2. AbouttheAuthor:
Tory Read is a writer and multi-media artist based
in Denver. Her clients include U.S. foundations and
nonprofits and international aid organizations. She
earned her M.A. in Journalism from the University
of Missouri in 1991 and her B.A. in Comparative
Literature from Stanford University in 1984.
You can see more of her work at www.toryread.com.
2008
This report was made possible by a grant from
the Innovations in American Government Award,
a program of the Ash Institute for Democratic
Governance and Innovation at Harvard University’s
Kennedy School of Government.
3. Lessons from The Annie E. Casey Foundation’s
Strategic Support of Indianapolis Mayor Bart Peterson’s Charter Initiative
EARLYINVESTMENT
JUMP-STARTSCHANGE
n 2006, Indianapolis Mayor Bart Peter-
son’s charter school initiative received
Harvard University’s Innovations in
American Government Award. The prize was
the culmination of five years of careful de-
sign and implementation that was made pos-
sible by an early, strategic investment by the
Annie E. Casey Foundation.
Casey, led by its senior associate for edu-
cation Bruno V. Manno, made a relatively
modest multi-year investment that catalyzed
an innovative and ultimately successful gov-
ernment venture in public education that is
now self-sustaining. The Foundation’s sup-
port also played a crucial role in significantly
changing the public education landscape
in Indianapolis.
“Bruno is willing to fund things that dramati-
cally challenge the system,” said David Har-
ris, CEO of a new nonprofit called The Mind
Trust and the former director of the Mayor’s
charter initiative.
Charter schools are public schools that op-
erate with freedom from many of the laws
and regulations that constrain district public
schools. In return for this autonomy, char-
ter schools agree to performance contracts
that allows them to be closed if they do not
achieve results. Organizations called “char-
ter authorizers” oversee charter schools. In
Indianapolis, the authorizer is the mayor.
Results from Mayor Peterson’s charter
initiative are impressive. The first mayor-
I
Early Investment Jump-Starts Change 1
4. sponsored charter schools opened in 2002
with 479 students. Five years later, 16 mayor-
sponsored charter schools are open, serving
3,855 young people. Five of them are among
the top 10 most improved schools in Marion
County, where Indianapolis is located. Al-
most three quarters of students who attend
charter schools are children of color, and 67
percent are eligible for free or reduced price
lunch. For more on the schools’ outcomes,
see the sidebar “Indianapolis Charter Initia-
tive Results.”
As a direct consequence of the charter initia-
tive, at least three of the 11 school districts in
the county are changing what they do to bet-
ter serve low-income children. “If it only ben-
efits the kids who go to charter schools, we
haven’t succeeded,” said Mayor Bart Peter-
son,wholeftofficeinJanuary2008.“Ourgoal
is to help improve district schools and
create alternatives.”
Helping to amplify this influence and bring
fresh education talent to the city is The Mind
Trust, a new, Casey-supported organization
that grew out of the charter initiative. The
Mind Trust brings education innovators to
Indianapolis through its venture fund and its
fellowship program.
With the charter initiative and The Mind
Trust now moving at full speed, Indianapolis
has become one of just a few cities around
the country with a vibrant and growing
concentration of education entrepreneurs.
Hundreds of citizens are involved, millions
of public and private sector dollars are flow-
ing in, and thousands of children and fami-
lies are benefiting. And all of this activity got
started with critical early funding from the
Annie E. Casey Foundation.
Other donors and mayors can learn a lot from
the Indianapolis experience. Even though
Indianapolis is the only city where a mayor
can issue charters, the systems and supports
Indianapolis developed with Casey’s backing
are widely applicable to authorizers of all
kinds, and mayors everywhere can support
charter schools even without formal charter-
ing authority. This white paper elaborates
the Annie E. Casey Foundation’s bold and
strategic early-stage investment in an inno-
vative but at the time unproven initiative.
It shows how a series of fairly small grants,
coming at the right time and focused on the
right activities, can serve to jump start wide-
ranging change in a community.
