Shorting The Lives of Children: No Small Matter

As I wrote in a previous post, “Don’t Let Impact Investors Capture the Non-Profit, Activist Media,” documentary film has been hijacked to advance the social impact investment agenda. I touched on it in a piece about Ted Dintersmith’s, Most Likely to Succeed. Dintersmith launched a Sundance-affiliated program, the Catalyst Fund, matching social justice minded filmmakers with venture capitalist backers. Other “impact” films making the rounds are Invisible Heart, raising awareness around social impact bonds and No Small Matter, a film the Pritzker-backed Choose Children campaign screened widely in advance of California’s elections last fall.

This post unpacks the financial interests behind the latter documentary, which at first glance seems like an innocuous vehicle promoting the importance of early childhood education. That “cradle to career” human capital pipeline Strive has planned? The one intended to move hundreds of millions of “social benefit” venture capital? Well, someone has to rough in plumbing to the nursery, and that’s the job No Small Matter is meant to do. Investors hope strategic screenings for audiences primed to receive their carefully crafted messages will put voters in the proper mindset to act with a sense of urgency when intended legislation surfaces. When targeted bills come up, these influencers will be eager to press their elected officials to pass them.

The transactional nature of the financial arrangements between documentary filmmakers and social entrepreneurs is made clear in a panel presentation from the 2012 Social Enterprise Conference, which was held at Columbia Business School. During the panel, “Media as Catalyst: Story Telling and Social Action,” Diana Barrett, former Harvard Business School professor and founder of the film production venture The Fledgling Fund, articulated her strategy. The Fledgling Fund backed the Invisible Heart SIB film.

“So, we’ve become very strategic. We look at inflection points and kind of leverage points where strategically we can really make a difference. We’ve become very, very systematic…

“… We are all about impact. Every film is chosen, because we think that for one reason or another it can reach audiences, change minds, change laws, which I’m not supposed to talk about…um, um, because we’re not supposed to do that, but it does. And I’ll talk about that specifically. And so we look at every possibility (laughter in audience…another voice “the Internal Revenue Service”)…exactly!” Starting at timestamp 7 minutes 30 seconds.

We know Gavin Newsom’s proposed California state budget includes significant appropriations for early childhood and ACE screenings. In the pipeline is a slate of bills backed by EveryChild California: Association of Leaders Advancing Early Learning that will channel those allocations. A briefing summary dated February 3, 2019, available here, shows twenty-six separate pieces of legislation under consideration.

Certainly, all families deserve affordable childcare that is developmentally appropriate and staffed by trained caregivers who are adequately paid for this important work. But we also know there are plans afoot to build a national universal pre-k infrastructure from the ground up that will, if not actively contested, have “innovative finance” inextricably woven into it. Once in place, public-private-partnership funding mechanisms will impose exhaustive digital profiling on children, families and service providers. In reviewing the bills listed in that briefing, I find the following three to be of particular concern:

AB23: Incentivizes linkages between education and workforce training programs

AB347: Sets up CA Preschool Investment Fund (private investor) and a 5-county pilot program

SB2: Expresses legislative intent to create a P20 longitudinal database to facilitate innovative approaches to “cost-effective” education

Those bills indicate the state of California intends to embrace Strive’s data-driven, “collective impact,” engineered workforce approach to P20 education. Propaganda films like No Small Matter are yet another profit center that has been vertically integrated into this vast machine, another tranche of investment for those who hold so much wealth they must devise ever more brutal instruments of financialization to keep their abundant capital moving.

As Barrett states later in that discussion:

“And now I am very, very methodical about how we work with filmmakers, how we look at NGOs, how we put money into the field. I think of it much more as tranches of investment, much more like a venture capital model. When people say you’re a philanthropist, I go ‘no, not really.’ I personally don’t think of myself as a philanthropist. I think of myself as someone who has a lot of business background and a real interest in changing the world in my own way.” Timestamp 31:25

So how did No Small Matter find its way onto the big screen? If you accept at face value the film’s origin story, presented here, inspiration came after co-director Greg Jacobs spent a week at a Chicago-based Educare preschool. He’d been making a video for the Ounce of Prevention Fund, a client of his firm Siskel (Jon Siskel, nephew of film critic Gene Siskel )/Jacobs Productions. See trailer below.

