Updates on Some Sacred Cows

To the mooing of sacred cows, Rick Cohen's column in Blue Avocado has also unleashed furious and exhilarating discussion, gnashing of teeth, and movement in the national debate. Here, Rick updates us on some recent controversial articles on Teach for America, L3C corporations, and attacks on the nonprofit tax exemption.

Raising questions about Teach for America

Is Teach for America (TFA) the coolest thing ever for young idealists, for low-income students, and for foundations? Our article sparked responses from career teachers, a debate on the TFA Alum website, and much more.

For career teachers there are reasons for bruised feelings when un-credentialed TFAers with two months of training get into classrooms. As comments on the Blue Avocado website made clear, in some school districts, Teach for America teachers are being recruited while other teachers are being laid off. In Charlotte-Mecklenburg, the school board voted to lay off 539 teachers and educators on the same day it held a welcoming party for 150 TFA recruits. The Houston Independent School District is forcing out 162 teachers as it recruits new TFA teachers. And one former TFA teacher in Las Vegas, a 6-year veteran, worries about his former sponsors, "If I find out that a Teach For America (teacher) was placed in fifth grade and I lose my job as a fifth-grade teacher, I'm thinking, 'How is that OK?'"

No matter: TFA is expanding with no shortage of applicants: 46,000 people apparently applied for TFA slots last year, including 12 percent of all graduating seniors from Ivy League schools.

TFA's funding muscle continues to astound as well: until Congress and the President removed it, TFA had an $18 million "noncompetitive grant" in the 2011 budget.
And in the first big expansion of AmeriCorps under President Obama, TFA received the program's largest grant at $11.4 million to fund 6,621 teachers. (And as our original article pointed out, school districts pay the TFA teacher salaries.)

The funding flows do not stop the debate of competing academic studies whether TFA teachers outperform or lag behind credentialed teachers. Recent studies suggest TFA teachers lag behind other teachers in reading and mathematics performance and are not helped by their high turnover rates. We would imagine, as comments to Blue Avocado contend, that the critical studies emanate from the teachers unions, biased from the get-go, as though none of the pro-TFA studies don't start with their own animus toward the teachers unions or "mediocre" education training.

Make no mistake, but the debate (in part sparked by our article on TFA) tapped a wellspring of ideological predispositions. The remarkable stream of corporate and foundation funding for TFA no doubt reflects foundation frustration with poor results in so many public schools, a problem they are quite willing to ascribe to teachers, their credentials, and their unions.

Beyond the debate over the TFA model, the nonprofit sector is engaged in a debate over the future direction of public education: what kinds of schools are best, how teachers will be trained, what a career in education can and should mean.

We used to understand the debate about education as a political one: how to equalize funding commitments to wealthy and poor school districts, particularly for those public schools that can't exclude special needs students or those that don't speak English (as can private schools). But TFA has made the debate seem unpolitical: everyone's in favor of bright-eyed motivated young people in the schools. No one seems to be willing to vote for the taxes and school aid that will provide adequate funding to all schools.

See our original article on the Teach for America model here.

Governments squeezing nonprofits for pennies

Despite the nonprofit "tax-exempt" classification, we pointed out in "Attack of the Tax-Exemption Killers" how local governments are devising ingenious and even bizarre ways to charge nonprofits, such as streetlight usage fees, kitchen fees, and more. While our article looked at the thousands of small barbs aimed at nonprofit tax exemption, since then it seems as if the small barbs are turning into cannons.

These attacks on the tax-exemption both reflect and propel a growing resentment against nonprofits -- and nonprofit clients and constituents. In some communities, like Foster City, California, legislators are starting to lean toward completely denying government funding to nonprofits. In Worcester, Massachusetts, the idea that a nonprofit pharmacy and health college might rehabilitate a decrepit, bankrupt downtown hotel sparked volleys of antagonism aimed at nonprofits based on their their tax status.

This isn't stopping anytime soon. You have resource-starved public agencies chasing resource-constrained nonprofits for tiny amounts of money. Until the public gets past temporary, one-time budget balancing fixes (pitched by irresponsible politicians) and starts addressing the structural causes of multi-year government deficits, we're all going to be reliving "Groundhog Day" but with a lot less fun than Bill Murray had.