Casey’s Investments in the Mayor’s
Charter Initiative: An Overview
Shortly after the Indiana legislature gave the
Mayor of Indianapolis chartering author-
ity, Casey’s Bruno Manno reached out to
Mayor Peterson. “The charter initiative in
Indianapolis was attractive because it had
the potential to be a model for a new way
of authorizing charter schools and oversee-
ing public education,” said Manno. “I talked
to the Mayor, and I went to visit him and his
team. They had done research on best prac-
tices and had a good plan.”
Based on Manno’s recommendation, the An-
nie E. Casey Foundation made a small initial
investment of $66,000. This seed money sup-
ported the development of a school selection
and authorizing process that has enabled
the Mayor’s Charter Office to approve only
high-quality charter schools. After this initial
success, Casey made five successive annual
grants of $125,000 each to support the cre-
ation of a rigorous charter school account-
ability and monitoring system.
“Casey funded the development of the ap-
plication and accountability systems, and
those systems laid the groundwork for suc-
cess,” said Bryan Hassel, co-director of the
education consulting firm Public Impact and
an indispensable advisor to the Indianapolis
initiative from its inception. “The public and
private leverage has all hinged on the quality
of that early, Casey-supported work.”
The Foundation’s investment in these two
critically important activities made a signifi-
cant contribution to attracting $18.4 million
of other philanthropic support to individual
charter schools, $1.4 million to the Mayor’s
Charter Office, and millions in federal, state,
and local dollars that have flowed to charter
schools after they opened.
Casey made another major contribution by
using an investment tool known as a program
related investment (PRI) to attract partners
and resources to create a facilities loan fund.
A PRI in the form of a $1 million loan guaran-
tee secured $20 million from a national bank
for the fund. In addition, early support from
the Foundation to The Mind Trust has helped
the organization attract other local and na-
tional donors.
Although the Foundation’s investments have
comprised just a small fraction of the re-
sources the charter initiative and The Mind
Trust have attracted to public education in
Indianapolis, the value of the Foundation’s
support far outstrips its dollar amount. Casey
support came early, it came steadily, and it
focused on important activities that formed
the bedrock for all subsequent work.
Application & Authorizing System
Helps Select Top Flight Schools
In 2001, Indiana became the 37th state to
enact a charter school law. Unlike any other
state, however, Indiana granted the India-
napolis Mayor the power to authorize char-
ter schools.
Because Mayor Peterson entered the autho-
rizing game a decade after the first charter
schools opened in Minnesota, his initiative
benefited from other states’ experiences. One
big lesson learned was that a high-quality
charter school selection and authorizing pro-
cess is critical to later charter school success.
The day after Mayor Peterson received char-
teringauthority,heannouncedthetimelinefor
implementation. “We knew what steps to take,
and we knew we needed help on developing
the application packet,” said David Harris. “We
also started putting a community-based board
of advisors together immediately.”
Early Investment Jump-Starts Change2
5. Impact
• 16 charter schools open in 2006-2007, serving 3,855 students.
• 5 of 10 most improved schools in Marion County in 2006-2007 are
mayor-sponsored charter schools, which make up just 6 percent of
the county’s schools.
• Students gained ground on or stayed even with national peers in
89 percent of subjects and grades in 2007.
• Students gained ground on or stayed even with state peers in 96 percent
of subjects and grades in 2007.
• 82 percent of parents were satisfied with their children’s charter schools
in 2007.
• 78 percent of staff was satisfied with their charter schools in 2007.
• More than 1,000 students were on the wait list for mayor-sponsored charter
schools in 2006-2007.
Influence
• The initiative has increased national interest in mayoral role in public
education. The Mayor of St. Louis is seeking the authority to authorize
charter schools.
• Harvard University’s Innovations in American Government Award in
2006 has attracted ongoing national media coverage.
• Leading national models are running Indianapolis charter schools,
including KIPP, Big Picture Company, Expeditionary Learning Outward
Bound, and Lighthouse Academies.
• Several strong local organizations are running charter schools, includ-
ing Goodwill Industries of Central Indiana, Fairbanks Hospital, Christel
House, Inc., and Indiana Black Expo.