But there was more going on than simple “inspiration.” You see there’s a lot of money riding on people unquestioningly embracing the message this film advances. Diana Rauner is the president of Ounce of Prevention, a public-private partnership with a $74 million annual budget devoted to “research-based” programs for “at-risk” children and families. She’s the wife of Bruce Rauner who served as Governor of Illinois from 2015 to 2019 during which time the state established a Blockchain birth certificate initiative and a taskforce devoted to laying out options for Blockchain government. Cab Morris, who was the strategy lead for the Blockchain Task Force, has previously worked as Deputy Field Manager for Citizens for Rauner.

In 2012, Diana Rauner participated in a working group on innovative early childhood education finance run jointly by Robert Dugger on behalf of ReadyNation and Robert Litan of the Kauffman Foundation. Key players in outcomes-based finance also participated such as Jeffrey Liebman, George Overholser, and James “I’ll get you a 7-13% ROI on ECE Investments” Heckman. The press kit from No Small Matter states the film’s goal was to make Heckman’s research accessible using messaging set out in the Frameworks Institute’s toolkit “Talking About Early Childhood Development.” That toolkit was funded by the Mailman Foundation, which, according to Crunchbase, also invested in SixUp, a for profit software platform offering debt-financing for “under-banked” students.

The working group’s report discussed the lack of public resources available for early childhood development, emphasized the economic importance of investments in social-emotional and cognitive training for children ages five and under, and advanced a strategy that innovative financial instruments such as social impact bonds would be used to pay for the interventions. The group identified the following challenges that had to be overcome in order to realize their vision: they needed corporate and philanthropic support; local buy-in that would advocate for such things as quality rating systems; statistical studies affirming the principles of SIB finance; legal infrastructure; enforceable contract models; a common language for bond offerings that was comfortable for investors; and good investor relationships. A slideshare of content drawn from that report specifically states the groups intention to securitize debt related to pre-k service provision so it could be traded on global markets.

Twelve years earlier, Rauner’s Ounce of Prevention Fund, in partnership with the Irving Harris Foundation, launched Educare in Chicago. What started out as a single school serving “at risk” children and family grew into a national network with some rather influential backers as you can see in this diagram of the funders supporting Educare at Silicon Valley.

Interactive map of Educare at Silicon Valley Partners here.

In addition to your normal complement of community representatives (banks, Junior League, local college, etc.), you have a slate of tech giants, national philanthropies, even a legal firm with ties to the Chicago Blockchain Center. Government partners include, no surprises here, Santa Clara County and its office of education. The Educare program there is linked to the Franklin McKinley School District in San Jose, a test bed for Datazone and a new concierge model of family health and education services proposed by consultant and Rocketship Charter Schools board chair Fred Ferrer.

There’s a reason influential backers flocked to Educare Silicon Valley. To be part of the project is to get in on the ground floor of a whole new investment market. Rauner has ties to the Bay Area having received her MBA from the Stanford Business School in the late 1980s. She served on the school’s management board during the time Dugger’s innovative finance group was active, between 2012 and 2017. This was just as pay for success finance was getting off the ground in the US. Two of Rauner’s years on the board overlapped with her husband’s time as Governor of Illinois, home to the Chicago Mercantile Exchange (CME), commodities futures. CME is heavily invested in the early childhood sector and was one of the sponsors of ReadyNation’s Business Summit on Early Childhood in New York last November.

It’s chilling to look at the Stanford Graduate School of Business’s initiatives, which include innovating value chains, behavioral marketing, data analysis for hedge fund trading, and social innovation, and consider how that research will pave the way for a futures market in human capital data. The business school’s efforts must be considered in conjunction with other university efforts focused on school redesign, competency based education, innovative assessments, data-driven accountability, human-computer engineering, and venture philanthropy. Former students and alumni leading ed-tech and impact investing campaigns are cropping up across the country. Among them, Doug Burgum in North Dakota and Steve Ballmer of Ballmer Group.  None of this bodes well.

Interactive map of Rauner’s ties to Stanford and Yale here.

Rauner’s original Educare school maintains a close relationship with the University of Chicago’s Urban Education Institute and its affiliated charter school. In 2009, they jointly developed a “Birth to College” model with a goal of expanding it nationally. The program has an aligned pre-k curriculum that feeds three-year olds directly into privatized K12. Educare attempted to launch a pre-k charter school in Washington, DC in 2014 with the support of billionaire impact investor JB Prtizker, but it was not approved.

