Tuesday, July 06, 2010

The Curious Case of the Imagine Schools i3 Application

The DOE recently launched a website dedicated to i3 applications. Take some time to explore it, and keep in mind there are a few different kinds of apps: development (up to $5 million), validation (up to $30 million), and scale-up grants (up to $50 million). Applications can seek funding for effective teachers and principals, the use of data, high standards and high-quality assessments, and persistently low-performing schools. I won't go into the merits or demerits of the program.

There are plenty of interesting applications, but one application really has me scratching my head: this $29,032,386 5-year validation grant focused on using data in the classroom. An outline of the grant says all 71 Imagine Schools will be involved in the study, including testing students three times a year. Forty schools (I believe they're all Imagine Schools) will be randomly selected to have summer classes. The grant says they'll reach 100,000 students, but Imagine claims they have 36,000 students - not quite sure how that math works out unless Imagine has an incredible turnover rate or there are other schools involved in this study.

Considering this grant will reach all Imagine Schools, you'd think Imagine Schools Nonprofit, Inc might be listed as the applicant. But Imagine isn't listed as the applicant: Pathfinder Charter School Foundation, the nonprofit running Imagine Cortez Park - a nonprofit that contracts out just about everything to Imagine and operates with less than a $4 million annual budget - is the applicant for this $29 million, five-year grant. Below are a few snippets from Pathfinder's recent 990 tax forms (available at guidestar.com):

Pathfinder's most recent 990 shows they spent $605,368 in occupancy, $2,192,936 for "professional contract ser[vices]", and $351,909 on management. Combined, that is roughly $3.15 million of Pathfinder's $3.9 million operating expenses between 7/1/2008 and 6/30/2009. The other $750,000 was spent on food services, operations, supplies, equipment, accounting, office expenses, conventions/meetings, and insurance. Keep in mind that Pathfinder delegates control over virtually the entire budget to Imagine.

So what is Pathfinder doing applying for a grant they are clearly going to hand over to Imagine? Can anyone honestly say Pathfinder is truly the applicant when they are really just a legal entity that hands the keys to Imagine? Personally, I think this is a great example of how Imagine really isn't a nonprofit, and a tacit admittance of their status. The i3 FAQ published by the DOE defines nonprofit as an entity that meets the definition of "nonprofit" under 34 CFR 77.1c:
Nonprofit, as applied to an agency, organization, or institution, means that it is owned and operated by one or more corporations or associations whose net earnings do not benefit, and cannot lawfully benefit, any private shareholder or entity.
A reasonable observer would challenge Imagine's eligibility considering there's clearly a for-profit arm of Imagine that could benefit private shareholders (and that's not even getting into the details about their lack of 501c3 status). I would wager that this eligibility issue is part of the reason Pathfinder - a certified nonprofit that is supposed to have an arm's length from Imagine's for-profit branch - is the applicant as opposed to Imagine's nonprofit arm (which clearly has ties to Imagine's for-profit arm). But is this just making a mockery of the ban on for-profit providers applying for i3 grants? Is anyone in the OII going to ask about how a nonprofit with a budget of roughly $4 million per year - which is mostly turned over to Imagine - can really be considered the applicant here?

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