Forbes reports on the investment strategy of billionaire hedge fund manager William Ackman. He makes money investing in charter schools and thinks he is “doing good” by undermining public education.
“It turns out that Bill Ackman is making good money in the most unexpected of places: financing charter schools for low-income kids.
“Since 2011, the billionaire hedge fund manager has invested $20 million of his own money in the Turner-Agassi Charter School Facilities Fund, which was started by former tennis star Andre Agassi and has built 79 new charter schools in poor neighborhoods around the country. The impact investment, which Ackman made via his charitable foundation, has netted annual returns north of 10%.
“Meanwhile, performance at his hedge fund has been languishing. Ackman has lost money for the past three years running, largely because of disastrous bets on two companies: Valeant and Herbalife. During that time, his net worth has dropped by more than half, to an estimated $1.1 billion. Recently he’s managed to turn things in the right direction, with his Pershing Square Holdings posting gains of 15.8% through September 30, according to the firm.
“Ackman’s foray into impact investing began in 2011 when Agassi, a tennis champ with eight Grand Slams under his belt, pitched him on his new fund, the Turner-Agassi Charter School Facilities Fund. Agassi, who had teamed up with professional impact investor Bobby Turner, promised Ackman that his capital would go toward the construction of 100 new charter schools for low-income children by 2020 in areas like the Bronx and Southwest Detroit—and that he would see double-digit returns, to boot. Ackman put in $10 million and agreed to take calls from other potential investors who were deciding whether to plunk down their own money. (Ackman, who began playing tennis at age 7, says he managed to beat Agassi in a doubles match—sometime after the two first met in 2011).
“With that, Ackman became a vocal and early proponent of impact investments, which are designed to reap a financial return as well as some positive social or environmental impact. His foundation has put a total of $42 million toward these investments in recent years, in areas ranging from affordable housing to financial inclusion to education…
“His largest impact investment to date is in the Turner-Agassi Charter School Facilities Fund, which has financed construction for 79 new charter schools that have served over 41,000 students since 2011. It generates returns for investors by leasing or selling new schools to charter school operators like KIPP at a profit. Ackman has put a combined $20 million into two funds. (Stewart Rahr, another U.S. billionaire and a Forbes 400 member, has put in $10 million.)..
“Ackman, who signed the Giving Pledge in 2012 and promised to donate more than half his wealth, has pledged or donated over $400 million to organizations like Teach for America and Human Rights Watch through his foundation.”
Someone should tell Mr. A koan that his investments and gifts are undermining a basic democratic institution and harming the teaching profession by sending inexperienced amateurs into classrooms to replace professional teachers. At the same time, he is helping to kill unions.
Maybe that, plus return on investment, is exactly what he wants.
Diane Ravitch's blog 
Only in America . . . .
Charters are designed to provide a revenue stream for the already wealthy. Hedge funds exploit weaknesses. As long as we have laws like the New Market Tax Credits on the books, we are inviting the destruction of public education. These tax advantages along with a host of other loopholes written into the tax code invite investors to use public dollars to build their private wealth! We need to stop incentivizing the destruction of public education!
I keep stating that Charters and Vouchers = JIM CROW.
Do people “see” this connection or are they just brainwashed and/or don’t know history?
Yes, retired colleague. The New Markets Tax Credit was the true beginning of the end of public education in the United States. Subsidized, double-dipping private investments with all risk and loss taken by the public, the NMTC law is a model of corruption.
Profits are everything. There is little risk to the hedge fund investors in charter schools as long as these privately managed schools take in taxpayer money and also create “new markerts” by reducing the financial resources for public schools.
reducing — and redirecting.
Most of the wealthiest 1-percent are not concerned about maintaining a democracy in the United States because they don’t worry about what will happen when the democracy is gone. They are the wealthiest and most powerful 1-percent. They will be in charge. Their wealth and power will protect them when they break laws even murder and rape.
The rest of us are just numbered consumer widgets to be milked for every penny possible and the tossed aside when we are not useful to them anymore.
Credit is due to David Brooks, George Will, Brookings, AEI,… With luck, all of the people involved make it to a list that is remembered when the predictable outcome happens.
[…] (Barnum, 2019). It’s no secret that hedge funds love to invest in charter schools (Ravitch, 2018). It’s fundamentally free taxpayer money that is not under the same scrutiny as it would be in […]