New categories for businesses give them tax exemptions

Our article on L3C corporations looked at the questionable "low profit" corporations that profess to be more concerned with social good than profits, and therefore deserve foundation funding, nonprofit set-asides, and more. These corporations are just the latest development in the growing wave of thinking that businesses are better than nonprofits at getting things done.

At the time we raised questions about L3Cs, there was absolutely nothing in the press or the literature that suggested that L3Cs might be anything but the bees' knees. Four states authorized L3C creation. The nation's foundation sector trade association -- the Council on Foundations -- proposed that the IRS give something of an automatic green light to L3Cs looking to private foundations for Program Related Investments (PRIs).

But something happened along the speedway to the L3C pot of gold. We haven't seen any new states jumping recently to enact L3C statutes, in part because limited liability corporations (LLCs) can do virtually everything an L3C can do except get foundation PRIs. In its March 2010 legislative agenda, the Council on Foundations appeared to back off legislation that specifically elevated L3Cs.

Will LC3s be stopped? No, but there has been some pushback from the nonprofit sector and from some attorneys. Several well-known law professors submitted a resolution to a committee of the American Bar Association's Business Law opposing the inclusion of L3Cs in LLC statutes, which had already unanimously voted to oppose national uniform L3C legislation. In a November/December 2009 ABA Business Law Today commentary, L3Cs were called "useless gadgets" (presumably unlike so many other legalities).

Blue Avocado readers rock

One of the amazing and rewarding aspects of Blue Avocado is the engaged, smart, thoughtful questions and comments that readers post here -- comments by the folks working and volunteering in on-the-ground nonprofits. We hope these updates will prove as provocative as our original coverage.

Rick Cohen writes this column for every other issue of Blue Avocado, and also is the Nonprofit Quarterly's National Correspondent. He is known for his special investigations and analysis on the sometimes quite odd intersections between politics and nonprofits. Rick's background includes community organizing, city and state government, LISC, and eight years as executive director of the National Committee for Responsive Philanthropy. He lives in Washington, D.C. where he never has a shortage of things to be grumpy about.

Comments (6)

  • Anonymous

    Rick, you are so right about what is happening with volunteers and small not-for-profits in particular. I work with small museums, and there is a lot of misunderstanding about what it means to have a professional on staff -- and boards offer ridiculously low pay. I know that their budgets are tight, but I also know that the first step is recognizing the need for professional workers. Not everything can or should be done by volunteers.

    Jun 22, 2010
  • No hope in sight it sounds like.

    Jun 22, 2010
  • I really enjoyed this article. I love irreverent people!

    Jun 22, 2010
  • Anonymous

    Thank you for saying it all! I was beginning to wonder, with city govt quadrupling fees and levies, school districts threatening to fire teachers, esp. those who volunteer outside school time, for "competing" with their new community class offerings "at cost recoverable rates only", and community use fees becoming capital revenue sources for overcrowded schools. I'm afraid this will fall apart before the structure is examined, and that's the only way it will change.

    Jun 22, 2010
  • For those interested in the TFA and broader school reform debates I strongly recommend the Bridging Diferences blog (http://blogs.edweek.org/edweek/Bridging-Differences/Bridging Diferences) and Diane Ravitch's new book "The Death and Life of the Great American School System", which is a brilliant analysis of what is happening out there. If only we had similar analyses in other areas. In the meantime, keep it up Rick! Michael Edwards

    Jun 23, 2010
  • Anonymous

    One correction: the following statement is inaccurate:

    "limited liability corporations (LLCs) can do virtually everything an L3C can do except get foundation PRIs".

    LLCs, and business corporations, and any other legal person, can receive PRIs from foundations. The idea of L3Cs is to make it easier for a foundation to make required findings and complete required due diligence, before it makes a PRI. Absent the sort of blanket IRS blessing Rick refers to (which does not seem imminent), foundations who wish to make PRIs, whether to L3Cs or LLCs, need to satisfy themselves (or their legal counsel) that a particular PRI is proper and appropriate under the circumstances.

    Jun 25, 2010

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