• 3 area school districts are partnering with mayor-sponsored
charter schools.
• 131 citizens serve on charter school boards.
Leverage
• $20 million in private capital loan funds for charter facilities.
• $18.4 million in private philanthropic support to individual
charter schools.
• $18 million in city and state public education funds to Indianapolis
charter schools.
• $5.5 million in federal charter school startup funds to Indianapolis
charter schools.
• $1.4 million of philanthropic support to the Mayor’s Charter Office.
• City of Indianapolis funds five full-time staff members and office
expenses for the Mayor’s Charter Office.
• $6.1 million in private philanthropic support to The Mind Trust.
IndianapolisCharter
Initiative
Results
Mayor Peterson was highly motivated to cre-
ate a transparent and rigorous process. “An
elected official has to be able to explain his
rationale for making decisions,” said Har-
ris. “We needed to have a solid authorizing
process in place from the outset so that, if
questioned, the Mayor could show consistent
and sound reasons for saying ‘yes’ or ‘no’ to
different applicants.”
Implementation funds were not included in
the legislation, but the Mayor was able to
fund core implementation activities through
the city budget, including salary for three
staff members, office overhead, and some
consulting fees. However, the initiative
needed additional support to hire experts
to assist with developing the application and
authorizing system and to help evaluate ap-
plications. Casey’s first year grant of $66,000
provided this essential support.
“This money was critical to getting the appli-
cation process right,” said Harris. In addition,
Manno himself helped inspire Mayor Peter-
son’s board of advisors to make the charter
application process rigorous. Harris recalled,
“Bruno attended a board meeting and told
the board: ‘Make getting a charter from the
Mayor mean something.’”
With the Foundation’s backing, Mayor Peter-
son’s charter team was able to look beyond
itself for answers and advice. “We maximized
the impact of the first year Casey investment
by bringing in the nation’s premiere account-
ability experts,” said Harris. “We learned
from those experts and used that first year
to build our own capacity so we would be
less dependent on external support later on.
With every subsequent round of the applica-
tion process, we have become less and less
dependent on external input.”
The Charter Office used Casey funding to hire
experts who reviewed written charter appli-
cations and participated on review panels.
These national experts supplemented lo-
cal people on the panels, who were able to
assess the capacity and track record of
local applicants.
Early Investment Jump-Starts Change 3
6. Within a few months, the initiative had devel-
oped a rigorous application process that gave
reviewers the information they needed to
make good decisions. The system is very com-
petitive and extremely selective – as of the
end of 2007, the Mayor’s Charter Office had
approved only 17 of 90 total applications.
The application process has also helped as-
piring charter schools make a good plan.
“The application was very, very thorough,”
said Don Stinson, superintendent of nearby
Decatur school district. “We had to do a lot
of planning, have our ducks in a row. They
had to believe we had the capacity to pull
it off.” Stinson’s district was the first to take
the unusual step of having the Indianapolis
Mayor authorize a charter school the district
was organizing, rather than create its own
authorizing process.
A Well-Designed Accountability
System Helps Schools Succeed
As soon as the authorizing process was in
place, the charter team sought additional
Casey support to create an accountability
system that would enable the Mayor’s Char-
ter Office to closely monitor school perfor-
mance. Support from the Foundation made
it possible for the charter team to hire the
experts it needed to develop a top-notch sys-
tem from the ground up.
“Accountability systems were far less devel-
oped nationally than we expected,” said Bry-
an Hassel. “We knew we had to answer two
key questions: What do we need to measure?
How do we report to the public?”
Since Indiana gave its state tests only in
the fall, Mayor Peterson’s charter team
realized the state tests couldn’t be used
to measure how much students learned
over the school year. The team decided to
add a nationally normed test in both the
fall and the spring, making it possible to
track student growth over time, as well
as compare Indianapolis charter perfor-
mance with performance in schools across |
the country.
The charter team also wanted to measure
the quality of teaching and learning, parent
and staff satisfaction, and how well schools
were governed and managed. “District ac-
countability systems focus on the number of
students per class and what degrees teachers
have,” said Don Stinson. “The charter school
accountability system focuses on instruction
and learning.”
