Politics & Government

May 10, 2014

EXCLUSIVE: SC parents pressured to donate to scholarship group

The leader of a West Columbia private school says her students’ parents are being pressured to donate to the new private-school choice program, created to help parents of children with disabilities afford private school.

The leader of a West Columbia private school says her students’ parents are being pressured to donate to the new private-school choice program, created to help parents of children with disabilities afford private school.

The pressure, said Susan Thomas, head of Glenforest School, is coming from Jeff Davis with Palmetto Kids First – one of five nonprofits set up this year to grant private-school scholarships made possible through a new state tax credit.

Emails to parents leave the impression – without directly offering a quid pro quo – that if the parents donate to Palmetto Kids, it will grant them a scholarship, Thomas said.

That quid-pro-quo arrangement is illegal, under the new S.C. private-school choice law, which says donors to scholarship-granting organizations cannot designate the students or schools that will benefit from their contributions. That controversial one-year law is up for renewal this spring before the Legislature.

Lawmakers included that rule to prevent the scholarship program from becoming, in practice, primarily a way for parents to get a tax break on the money they already are paying for private-school tuition.

That donate-for-a-tax-break and, then, get your money back in the form of a grant two-step was happening in Georgia after a broader tax-credit program in that state passed, a Southern Education Foundation report found.

In Georgia, where the state has forgone hundreds of millions in tax revenues for the scholarship program, donors could specify what schools, but not students, their money would benefit. The result, the report found, was very little growth in private-school enrollment among the needy children that the Georgia program – like the S.C. program – supposedly was to benefit. Instead, children already going to private schools were getting most of the scholarships.

Thomas said she wants to make sure her parents are following the law in giving, if they choose to donate. But Davis’ appeals make her wonder if he intends for parents to think they will get a scholarship for donating.

In an April email to parents, Davis, who helped set up a private-school scholarship organization in Georgia, wrote to Glenforest parents: “We have a very short timeframe and we want to provide scholarships to all of our remaining Glenforest School families. ... We can do it as evidenced by the fact Georgia raised $58 million ... in just 22 days. With S.C. tax credits, a $175,000 goal should be very easy for a school like Glenforest.”

The impression parents got from the email, Thomas said, is: “You get your donors – your parents, whoever – to give, and they are going to get this free money, and they will get a scholarship.

“When I read the (S.C. law governing the program), it was pretty clear to me that the money could not be earmarked for a school or a student,” Thomas said. “It has become ever clearer to me that it seems as if there’s a hint of tit for tat.”

Davis said he has made clear that donations cannot be designated for students or schools but few people – parents, schools, even accountants – clearly understand the tax-credit program.

“We preach that all day long. There is no quid pro quo,” meaning something for something, he said, adding in the first year of the new scholarship program it is inevitable that, “People are going to get confused.”

In practice, Davis – who S.C. law bars from serving on the board of Palmetto Kids because of his recent bankruptcy, stemming from a failed Georgia investment deal – said his goal is to identify students in the greatest need and give them scholarships first.

But Davis said he also considers in awarding scholarships – without direction from donors, which the law prohibits – how much a private school has “embraced” the scholarship program through donating to it, spreading the word or identifying potential donors.

Nothing in the law prohibits that, Davis said.

‘What’s best for the child’

Lawmakers and other education and private-school choice advocates say that pressuring parents to give goes against the spirit of why the law was passed.

“I’m disappointed that the focus isn’t on, ‘Let’s find a child with the most need and get him or her the scholarship,’ ” said state Sen. Kevin Bryant, R-Anderson, whose legislation led to the program.

Bryant said lawmakers, now considering whether to approve the tax-credit scholarship program for another year, are looking into ways to improve the best practices required of organizations that grant scholarship money.

S.C. law does not require that the scholarship programs disclose their donors or the recipients of scholarships. Instead, it relies on a honor system so that donors will not illegally dictate scholarship recipients.

But state Sen. Wes Hayes, R-York, said any changes in the S.C. program may need to wait until next year, when the program comes up again for reauthorization. Hayes added whether parents or schools donate to a nonprofit should not be a factor in who gets scholarships.

“It should be solely based on what’s best for the child,” he said.

‘Donations to a good cause’

Thomas said she grew concerned when emails from Davis were urging Glenforest parents to contribute in a way that suggested that receiving a scholarship was dependent on the school’s giving.

In April emails to Glenforest parents and school officials, Davis paired the school’s scholarship requests with a pitch for donations.

To school leaders, Davis said applications from students at the school had reached $200,000.

“Doable, but we have to somehow get past whatever hurdle the board especially might have. They are typically our best source of donor referrals (without having to go to parents to spread the word as well – which we have already had to do),” Davis wrote.

