teachers from United Learning academies meet with peers from the independent schools to share expertise, a Russell Group university entrance project has been set up, sports ambassadors have spoken with more than 4,100 pupils, and there is a national focus on music and performing arts.

This last project includes a paid-for music and performing arts lead, an ambassador programme with composer Alexander L’Estrange and a partnership with the English Pocket Opera Company in which pupils perform to international audiences, including a tour to New York last year.

A £500,000 charitable donation from the David Ross Foundation last year went on enrichment programmes for pupils at the trust’s schools, which serve some of the country’s most deprived areas.

These programmes include an outdoor adventure trip to Canada, sending two pupils to the Nasa-backed space camp in Alabama, and plans for students to visit the Caribbean island of St Vincent to support a water aid project.

Sport, one on Ross’s passions, also plays an important part of the trust’s offering (Boris Johnson nominated him to sit on the board of the London organising committee for the 2012 Olympics).

A spokesperson for Ark said it raised funds to supplement its core finances and to offer a “better educational experience for the children we serve.

“This is especially important for us, as our schools are all non-selective, and located in economically disadvantaged communities.”

The spokesperson said the additional cash allowed the trust to offer better learning materials, music lessons and enrichment opportunities.

The money is undoubtedly filtering through to change the lives of some of the poorest pupils in the country – offering them life chances that would not be possible without the donations.

But is it creating an uneven schools system?

 

Uneven playing field?

In 2014, Ark was rated by the Department for Education as the highest performing large multi-academy trust on student progress measures.

It is regularly cited by ministers as a leading light of its academies programme and is regarded as one of the country’s most successful sponsors.

But does Ark’s additional charitable millions give it an unfair leg up on schools without wealthy backers?

The £3.6 million received by Ark last year works out at nearly £106.000 for each school that it runs.

This is at a time of squeezed school budgets, with funding for extracurricular activities among the first to be chopped.

Janet Downs, a state school campaigner, says: “It’s inequitable. State education is supposed to be equal for all.”

Downs also raises the issue of charitable donations from parents. School leaders in affluent areas are able to call on support from wealthier parents to provide funding for better facilities, unlike leaders in less advantaged schools, where “parents aren’t in a position to help financially”.

It’s inequitable. State education is supposed to be equal for all.

Parent donations are classified in annual accounts under the “donations” section in “voluntary income” – however, other sums such as legacy donations, can be included in this figure.

Examples of large donations found in our analysis include the London Oratory, the top Catholic school in Fulham, west London, attended by Tony Blair’s children. Donations totalled £152,648 for 2015.

Of that, £63,370 is classed as “schola donations”. This appears to be donations linked to the school’s Schola Cantorum, a programme that provides pupils with a choral education and that has close links to the University of Oxford.

The school did not respond when approached by Schools Week.

Another school, previously featured in Schools Week after unlawfully asking parents for donations, is the Grey Coat Hospital School, in Westminster.

Attended by the daughters of prime minister David Cameron and former education secretary Michael Gove, the school recorded voluntary income of “private fund donations and legacies” of £104,000 last year. In 2014, that figure
was £249,000.

The West London Free School, in Hammersmith, headed by Toby Young, also made headlines in 2014 after reportedly securing almost £70,000 from parental donations in the two years since its opening.

Annual accounts show its trust, the West London Free School Academy Trust, received a healthy £42,268 of donations in 2015.

Allan Hickie, of UHY Hacker, says the difference between parental donations and large sums from sponsors is that parental cash can go in “unrestricted funds”, which means it can be spent on core costs, such as new buildings.

He says he has recently dealt with academies that want to hire professional fundraisers to expand their charitable activities and encourage more parents to donate.

Christine Bayliss, an academy trust founder and former civil servant at the Department for Education, says there is already a “huge uneven playing field in every town and city in the maintained sector. “As a governor of a maintained school in a deprived community . . . we were always at a disadvantage to the school on the other side of town with lots of middle-class parents who raised lots of extra cash for their school.”

Cash from multi-millionaires is one way to rebalance donations. “At least Lord Nash sponsors a school that serves a disadvantaged community in Pimlico (in central London) and I guess that if he’s giving them additional charitable donations that’ll be a lot more than it got from its parents/community as a failing maintained school,” she said.

 

Money is golden, but should their silence also be?

So what motivates successful business people to hand over cash to schools?

Schools Week approached a number of the trusts in our investigation in an attempt to ask benefactors directly.

Lord John Nash’s Future academy trust did not respond to repeated requests for an interview. Ark said it could not provide either its chief executive or any trustee for interview.