At the same time, the team wanted to cre-
ate a system that helped schools learn from
their experience and improve programs
and performance accordingly. The result
is a thorough accountability process that
also helps schools assess how they are do-
ing. It includes surveys of parents and staff
and a series of intensive site visits. The on-
site reviewers interview students, parents,
teachers, and administration staff, and they
review tests, portfolios, and other student
work. Then they make recommendations on
how the school can improve.
“The site team visits feel more like a con-
sulting effort than an audit,” said Scott
Bess, chief operating office of Indianapo-
lis Metropolitan High School (The MET), a
mayor-sponsored charter school operated
by Goodwill Industries of Central Indiana.
“Site teams talk to everybody, and we have
a dialogue. We get back things we need to
know, and we have adapted a lot in our first
two years based on feedback from the site
team. We need to adapt quickly, so the ear-
liest students don’t suffer.”
“We work together with the team in a dia-
logue,” said Stinson. “We discuss the issues
the site visitors have discovered and how to
fix them. When the team comes in again the
following year, we pick up where we left off.
It is a living process.”
In the third year, schools conduct a self-
study, critically analyzing their own perfor-
mance using the accountability system indi-
cators and then presenting their findings to
an expert team for feedback.
“The accountability process is tough, but
it’s helpful,” said Leondra Redford-Ddungu,
a teacher at The MET, which serves trou-
bled teens likely to fail at traditional public
high schools.
Every year, the Mayor’s Charter Office pub-
lishes a highly readable accountability re-
port that is widely distributed to parents,
educators, and others in print and on the
initiative’s web site. The report provides
detailed information, including both good
and bad news, about each charter school
and student performance over time, mak-
ing it a valuable tool that drives school im-
provement. “It shows a pre-determined set
of data on every school, every year, regard-
less of whether this makes the schools or the
Mayor’s Office look good,” said Hassel.
Casey'sinvestmentcatalyzed
aninnovativeandultimatelysuccessful
governmentventureinpubliceducation
thatisnowself-sustaining.
Early Investment Jump-Starts Change4
7. is accessible to low-income students and em-
phasizes civic responsibility and community
service. The southeast neighborhoods of In-
dianapolis started Southeast Neighborhood
School of Excellence (SENSE), a community-
driven elementary school.
The Initiative has Local
and National Influence
After almost seven years, the Indianapolis
charter initiative is having significant lo-
cal and national influence as a result of the
high-quality work that grew out of the crucial
Casey-supported early activities.
First, the charter initiative is having an influ-
ence on local school districts. In the begin-
ning, the 11 districts in Marion County saw
the charter initiative as a potential threat to
their enrollment and funding, but Mayor Pe-
terson met with the superintendents often,
developed strong relationships, and diffused
their anxiety over time.
“Sixteen new schools are bringing ideas, cre-
ativity, and innovation to public education,
encouraging change within the districts that
havestrong,reform-mindedsuperintendents
and providing models for them to follow,”
said the Mayor.
Three superintendents are now either op-
erating their own schools through mayoral
charters or collaborating with mayor-spon-
sored charter schools. Decatur school dis-
trict has chartered Decatur Discovery Acad-
emy, an expeditionary learning high school.
“The Mayor’s charters have forced us to step
back and say, ‘We’ve got to do things differ-
ently, we need to have some options,’” said
Superintendent Don Stinson. “They are forc-
ing all of us to face the failure of our district
schools and think about innovation.”
In Lawrence school district, the superin-
tendent joined forces with a local com-
munity college to create an early college
high school in which juniors and seniors
can take college courses and earn an asso-
ciates degree.
our case to the public,” said David Harris.
“We had the facts and effectively convinced
the public that we were right. We had docu-
mentation, we had effective tools for gather-
ing the data, and the accountability system
helped us close a school where kids were
not learning.”
