Mark Zuckerberg / Photo by TechCrunch
Helaine Olen,  May 15, 2014

Zuckerberg Gets Schooled in Newark

Mark Zuckerberg / Photo by TechCrunch
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Was the hoodied billionaire hoodwinked?

That’s one conclusion one could reach after reading Dale Russakoff’s exhaustive piece in The New Yorker this week on Facebook founder and CEO Mark Zuckerberg’s $100 million challenge grant investment designed to jumpstart the underperforming Newark, New Jersey schools back in 2010.

Not only did Zuckerberg’s $100 million fail to significantly improve the district, but his funds vanished into a quagmire of controversial charter schools, union contracts, and the pockets of connected education reform activists, as Rusakoff reports.

The hoodied billionaire had wanted to give the best teachers bonuses equaling 50 percent of their pay, a routine event for Facebook engineers. Instead, he found his funds going to pay $1,000 a day educational consultants. And now that Zuckerberg’s money has either been spent or is fully committed, the Newark school district has announced plans to lay off more than 1,800 teachers and other district employees over the next several years.

How could it all go wrong?

Zuckerberg reportedly became interested in the Newark only after hearing a pitch from then-mayor Corey Booker when the two attended the elite annual Sun Valley media conference hosted by billionaire investor Herb Allen. Never mind the fact that Zuck had never visited Newark, or that he openly admitted he knew next to nothing about “education or philanthropy.” He wanted to make a difference. Besides, he was sure he could learn from the experience.

Soon the naïve Zuckerberg was on The Oprah Winfrey Show, sans famous hoodie, accompanied by Booker and New Jersey governor Chris Christie, announcing the plan. Winfrey, who introduced the nation to The Secret—Rhonda Byrne’s 2006 bestselling opus proclaiming that one could magically attract success if one visualized and wished for it hard enough—apparently believed Zuckerberg had equally mystical powers, that the magnetic pull of his billions would magically attract improvements to the Newark schools and the lives of its poverty-struck students.

Okay, fine, Oprah didn’t put it quite like that. But this magical thinking is all but the received wisdom, at least as far as our current philanthropic industrial state is concerned.

It is one of the shibboleths of our current gilded age that a combination of money and smarts can fix almost any problem or issue. People just need to be shown the right way to do things, preferably without the input of the actual people and institutions supposedly being helped.

It’s a big business, this virtuous spending loop. The same day The New Yorker published the Zuckerberg piece online, the Robin Hood Foundation, the charitable foundation founded by hedge fund star Paul Tudor Jones, held its annual fundraising dinner in New York City. The event raised $60 million for various New York City social services.

According to Bloomberg, a $250,000 Robin Hood table was advertised as paying for preschool for 2,500 children. What about increasing taxes and letting the people decide what they want? Pshaw. How Thomas Piketty of you to even think about it. Billionaires know best. They’ve got the track record after all. Facebook or Newark’s First Avenue Elementary? Any self-made man should be up to the challenge of both.

No one mentioned, while listening to a live private Bruno Mars performance at Monday night’s Robin Hood gala, that New York City Mayor Bill de Blasio got his nose swatted by many of these very same millionaires and billionaires earlier this year, when he proposed increasing the New York City income tax on those earning more than $500,000 annually to pay for free pre-kindergarten for every New York City child. De Blasio’s plan would have raised an estimated $532 million. It wasn’t very popular among the people who would have been taxed, and it was quickly dismissed.

Do you need me to point out that that amount is more than eight times the amount voluntarily raised by the Robin Hood dinner?

So what’s the motivation here? For some insight, let’s turn to Peter Buffett, the musician son of fabled investor Warren Buffett. He became much more serious about his own charitable giving after his father announced in 2006 that he would give much of his fortune to the less fortunate and to the good causes that would hopefully help them.

The younger Buffett turned cynical fairly quick. “Philanthropic colonialism,” he proclaimed on the op-ed pages of The New York Times last year. “As more lives and communities are destroyed by the system that creates vast amounts of wealth for the few, the more heroic is sounds to ‘give back’ . . . . But this just keeps the existing structure of inequality in place.”

It seems likely Newark residents figured that part out. All this billionaire bought and paid for education reform resulted in little in the way education gains for the actual students. On Tuesday, Ras Baraka, a city council member, principal of one of the city’s high schools and opponent of the Zuckerberg inspired reforms, was given the nod by Newark’s voters to serve as their next mayor. His successful campaign slogan? “When I become mayor, we become mayor.”

As for Zuckerberg, he still has more than $1 billion in his charitable foundation. So far, it is unspent. It’s his money, after all.

Helaine Olen is the author of Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, a contributing editor for Pacific Standard, and a regular Slate contributor.

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