The Harris Federation said it did not comment on sources of charitable income. Inspiration Trust said Agnew did not want to contribute to our piece.

A search of articles already in the public domain reveal further insights, though.

On the Harris Federation’s website, Lord Harris says he set up the trust because he wanted children in London to have a better education than he did.

Harris left school in his early teens to help to run the family business after the death of his father.

He says: “I want every child that comes through the door of a Harris academy to leave having grown as an individual, having enjoyed their education and being well-placed for a successful and happy life.”

In an article in The Jewish Chronicle, Lord Stanley Fink (at Ark) says his charitable approach comes from his parents who had the philosophy of “if you were approached by somebody you knew or a cause you had a connection with, it wasn’t a question of ‘yes’ or ‘no’, but of ‘how much?’.”

It is giving people life chances and social mobility

He told the publication: “If you are fortunate to be able to pay high-rate tax, then you can afford to give a bit more to charity. How much more is a matter for one’s own conscience.”

Angela Kail, head of the funders team at the charity think-tank New Philanthropy Capital and author of a recent report into education charities, told Schools Week that most people give because they are asked.

“The primary motivation is to make a difference. Education is seen as the silver bullet – it is giving people life chances and social mobility.”

However, Tamasin Cave, book author and founder of the Spinwatch website, says education is going the same way as
the NHS with “more outsourcing to the private sector”.

She splits donors into three categories: those motivated by the idea of giving back to society, those driven by prejudices (specifically that the private sector will do a better job of running schools), and those who see privatisation as a “commercial opportunity, now or in the future.

“There needs to be far greater scrutiny over whose money is propping up the school system and why.”

 

Is education heading towards privatisation? 

It was widely reported in 2013 that former education secretary Michael Gove was considering privatising academies, although no proposals were acted on.

Ian Comfort, chief executive of the country’s largest academy chain Academies Enterprise Trust (AET), says: “Is there a position in the future where the private sector could make money out of academies? The government has said no. I would say it may become an option.”

Frank Green, the former national schools commissioner, says the rise of business people in schools and their focus on the “bottom line” is “one of the most important things you can bring to a [school governance] board.

Ian Comfort

Ian Comfort

“Generally, looking at how headteachers spend their money and why is a good thing for the system.”

He also praises the links and capacity that directors of chains such as Ark have to other wealthy people who can donate to change children’s lives.

Another concern regularly cited is the seeming rise in outsourcing of services.

A recent investigation in The Observer newspaper looked at the Bright Tribe academy trust, which the paper reported had paid nearly £3 million to businesses associated with the trust’s founder, venture capitalist Michael Dwan.

A spokesperson for Dwan told The Observer while he is aware “some will seek to find ulterior motives for his actions”, he is involved to “promote better outcomes for our children”.

While it may not be a factor in motivation to donate, many academy sponsors have also received honours for their services to education. Ark’s Paul Marshall was knighted in the Queen’s Birthday honours this month – one of several academy leaders to get a gong.

 

Should cash bring influence?

The academies programme has pushed education up the philanthropy agenda, says Angela Kail of think tank New Philanthropy Capital.

Many academy sponsors featured here pledged their cash in the early days of the programme when the Labour government asked benefactors to stump up at least
£2 million per school.

But cash also brought power. Lord Nash, for example, alongside his wife Caroline, are members of the academy trust they set up, which means they have control over setting its strategic vision and the power to appoint or remove trustees.

Nash is also chair of directors, and his wife a director alongside five others. This allows them to challenge and monitor school performance and manage the trust’s finances.

Caroline Nash is also in charge of the trust’s curriculum.

Nash was made a life peer in 2013 so he could become a junior schools minister under former education secretary Michael Gove.

Most of the directors of Ark Schools are from the hedge fund industry and are sponsors of Ark charity.

Lord Fink is a director, as is the newly knighted Paul Marshall, a hedge fund manager reportedly worth £300 million. The Liberal Democrat donor was appointed as a lead non-executive director at the DfE in 2013.

The other directors are Ron Bellor and Gerard Griffin (both hedge fund managers), Paul Dunning and Anthony Williams (both formerly of investment bank Goldman Sachs), Neil Woods (partner at professional services firm Deloitte) and Lucy Heller (chief executive of Ark and former joint managing director of News International’s former education subsidiary, TSL Education).

They set the overarching strategy of the trust, approving its annual budget and making major decisions on expenditure. They delegate functions to the local governing bodies for each academy, but four of the directors also serve as chairs of an individual governing body.