Local Partnerships Key to Success
The Annie E. Casey Foundation’s early sup-
port was important in part because it brought
additional resources into the initiative, in-
cluding the financial resources described
above, as well as powerful partnerships. A
key ingredient to the now thriving charter
initiative is enthusiastic participation by lo-
cal businesses and groups. As of December
2007, a remarkable 113 individuals serve on
charter school boards of directors, and sev-
eral of the city’s most well-respected busi-
nesses and community groups have helped
start charter schools.
Goodwill Industries of Central Indiana, a
prominent and reputable member of the In-
dianapolis community, was awarded a char-
ter at the end of 2004 to open the group of
high school academies called The MET.
Goodwill invested more than $3.5 million
of its own money to equip and open its
school facilities.
Fairbanks Hospital, another well-known lo-
cal partner, has created a charter school
called Hope Academy for high school stu-
dents recovering from drug and alcohol ad-
diction. Other Indianapolis organizations
that have opened mayor-sponsored charter
schools include Christel House, Inc. and In-
diana Black Expo. Currently in the works is a
building trades charter high school, in which
local unions will provide apprenticeships to
students after they graduate as well as help
them access higher education.
Neighborhood groups have also started char-
ter schools. Leaders from the Herron Morton
communitystartedHerronHighSchool,which
offers a classical liberal arts curriculum that
“The accountability system is the heart and
soul of our charter program,” said Mayor Pe-
terson. “It ensures quality and transparency.”
Casey’s early investments were essential to
creating the high-quality accountability sys-
tem. “Foundation funds paid for the design
work,andtheyalsocontributedtotheexpert
sitevisitsandsurveysintheearlyyears,”said
Hassel.“Astheinitiativetookholdandgained
public support, Mayor Peterson was able to
increase the city’s own commitment. Now,
the entire accountability system runs on the
city’s budget.”
Accountability System Leads
to Charter School Closing
Thanks to the Casey investment, the system
closely monitors school performance and
implementation, and it is already working. In
2005, Mayor Peterson closed Flanner House
Higher Learning Center because of problems
that first came to light through the account-
ability system.
The High Learning Center opened in 2003
to serve high-school dropouts. In the first
year review, site visitors expressed concern
about a number of irregularities. Very few of
the school’s students appeared to be gain-
ing ground academically, student counts
appeared off, and there was evidence of fi-
nancial irregularities. These issues surfaced
again in the second-year review.
The Mayor’s Charter Office brought the con-
cern about student counts to the attention
of the state, which then did its own review,
finding that the school had over-counted its
students. This conclusion, combined with
two years of data amassed through the ac-
countability system, convinced Mayor Peter-
son to close the school, sending a clear mes-
sage to the public that the initiative valued
quality above all else.
“We were able to close the school in the face
of the typical backlash because we gath-
ered data, reported it, and clearly laid out
Early Investment Jump-Starts Change 5
8. Indianapolis Public Schools (IPS) is by far the
largest school district in Marion County, en-
rolling 33,000 students in 2007. Enrollment
has declined every year since 2001, and the
district has been forced to lay off teachers and
close more than a dozen school buildings.
“[Dr. Eugene] White came on board as IPS su-
perintendent in the middle of the flap over
the charter schools,” said Steve Tegarden,
former superintendent of an area school
district. “IPS is strapped for resources and
enrollment is continuing to decline, so he’s
focusing on reinventing IPS and borrowing
from successful charter ideas to do it.”
Under Dr. White, two IPS schools are sharing
a district building with a mayor-sponsored
school run by the successful Knowledge is
Power Program (KIPP), and the IPS schools
in that facility are borrowing heavily from
the KIPP model. Both IPS principals attended
KIPP’s national principal training program,
and the district won concessions from the
teachers union to allow teachers at the two
schools to devote the additional time re-
quired by the KIPP model.
The charter initiative is also having an influ-
ence on the overall public education discus-
sion in Marion County. The conversation
changed significantly from an era when it
was polarized between reformers and rep-
resentatives of the status quo. “There was
not a lot of constructive dialogue,” said
Mayor Peterson. “We’ve moved way beyond
that now.”
Participation in the public education discus-
sion has also expanded to include business
leaders and community groups. “I under-
stand much better now, from my first-hand
experience, what educators and schools are
up against,” said Jim McClelland, president
∑• Made it possible to open 16 new public schools, which have collectively
attracted over $18 million in private philanthropic support and more than
$23 million in public sector dollars.
