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Study: Voluntary support for public schools has grown, but not enough to offset tax losses

Researchers find students in high-poverty schools are less likely to benefit

• Oct. 23, 2014

FOR IMMEDIATE RELEASE

BLOOMINGTON, Ind. -- Nonprofit organizations dedicated to helping support public schools have grown dramatically over the past two decades. And they are raising a lot more money than a few years ago.

But the growth hasn't come close to offsetting the reduction in tax revenues for schools that came with the recent recession, according to a study by Indiana University researchers. And the support is uneven, with students in high-poverty schools less likely to benefit from voluntary fundraising.

"Despite the meteoric rise of school-supporting charities, voluntary contributions to public schools have not substantially changed the landscape when it comes to paying for public education," said Ashlyn Aiko Nelson, co-author of the study and an associate professor in the Indiana University School of Public and Environmental Affairs. "Our findings suggest that while voluntary support may help increase spending on public education in some districts, voluntary contributions do not solve the funding problems faced by many U.S. schools."

"The Rise of School-Supporting Nonprofits" appears in the current issue of the journal Education Finance and Policy. Authors are Nelson and Beth Gazley, also an associate professor in the School of Public and Environmental Affairs.

The researchers analyzed trends and relationships in data from thousands of U.S. nonprofit school-supporting organizations that filed annual IRS reports between 1995 and 2010. Findings included:

• The number of such organizations, including local school foundations, booster clubs and parent-teacher organizations, grew from 3,475 in 1995 to 11,453 in 2010.
• The money they raised, adjusted for inflation, grew from $197 million to $880 million, or nearly 350 percent.
• The share of school districts with at least one such nonprofit organization increased from 12 percent in 1995 to 29 percent in 2010.
• Large school districts are more likely to be served by at least one fundraising organization; but the money raised, per pupil, declines as district enrollment gets larger.

School districts with greater capacity -- as measured by property tax revenues per pupil, the share of individuals with a bachelor’s degree or more, median household income, and relatively low unemployment rates -- have higher probabilities of being served by at least one school-supporting nonprofit and receive more money, per pupil, from the nonprofits.

While school-supporting nonprofits have exploded in number and revenue, the researchers conclude the money they raise isn't enough to tip the balance in how schools are funded. Among school districts that got help from one or more nonprofit organization, average voluntary per-pupil funding in 2010 was $28; that compares to approximately $10,600 per student that public schools spent. Meanwhile, state tax receipts -- a key source of support for schools in many states -- have declined by 12 percent since the start of the Great Recession in 2008.

For a copy of the paper or to speak with Nelson or Gazley, contact Jim Hanchett at 812-856-5490 or jimhanch@indiana.edu.

Related Links

• School of Public and Environmental Affairs