Wal-Mart heirs' hefty donations influencing education reform

By Jim Hopkins
USA Today

Wal-Mart's founders transformed U.S. business. Now they are taking on a very different subject: the nation's public schools.

The Waltons — the nation's richest family — have quietly become top philanthropists in education reform, including controversial charter-school and school-voucher causes. They have donated at least $701 million to education charities since 1998.

That pales beside the $1.05 billion given to education by the Bill & Melinda Gates Foundation. But the Waltons' giving could soar to as much as $1 billion a year as they shift more riches to charity. How much more? John Walton, one of founder Sam Walton's four children, says the family expects to donate as much as 20 percent of its $100 billion in Wal-Mart stock.

The shift could spur far-reaching education reform, say experts on philanthropy and education. "That could totally transform public education in this country. It's a mighty thumb on the scale," says Chuck Collins, co-founder of Responsible Wealth, a group critical of the influence of the megarich.

Redefining charity

The Walton giving is another example of how Wal-Mart, the nation's biggest company, is shaking up fields far beyond retailing. It also illustrates how new entrepreneurial fortunes — like Bill Gates of Microsoft — are redefining philanthropy and charity.

Walton money has helped pay for 62,000 scholarships for needy children in private schools across the United States. Gifts in 2002, the most recent year available, range from huge — $300 million to the University of Arkansas — to not as huge: $7,549.71 to the Colorado League of Charter Schools.

Walton money also extends to education politics. John Walton gave $100,000 to an election campaign in 2000 to support back-to-basics education reform in San Diego.

Walton, 57, who is leading the family's giving, says improving education could have the broadest impact on the most pressing problems. "Everything from poverty to productivity to crime to standard of living," he says.

Public vs. private schools

Allies say the family's giving is injecting competition between public and private schools that will produce better-educated children, and so reduce unemployment, crime and other social ills. "There are so many great things that can happen when someone is well-educated," says Tim Draper, a prominent Silicon Valley investor who has spent millions to promote school vouchers.

Critics say the Waltons could do the opposite — weakening public schools by encouraging the flow of tax dollars to less-regulated charter schools and to religious and other private schools through vouchers. The prospect of the Walton billions is "alarming," says Marc Egan, head of anti-voucher efforts at the National School Boards Association.

That worry comes partly from the Walton legacy at Wal-Mart. The retailer has reshaped commerce in the 42 years since it began as a five-and-dime in Rogers, Ark. Its demand for rock-bottom prices has forced suppliers such as Kraft Foods and competitors such as Kmart to revamp productivity and other practices.

Now that approach may be brought to education reform. Indeed, Sam Walton, shortly before he died in 1992, spoke about linking the "Wal-Mart way of doing things" to philanthropy. He referred to education projects that challenge the status quo.

'Revolution in education'

Education was his top worry in America's ability to compete globally. He said U.S. schools lagged behind those of other nations. "I'd like to see an all-out revolution in education," he wrote in his autobiography.

He then pledged for the future as much as 20 percent of the family fortune — the share he owned with his wife, Helen Walton. It is an amount the family is still considering. "That's the most likely outcome," John Walton said in a rare interview last month.

The timetable has not been finalized, Walton says. But the family will likely be forced to take action because of estate taxes potentially due when Helen Walton, 84, dies, leaving behind as much as 20 percent of the family's Wal-Mart stock.

The Waltons have long avoided publicity. Most details of their giving and wealth are revealed in public documents filed with the IRS and Securities and Exchange Commission. The documents show that nearly 12 years after Sam Walton's death, the family's role in education reform has grown as:

• The value of their Wal-Mart stock quadrupled — giving them a far bigger education war chest. Moreover, Helen Walton and the four children will earn nearly $890 million in Wal-Mart dividends this year vs. $342 million just five years ago. The company last week boosted the dividend 44 percent.
• They have begun focusing more giving on private-school scholarships, charter schools and vouchers — revealing clues to how they'll target giving as their family charitable foundations grow. With that shift, the Waltons are joining a hotly debated issue.

Charter schools, in 37 states and the District of Columbia, are public schools financed with tax dollars. Oversight may be given to colleges or other community groups. Critics, such as People for the American Way, say charter schools are sometimes weaker than public schools because they are less regulated in areas such as student testing and teacher certification.

Vouchers let families use tax dollars to pay tuition at religious and other private schools. They are available in Milwaukee, Cleveland and Florida. They are the subject of a legal fight in Colorado heading to the state's Supreme Court. Compared with charter schools, vouchers draw far more opposition from groups favoring strict separation of church and state.