∑ ≥• Enabled the charter initiative to create high-quality authorizing and
accountability systems so that: reviewers select schools that can deliver,
the Charter Office holds schools accountable, and schools learn from
experience to improve performance.
∑ • Funded crucial bedrock activities that in turn instilled other donors with
confidence in the overall initiative.
∑ • Attracted $20 million in bank financing to create the charter facilities loan
fund through the PRI investment.
CaseySupportinIndianapolis
Attracted
RESOURCES
and CEO of Goodwill Industries of Central
Indiana, which runs The MET.
On a national level, several other mayors have
expressed interest in the Indianapolis model.
St. Louis Mayor Francis Slay has visited India-
napolis and is actively seeking the authority
to charter schools in his own city. The initia-
tive garnered further national attention when
it won Harvard University’s Innovations in
American Government Award in 2006.
Casey Leads in Facilities Financing
The Annie E. Casey Foundation also played a
major role in helping the Indianapolis char-
ter initiative solve one of the biggest chal-
lenges facing the charter school movement
everywhere – financing school facilities.
Renovating or upgrading an existing space to
code costs at least several hundred thousand
dollars. Purchasing and constructing a new
facility can cost millions. Like most other
charter legislation, the Indiana law did not
address charter facility costs.
Typically, charter schools do not have ac-
cess to the kind of low-interest, tax-exempt
debt available to other schools. Lenders see
charters as bad risks, because charter school
leaders are often inexperienced when it
comes to school finance, and because char-
ter agreements are contingent by design and
subject to re-approval every few years. As
a result, conventional lending institutions
require extra loan guarantees, security de-
posits, or high interest rates that schools
can’t afford unless they dip into general
operating funds.
“We knew at startup that facilities would be
an issue,” said Mayor Peterson. “Angels and
philanthropists enabled us to get good fa-
cilities early, but we knew that would not be
sustainable. We needed an alternative way
to finance facilities, and Casey catalyzed our
efforts to solve this problem.”
“We saw that the lack of available facilities
financing was becoming a real barrier to the
Early Investment Jump-Starts Change6
9. Hundreds of children are on wait lists for
mayor-sponsored charter schools, and the
Mayor and his charter team realized early
on that someone needed to be proactively
recruiting new, top-flight charter school ap-
plicants. They also became aware that both
district and charter schools needed help
drawing fresh talent and ideas to the city and
that existing charter schools needed assis-
tance to scale up their operations.
To expand the supply of talent for both char-
ters and district schools, Mayor Peterson
and David Harris launched The Mind Trust,
once again with critical start-up support
from Casey.
The Mind Trust promotes educational en-
trepreneurship in Indianapolis in two ways.
First, the organization’s nationally unique
Education Entrepreneur Fellowship provides
talented people with a two-year opportunity
to develop, build, and launch new education
initiatives in Indianapolis and beyond. The
fellowship includes full-time salary and ben-
efits, office space, and customized training
and mentorship. Fellows are expected to de-
velop and launch educational ventures with
the potential to dramatically improve and
transform public education for low-income
children in Indianapolis, the region, and
the nation.
Second, The Mind Trust has created a venture
fund that it uses to bring successful education
initiatives to all Indianapolis public schools,
including Teach for America, The New Teach-
er Project, College Summit, and others.
schools had solid plans and were monitored
regularly. Should a mayor-sponsored charter
school experience any financial, academic,
or administrative difficulty, the system was
designed to detect and correct these issues
well before default would occur.
Approved in 2005, the Indianapolis Charter
Schools Facilities Fund will support many
school construction projects over the next
few years that will create more than a thou-
sand new seats for the city’s low-income
students. The fund issued its first loan – $2
million to Indianapolis Lighthouse Charter
School – in late 2006.
