Education Funding

Sluggish Economy Tests High-Tech Industry’s Generosity

By Andrew Trotter — December 05, 2001 5 min read
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Their stock values have tanked, sales to consumers are sluggish, and many have laid off employees. Still, the nation’s top high-tech companies are promising schools that they have no plans to downsize their philanthropic initiatives. Whether they will deliver on those promises depends, more than anything else, on how long the economy stays in a recession.

But for now, the high-tech corner of corporate America is telling schools not to worry.

The economic downturn “basically will have no effect on our educational initiatives in terms of the dollars we allocate to these programs and our commitment to those programs,” Craig R. Barrett, the chairman of Intel Corp., one of the nation’s biggest funders of education philanthropy, said recently.

Intel, based in Santa Clara, Calif., will spend $35 million in 2002 on education initiatives at the K-12 level worldwide, roughly matching the amount spent this year and last, Mr. Barrett said in an interview last month at the annual conference of the National Alliance of Business. Giving by other technology companies is also holding steady.

“I haven’t seen any signs of [support dropping],” said Ted Sanders, the president of the Denver-based Education Commission of the States.

But Mr. Sanders cautioned that it may be too early to know for sure how companies will respond to the gloomy economy, especially in light of last week’s announcement by the National Bureau of Economic Research that the nation has been in a recession since March.

Even so, Cisco Systems Inc. plans to continue to expand its networking-academy programs, which offer training in Internet technologies to roughly 232,000 students in 133 countries. The company has hundreds of training academies in the United States, many of which are located in high schools.

The International Business Machines Corp., too, is going forward with the $25 million expansion, announced last June, of its 7-year-old Reinventing Education project, which partners with state education departments and school districts to set up technology programs that address critical educational needs. (“IBM Invests Millions More In ‘Reinventing Education’,” June 20, 2001.)

Meanwhile, Microsoft Corp. is keeping its current giving programs, which include $100 million in cash and software over five years to the nation’s Boys & Girls Clubs and some elementary schools, said Cathy MacCaul, the company’s communications manager for community affairs.

She said the philanthropic budget in her division, which includes most of the company’s K-12-related giving, increased in the fiscal year that began last July. That budget “most likely will be flat or it will grow,” Ms. MacCaul said.

Other Microsoft philanthropy includes a free online network for classroom teachers; software and training grants to state departments of education; and software provided to Intel’s Teach to the Future program, worth $344 million in retail value over three years, officials say.

The list of giving doesn’t include a recent Microsoft proposal—not yet accepted by a federal judge—for settling scores of private antitrust lawsuits. Under the proposal, the company would make what is described as up to a $1 billion commitment over 5 years to support technology in schools. (“Microsoft Deal Calls For $1 Billion School Effort,” Nov. 28, 2001.)

The generally encouraging outlook for giving doesn’t mean that technology companies won’t make adjustments in their educational initiatives, said Karen W. Smith, the executive director of Tech Corps, a nonprofit volunteer group that depends on contributions from high-tech companies.

“Everyone has fewer dollars than six, eight, and 12 months ago,” Ms. Smith said.

She said her Maynard, Mass., organization, which provides volunteer technology expertise to school districts, had not suffered any decline in contributions and was relying on its core contributors. They include Cisco, Sun Microsystems, and IBM.

But she said technology companies were “being a little more discriminatory, wanting to make sure that, where they put their dollars, the maximum impact is being reached.”

At Intel, belts have been tightened and priorities sharpened, said Cynthia Reed, a program manager for the company’s Teach to the Future program, which will have trained over 500,000 teachers in 20 countries by 2003.

“We’ve eliminated sending teachers cookie bouquets,” she said, referring to sweet treats the program has mailed to teachers who have completed its 40-hour workshops. “We’ve pulled out the fringes we don’t need for the success of the program.”

Reasons for Giving

High-tech companies that have been a mainstay of philanthropy in education have important reasons not to waver in their support, several observers say. First, many entered precollegiate philanthropy as a long-term commitment, said Linda G. Roberts, who was the chief technology adviser to former U.S. Secretary of Education Richard W. Riley and now serves on the corporate boards of several technology companies. “When the Intels and the Apples and the IBMs and the other big ones made the decision to go into K-12 giving ... they saw it as not a short-term, but a long-term, investment,” she said.

And cutting education giving risks eroding favorable impressions that such companies have spent years building in the K-12 community at a time when schools are one of the few bright spots for the technology industry, said Gary J. Beach, the publisher of CIO Magazine, a Framingham, Mass.-based publication that tracks the technology industry. He pointed out that by next year, many districts might begin replacing large numbers of personal computers that were purchased around 1998. And he added that districts are also poised to extend broadband communications links to classrooms.

Even if the recession forces districts to postpone those spending plans, observers argue that the companies would be making a serious mistake if they abandoned their major K-12 philanthropic projects.

“You can’t skip in and out of the education market,” said Jim McVety, an analyst for Eduventures, a Boston-based firm that tracks companies involved in the education industry.

Coverage of technology is supported in part by the William and Flora Hewlett Foundation.

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A version of this article appeared in the December 05, 2001 edition of Education Week as Sluggish Economy Tests High-Tech Industry’s Generosity

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