To parents, Davis wrote he had paperwork for 14 second-semester scholarships, then added in bold print, “Now we just need to get the tax credit donations. As of today the number of Glenforest families ... who have donated to the program is approximately ... ZERO?”

Thomas said the tone of the emails implied parents and schools are required to participate if they want to benefit. Davis also asked for a list of the school’s donors, which Thomas said she declined to provide.

Thomas said she worried about Glenforest’s donors donating to Davis’ Palmetto Kids.

“It could actually be a losing proposition for us,” she said. “Suppose our donors give to his organization, instead of us, and our families do not benefit?”

The exchange between Davis and the school ran counter to how Thomas thought the scholarship program would run. Thomas said she “was thinking corporate people, making donations to a good cause” were going to be the main contributors to the program, which would then identify students in need for scholarships.

Helping those most in need

Last year, when the General Assembly adopted the program, private-school choice advocates said the program would help children with disabilities move from schools that did not meet their needs into private schools that did. Advocates also said it would provide relief to parents who choose to pay private-school tuition for their special-needs children.

Focusing narrowly on children with disabilities – as opposed to all students – helped the program pass, despite hesitation from private-school choice detractors.

Through the program, nonprofits like Davis’ Palmetto Kids give scholarships to students with disabilities to help them pay for private-school tuition. Taxpayers who donate to the nonprofits can claim a dollar-for-dollar tax credit eliminating up to 60 percent of their tax liability. Up to $8 million in credits are available on a first-come, first-served basis.

Parents who donate can get the tax credit. They also can apply for a scholarship. If their child is awarded a scholarship, they get a credit, lowering their state taxes, and help paying part of the cost of private-school tuition.

Davis said about $100,000 of the $1.1 million his organization has raised has come from parents whose children attend private schools where students receive scholarships. Davis would not say how many of those donations have gone directly back to the donor-parents in the form of scholarships.

Donors cannot designate their contributions for any school or student. But there is some connection between donations and who gets scholarships, Davis said, out of fairness to the schools.

It would be unfair to take money raised by schools that generate the most participation in the program – through supportive board members that help with fundraising and parents who give whatever they can – and give that money to schools where board members do not return his phone calls, he said.

Instead, schools must help get the word out and encourage others to take advantage of the tax credits that make the scholarships possible, he said.

Other schools have been more receptive to Davis’ appeals.

Anne Vickers, head of the Sandhills School in Columbia, said her school would love to help Davis raise more money for the program if it could.

The Barclay School, a small school with about six special-needs students on the Columbia College campus, has received four scholarships and has two more in the works, Davis said.

While the school does not have a strong donor base that can give a lot of support to the scholarship program, Davis said the schools’ leaders have embraced the program and do whatever he asks to promote it.

Gillian Barclay, the school’s leader, said Davis’ organization has been “life-changing,” allowing her school to worry less about fundraising and focus its efforts on doing what they do best: teach.

‘No clue who has written checks’

Another S.C. nonprofit scholarship organization approaches soliciting donations differently.

Phillip Cease – who is leading a new scholarship nonprofit, Donors Enriching Students’ Knowledge, formerly known as South Carolinians for Responsible Government – said private schools are “not responsible for fundraising.”

While he and other private-school choice advocates want schools to notify parents and donors about the program, “I’m not going to schools asking them to send donors to me,” Cease said.

Cease, the fundraiser for Donors Enriching, said there is a conflict of interest in having the fundraising and grant-giving sides of a nonprofit closely aligned. To separate the two, Cease said his group has formed a small board to review applications.

“I don’t want to have any part in making decisions (about who gets scholarships), just to remove any possibility or any appearances” of a conflict of interest, he said. “The people who will be looking at the applications will have no clue who has written checks.”

Davis said, ideally, he would like to have a “Chinese wall” between the fundraising and grant-giving sides of Palmetto Kids First. Eventually, he said, that is his plan.

But for now, he said he wants to get the program going, by encouraging donations and granting scholarships.

Davis’ nonprofit has raised more money than any other nonprofits – surpassing $1 million in donations as of Friday, he announced on his Facebook page.

S.C. Private-School Choice

Palmetto Kids First Scholarship Program has raised the most money of any nonprofit participating in the state’s new private-school choice program. A look, by the numbers, at how the nonprofit is doing:

$1.1 million - Amount raised so far from 132 donors

$102,000 - Amount raised in the week before May 6

$100,000 - Amount of donations coming from parents whose children attend private school

$870,844 - Amount in scholarships granted to 16 different private schools

$192,274 - Money left to spend

$1.5 million - Amount the nonprofit hopes to raise in three weeks, so it can give a scholarship to all applicants

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