Casey’s Manno is quick to caution that loan
funds like the one in Indianapolis are not
the ultimate solution to the charter facilities
financing issue. “The PRI and the charter fa-
cilities loan fund are a stop-gap measure, an
interim solution,” he said. “Facilities financ-
ing is a public sector issue and it needs to
be solved using tax-payer dollars, because
charter schools are public schools.” But early
investment by foundations in innovative ap-
proaches can help show the way to public
policy solutions.
Initiative Spawns a New Organiza-
tion to Cultivate Talent and Ideas
As the charter initiative began to expand, it
encountered another major challenge – a
finite supply of talent to launch, lead, and
staff successful charter schools. Although the
Mayor’s Charter Office is allowed by law to
have opened 30 schools at this point, it has
authorized only 17 schools because it hasn’t
wanted to compromise on quality.
AnnieE.CaseyFoundation's
earlysupportwasimportant
becauseitbroughtfinancialresources
aswellaspowerfulpartnerships.
growing sector of new schools in Indianapo-
lis,” said the Foundation’s Bruno Manno.
“Casey had been using program related in-
vestments (PRIs) in various ways as part of
its social investment strategy, and charter
facilities seemed like a worthwhile use of
that resource.”
“Bruno came to us with the idea of the PRI,”
said Harris. A PRI is a foundation investment
in the form of a loan, a loan guarantee, a line
of credit, a mission-related deposit, an asset
purchase, a recoverable grant, or an equity
investment. Manno proposed using a PRI as
a way to attract other resources to the table
and create a charter facilities loan fund.
Led by Casey, a diverse group of public,
private, and nonprofit institutions came to-
gether to establish a loan fund. The institu-
tions included the Indianapolis Bond Bank,
the City of Indianapolis, the Local Initiatives
Support Corporation (LISC), and Bank One
(now JPMorgan Chase & Co.).
Creating the loan fund took two years and in-
volved a very complex process, and Founda-
tion staff and experts played a pivotal role in
bringing the complicated deal to fruition. In
the end, Casey and LISC each agreed to pro-
vide one million dollars in loan guarantees to
be drawn down only in the case of default.
With that promise in hand, the City-County
Council and the city’s Bond Bank agreed to
pledge the city’s backing for charter school
loans. Bank One extended a $20 million line
of credit to the Bond Bank, which it could in
turn lend to qualified charter schools for the
acquisition, construction, renovation, and
leasehold improvement of their facilities.
Casey’s PRI catalyzed the process that led to
the establishment of the loan fund. “The PRI
was a big part of our making the case to the
City-County Council to set up the facilities
fund in Indianapolis,” said Harris.
Along with the PRI, the Casey-supported
application and accountability systems
also helped attract other partners to the
deal because these systems ensured that
Early Investment Jump-Starts Change 7
10. Lessons for Investors
The Annie E. Casey Foundation’s experience
with the Indianapolis charter program sug-
gests several lessons for investors who want
to catalyze innovative initiatives:
∑• Strategic investments don’t have to be
huge to attract other resources.
∑• Astute early investment can begin to trans-
form the public education landscape.
∑• Reserve some portion of your annual bud-
get for high-risk investments that have
potential for a high payoff. Recognize that
some of these high-risk investments will
fail. Casey’s education program reserves 15
percent of its annual budget for this use.
∑• Whendecidingwhethertoinvestinpromising
but unproven strategies, focus on the people
andtheideas.Makethedecisionbasedonthe
quality of the proposal, word on the street
about the people involved, and your instincts
about what makes a “good bet.”
• ∑Focus your funding on activities that lay
essential groundwork for the endeavor to
be successful over time.
∑•To attract co-investment, clearly articulate
your goals and your evidence to persuade
other donors to invest, and fund the ca-
pacity of innovative initiatives to track
and use data to improve outcomes for low-
income children.
Conclusion
After five years of steady support, the In-
dianapolis charter initiative no longer needs
financial support from the Annie E. Casey
Foundation. All of its costs are paid for by the
city budget, even though those costs have ris-
en as the number of schools has grown. With
the firm base made possible by the Annie E.
Casey Foundation’s early support, the initia-
tive is well-positioned to create high-quality
schooling options for low-income children
for years to come.
Early Investment Jump-Starts Change8