David Ross, who provided the cash to found the David Ross Education Trust

David Ross, who provided the cash to found the David Ross Education Trust

David Ross (pictured left) is also a member and director of the trust he founded and was also appointed chair of trustees at the New Schools Network in April this year, the influential charity working with free school founders to help them to win approval for their bids.

Ian Comfort of AET says that money is not the reason benefactors support the academy movement. “People who set up a trust have a big impact on how it’s run – whether they have put money in or not.”

The influence of hedge funders, with other business professionals, into the running of schools follows a drive by the government.

Michael Gove appointed four new board members to join the DfE in 2010. One was a headteacher, Sue John, the other three were Nash, Agnew and lawyer Anthony Salz, an executive vice-chairman of Rothschild, one of the world’s largest investment banks.

Gove said at the time they would help the department to run in the most “effective and business-like way, by drawing on the experience of what works outside government”.

This ethos is also now sought in school governance. Nash said in 2010: “The best businesses have a skilful board of directors keeping them on the right path. I want to see the same approach in schools.”

 

The silent investors

Only certain people are attracted to the “influence element” of donations, according to Kail.

She said: “There are an awful lot of people who are quietly giving money to local schools with no interest in joining the board, let alone making radical changes.”

For example, Impetus – The Private Equity Foundation (Impetus-PEF) takes donations, normally from wealthy backers, and invests in other charities that fit its “venture philanthropy” model.

This means taking concepts and techniques from venture capital and applying them for a social, rather than financial, return.

In January, the charity gave £100,000 to the Dixons trust, which runs schools in some of the most deprived areas of Bradford. The cash was to fund “ongoing strategic and operational support” so it could grow to take on more schools.

Andy Ratcliffe, chief executive of the charity Impetus-PEF, says: “Donors are attracted by the charity’s pledge to develop high-impact services that produce clear and measurable, life-changing support.”

This seems a popular view. On the Philanthropy Impact website Lord Fink of Ark  says: “I look for efficiency, projects that affect many lives at low cost. I like to invest in what I call ‘transformational’ charities.”

Impetus-PEF also offers donors the chance to give shares, which means the gift will, according to its website, be “exempt from capital gains tax, and you can also reduce your taxable income by the market value of the shares”.

A spokesperson for the charity said these tax benefits apply when supporting any charity in the UK, adding: “We haven’t actually received many donations in the form of shares, but it’s pretty common for other charities.”

 

Is this funding now propping up the education system?

Funding is now one of the biggest issues that headteachers face. Ian Comfort of Academies Enterprise Trust says, for instance, that schools can no longer rely on government funding as a single source of income. “If they do, they will run into financial difficulty. The pressure on budgets is huge. You have to look at other sources of income – which might be charitable donations.”

He says AET, which does not benefit from a wealthy backer, hires out its school premises and leisure facilities to make an income stream.

But sponsors with benefactors will, he says, be facing the same pressure in terms of how they allocate their resources. However, charitable donations allow them to put more money into enrichment opportunities, something that he backs.

At think tank Policy Exchange, Jonathan Simons, head of education, says charitable donations do make it a “little bit easier for schools that have the cash to handle the budget squeeze”.

That money is going directly to children and young people. We don’t want to stop that. I just wish we [AET] were in that position

He says the extra money allows some schools to offer provision that private schools more commonly offer – such as extra technology, new buildings and additional sports equipment.

But this is not an original aim of the academies programme, which Labour introduced when school budgets were rising year-on-year.

Simons says the original money sought by government from sponsors was for new buildings – and to show their commitment.

But one academy chain source says the Department for Education has been clear that trusts must become sustainable and not rely on their sponsor’s cash.

The source says his trust’s sponsor wanted to create a “capital pot” that its schools could make bids for.

However, this was pooh-poohed by the department, and instead the pot was set up as an interest-free loan that schools must pay back over 15 years.

The DfE declined to comment when asked to confirm this by Schools Week.

Many of the academy chains are also clear their aim is to become self-sustainable.

A spokesperson for Ark Schools says its business plan is to be “entirely financially self-sustainable in the future, but in the meantime we are lucky to have the support of Ark to help us to support our schools”.

Comfort is adamant that charitable donations do not make school funding unfair; “it’s the way it is. That money is going directly to children and young people and we don’t want to stop that. I just wish we [AET] were in that position.”

 

Who are they?

Lord Nash folderweb Lord philips Harris folder web2 Lord Stanley Fink folder web5David ross folder web3 Theodore Agnew folder web4 Alan Howard folder web7