Education Funding

Suit Accuses Walton Foundation Of Torpedoing New Charter Group

By Caroline Hendrie — December 10, 2003 3 min read

A foundation established by Wal-Mart tycoon Sam M. Walton is being accused in a federal lawsuit of effectively snuffing out a fledgling national charter school organization.

Marc Dean Millot, who was hired last March as the first president and chief executive officer of the National Charter School Alliance, accuses the Walton Family Foundation of reneging last summer on what he claims was a “firm commitment” for multiyear funding. That move, Mr. Millot alleges in a complaint filed Nov. 12 in federal court in Alexandria, Va., was “calculated to cause [the alliance’s] demise, and with it, the demise of Mr. Millot as a player in the charter school movement.”

Cathy Lund, the program director of the Walton Foundation’s national charter school initiative, said the Bentonville, Ark.-based philanthropy would have no comment on the legal action.

"[I]t is now apparent that Walton sought to control the new organization—and through it the national voice of the charter school movement— from the outset,” the complaint contends. As the alliance’s board “exerted its independence,” the suit continues, “Walton’s support waned and then finally disappeared.”

Mr. Millot, who lost his job Aug. 15, is seeking at least $490,000 in compensatory and punitive damages. He contends that the foundation’s failure to come through with grant money illegally interfered with his employment contract with the alliance, which is not named as a defendant in the case.

The 13-page complaint also points a finger at several other prominent funders of the charter movement, suggesting that they got together with the Walton Foundation and jointly decided to pull the plug on the alliance.

The National Charter School Alliance was launched last winter as a membership organization of state-level charter school groups, with a goal of becoming the leading national voice for the independently run public schools. Citing a lack of money, however, its board of directors fired its paid staff and is considering disbanding. (“Leaders May Disband New Charter School Organization,” Nov. 5, 2003.)

The alliance grew out of the now-defunct Charter Friends National Network, a St. Paul, Minn.-based group that was started in 1996 and relied heavily on the Walton Foundation for support. The foundation helped finance the network’s planned transition into the alliance, as well as the search for a chief executive officer.

On the Outs

Mr. Millot contends in his suit that the new organization fell out of favor with the Walton Foundation in part because it passed over the philanthropy’s “handpicked candidate” for CEO.

He identifies that candidate in court papers as James A. Peyser, the chairman of the Massachusetts state school board and a newly named partner in the San Francisco-based New Schools Venture Fund, which strongly supports charter schools. Mr. Peyser declined to comment on the lawsuit.

“The alliance’s rejection of Mr. Peyser’s candidacy marked the beginning of the end of Defendant Walton’s long-term funding commitment,” the suit says.

About six weeks after Mr. Millot’s hiring, Walton informed alliance leaders that it would require that the alliance secure another major source of philanthropic support, according to the complaint.

Alliance leaders thought they had found that backing last July, when a high-ranking representative of the Seattle-based Bill & Melinda Gates Foundation “committed” to provide $750,000 for the fiscal year starting this past October, the suit says. The alliance then “requested that Walton honor its commitment to match the funding promised by Gates in the amount of $750,000,” it adds.

But the funding did not come through from either group. The suit says that representatives of the Gates and Walton foundations discussed the alliance with officials of the New Schools Venture Fund and the Pisces Foundation, a San Francisco-based philanthropy established by Gap Inc. founder Donald G. Fisher, during the course of two meetings last summer—the first in Charlottesville, Va., and the second in Philadelphia. Spokesmen for those organizations declined to comment on Mr. Millot’s allegations.

Shortly after the second of those two meetings in early August, the complaint says, alliance leaders were told that “none of the charitable organizations represented in Philadelphia would commit funds for the alliance.”

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