Education Funding

Pew Seeks Flexibility Through New ‘Public Charity’ Status

By Marianne D. Hurst — November 19, 2003 | Corrected: January 07, 2004 3 min read
  • Save to favorites
  • Print

Corrected: This story incorrectly stated the proportion of its annual budget that the organization can spend on lobbying. Pew will be able to spend up to 5 percent.

The $3.8 billion Pew Charitable Trusts, founded in 1956 and now one of the nation’s largest private philanthropies, plans to become a public charity, a restructuring move that some observers said could give it more freedom and financial leverage to support and lobby for education initiatives.

Robert B. Schwartz, a professor at Harvard University’s graduate school of education and a former director of education programs for Pew, said that “clearly, this gives Pew more freedom than before to be more aggressive on behalf of education initiatives and get the country to understand why these things need to be funded.”

S Urahn

Basically, public charities can act with more financial and political flexibility than private foundations, which must comply with stricter spending and operating rules under federal law.

Officials at Pew said the move would not cause dramatic changes, however, in its future education funding or affect current K-12 education grantees. Education Week receives funding from the Pew Charitable Trusts.

Pew, which has focused mainly on higher education in recent years, will increase its emphasis on prekindergarten education.

“This is where we feel we can make the most impact,” said Sue Urahn, Pew’s director of education. The philanthropy will continue to underwrite K-12 opportunities as they arise, she said, but all future grants will be given only if there’s evidence that the funding can have a noticeable impact.

Pew, which contributed almost $10 million in prekindergarten grants in 2002 and about $12 million in 2003, currently funds early-childhood-education research, development, and legal support. The goal of its prekindergarten support, Ms. Urahn said, is to help K- 12 education by ensuring that a majority of 3- and 4- year-olds have access to high-quality preschool programs.

‘Unique Transformation’

“This is a unique transformation,” Rebecca Rimel, the president of the Pew Charitable Trusts, said last week in an interview about the organization’s planned shift in status, which will become official Jan. 1. “It’s not a model for others to follow because it’s hard to imagine another foundation being dealt the same deck.”

In fact, experts in philanthropy said, it’s next to impossible. Internal Revenue Service requirements usually prohibit private foundations from becoming public charities. But Pew, based in Philadelphia, is funded by seven individual trusts that the IRS considers private foundations, so it meets what is called the “10 percent rule” under federal tax law. That rule stipulates that a public charity must receive at least 10 percent of its funding from five or more independent donors.

Rebecca Rimel

“Being a private foundation and a public charity are very different,” Ms. Rimel said.

Pew intends to take advantage of those differences, she said, to increase the organization’s influence and flexibility. The philanthropy will change its tax status to a 501(c)(3), which will exempt it from excise taxes, saving an estimated $4 million a year. That change in tax status will also increase tax- deduction rates for donors from less than 20 percent to up to 40 percent.

As it shifts to public-charity status, Pew also plans to restructure its seven program areas into three, more focused areas: public information, public policy, and civic life. Currently, the seven program areas include culture, education, the environment, health and human services, public policy, religion, and a venture fund that supports journalism.

In practice, the tax changes will allow Pew to operate more like a business. It will be able to raise money directly for its programs, operate and provide services for grantees, provide funding to individuals, and partner with virtually anyone, including financial institutions. All those activities are prohibited for private foundations.

Moreover, as a public charity, Pew would be able to spend up to 20 percent of its annual budget on lobbying. However, it’s unclear whether Pew will take advantage of that option, Ms. Rimel said.

The main advantage of the change, she argued, is the increased flexibility. That will allow Pew to pursue its funding goals more aggressively and better assist grantees, she said.

“We can realize an economics of scale that we couldn’t before,” Ms. Rimel said. “Under foundations, that’s not possible.”

Events

Federal Webinar The Trump Budget and Schools: Subscriber Exclusive Quick Hit
EdWeek subscribers, join this 30-minute webinar to find out what the latest federal policy changes mean for K-12 education.
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Curriculum Webinar
End Student Boredom: K-12 Publisher's Guide to 70% Engagement Boost
Calling all K-12 Publishers! Student engagement flatlining? Learn how to boost it by up to 70%.
Content provided by KITABOO
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
School & District Management
Moving the Needle on Attendance: What’s Working NOW
See how family engagement is improving attendance, and how to put it to work in schools.
Content provided by TalkingPoints

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Education Funding Trump's Cancellation of States' COVID-Relief Funding Is on Hold Again
Pandemic-relief funds in 16 states have been temporarily restored—again—just days before they were set to expire.
3 min read
3d Render Red glossy Glass Dollar Sign icon in circle Blue Soft Maze, problems, solutions, strategy concept
iStock/Getty
Education Funding How Trump’s School Priorities Will Shape New Ed. Dept. Grants
The Department of Education on Tuesday announced the priorities it will use to award competitive grants.
6 min read
High school student teachers read a book to a preschool class.
High school student teachers read a book to a preschool class. Evidence-based literacy instruction will be one priority for the Trump administration as it awards competitive education grants. The priorities in those competitions will be school choice and "returning education to the states."
Allison Shelley for All4Ed
Education Funding Education Department Adds $60 Million in Grants for Charter Schools
The department will free up the funding after it gained more spending leeway in a March budget bill.
5 min read
From the left, kindergarteners Kiera Lee, Jenny Sun, Gilbert Li, and Avelyn Fong, wait in line to walk the red carpet while listening to music from Beauty and the Beast, on the first day of school, at the Philadelphia Performing Arts Charter School, K to 1, on South Broad Street, in Philadelphia on Sept. 9, 2019.
Students wait in line on the first day of school at the Philadelphia Performing Arts Charter School in Philadelphia on Sept. 9, 2019. The Trump administration has increased funding for charter school grants by $60 million.
Jessica Griffin/The Philadelphia Inquirer via AP
Education Funding Kennedy Assures Congress Funding for Head Start Will Not Be Cut
Kennedy said the administration would “emphasize healthy eating in Head Start."
1 min read
Secretary of Health and Human Services Robert F. Kennedy Jr. appears before a Senate committee on Health, Education, Labor and Pensions hearing at the U.S. Capitol on May 14, 2025, in Washington.
Health and Human Services Secretary Robert F. Kennedy Jr. appears before the Senate's Health, Education, Labor, and Pensions committee at the U.S. Capitol on May 14, 2025. The secretary told lawmakers the Trump administration wouldn't cut funding for Head Start after an early budget draft proposed eliminating the early childhood program for children from low-income families.
John McDonnell/AP