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United Way: BCG funding arrangement messy, but no conspiracy

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by Benjamin Herold for the Notebook and WHYY/Newsworks

 

Private philanthropists have been using a complicated series of pass-throughs to fund the Boston Consulting Group’s far-reaching work to help overhaul the School District of Philadelphia.  

But where critics see a coordinated back-channel effort to privatize the city’s public education system, Jill Michal sees evidence of an unusual consensus among Philadelphia’s civic leadership to actively engage in the city’s troubled school system.

“We’re all kind of rallying around each other,” said Michal, executive director of the United Way of Southeastern Pennsylvania, which has served as a fiscal conduit for $2.7 million in private donations earmarked for BCG.

“From [William Penn Foundation president] Jeremy Nowak to Rob Wonderling at the Chamber of Commerce to [School Reform Commission Chairman] Pedro Ramos to other leaders throughout the region, we’re all finally sitting in a room together saying, ‘How can we help?’”

Friday, the Notebook/NewsWorks obtained under state Right to Know law previously unreleased “statements of work” (Phase II, Phase III) outlining BCG’s extensive assignments, as well as two memoranda of understanding (Phase II, Phase III) detailing the financial relationship between BCG, the United Way, and William Penn.

To date, according to the documents, three payments have been made to BCG:

  • $750,000 for Phase I of the firm’s work, completed March 29
  • $700,000 for Phase II, completed April 27
  • $1,250,000 for Phase III, completed June 11

From the beginning, Michal said, the arrangement has been “fungible.”

In Phase I, William Penn made a grant to the United Way, which then passed a portion the money on to the District, which then paid BCG.

“The first time around, we wanted to make sure everybody had skin in the game,” Michal said.  “But it was just too complicated.”

In Phase II, United Way directly paid BCG the balance of the initial William Penn grant after the District and then Nowak had approved BCG’s work.

And in Phase III, Nowak arranged for a number of private donors to contribute to the United Way, which then pooled the resources and made a single payment to BCG after the District and Nowak had approved the firm’s work.

The complicated arrangements have been successful, contended Michal, because all the involved donors agreed to support BCG’s “entire project.”

“Jeremy [Nowak] was intentional in saying, ‘This is not something [donors] can have a lot of strings attached to. It has to be in the best interests of the work, not any individual contributor,” Michal said.

For his part, Nowak, who is now trying to raise more money to pay BCG, said he has been “very impressed” with the blue-chip consulting firm’s work.

“That’s why we continued to find additional funders so they could continue working for the District and SRC,” Nowak wrote in an email Friday.

And as for the grassroots concern that BCG is working behind closed doors to privatize the city’s public education system?

“It’s the dark place that everybody goes to right away, thinking that we’re trying to dismantle the District,” Michal said.

“I just wish we would let the conversation play out longer and actually look at the alternatives in an objective way.”

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