Last week, however, the issue of charter pre-k programs surfaced again, this time in Dallas. Strive Together has an influential network partner there in Commit, led by retired Goldman Sachs partner and Wharton alum Todd Williams. While not specifically linked to Educare, the Dallas pre-k proposal would make expanded pre-k contingent on outsourcing management to non-profits under a charter arrangement. A February 14 article in the Dallas News notes a number of trustees expressed concern about this structure as it would create a system to funnel pre-k families into affiliated charters.

There are quite a few cities with Educare schools that do not have Strive Network programs going, as well as many Strive cities that do not yet have Educare schools. I do, however, sense a synergy between the two, since both promote a human capital, “cradle to career,” “collective impact” strategy. I did a comparison and found the follow cities have efforts underway on both fronts. If you live in one of these cities, you’d better get up to speed on early childhood and workforce impact investing right away:

Washington, DC: Raise DC / Educare Washington, DC

Atlanta, GA: Learn4Life / Educare Atlanta

Tulsa, OK: Impact Tulsa / Educare Tulsa, three schools

Chicago, IL: Thrive Chicago / Educare Chicago

Milwaukee, WI: Milwaukee Succeeds / Educare Milwaukee

Seattle, WA: The Road Map Project / Educare Seattle

Phoenix, AZ: Thriving Together / Educare Balsz School District

During the time director Greg Jacobs was finalizing No Small Matter, he was also a New America Fellow. New America, a think tank based out of Washington, DC with satellites in New York and the Bay Area, was started in 1999. Among its major backers is Eric Schmidt, former chair of Google and Alphabet. In the fall of 2017 the extent of Google’s influence was made very clear when Barry Lynn, a researcher in the organization’s Open Market’s program, criticized the powerful company. This resulted not only in Lynn’s immediate removal, but the elimination of the entire project including 10 other staff members. Heavy hitters in social impact investing like the Gates, Ford, and Rockefeller Foundations and the Omidyar Network are other major funders.

New America is pursuing initiatives in global impact investing via its Bretton Woods II effort and has launched an accelerator to advance Blockchain R&D. Blockchain identity is a key element in human capital impact investing as it will allow longitudinal tracking of social service inputs versus economic outputs over time. Using MIT’s Engima software, impact investors will be able to conduct queries even on encrypted data. IXO Foundation with support of Omidyar Network has already developed a proof of concept for this with Amply, a pre-k digital identity reimbursement app in Cape Town, South Africa (more here). Several pending bills in California have to do with standardizing pre-k reimbursement systems and investigating alternative payment structures, though as far as I know there are no blockchain identity efforts are underway in the state yet.

New America has its hand in digital learning and workforce development, too. It incubated Opportunty@work whose home page proclaims “It’s time to rewire the labor market.”  It promotes career pathways and FINANCING (debt) for training costs and is affiliated with the Connecting Credentials Initiative and the Workforce Data Quality Campaign. Lisa Guernsey is New America’s director of early learning and learning technologies in their education division. Her focus is on closing the digital divide, even for young learners. Last year the Silicon Valley Community Trust interviewed her for their “Philanthropy Now” podcast, which focused on the importance of technology. From the screen shot of a 2018 tweet, you can see New America is very interested in tracking human capital. Platforming education accomplishes that while creating value for their tech and venture philanthropy backers.

Interactive Map of Greg Jacobs / New America here.

I have not yet had the chance to watch Jacobs’ documentary, but I’ve spoken to people who have and was told it downplays technology. This is worth noting since the film is funded, in part, by the Gates and Bezos Family Foundations. The press kit mentions iconic characters like Cookie Monster and a quirky, lovable teacher, Ms. Giannini, who adds pathos to the storyline, because she has to work side jobs to make ends meet.

The involvement of Sesame Workshop should raise a red flag. They’ve partnered with the International Rescue Committee, IBM, and the UK nudge unit to test digital AI literacy interventions and technology-based home visits on Syrian refugee populations with a $100 million award from the MacArthur Foundation, more here.

And while Ms. Giannini did spend four years as a preschool teacher, according to her LinkedIn, she left that position in 2015 and has since made a reputation for herself as a video blogger and content producer for the Kindling Group and the Chicago Children’s Museum. In the clip she’s pitching the need for children to cultivate executive function, the holy grail of SEL impact investors.

The press kit for the film is a treasure trove of information. It lists the film’s funders as well as those either featured in it or who supported it as partners. In closing, I’d ike to share two maps I put together.

Funders first: in addition to the Gates and Bezos Family Foundation, the map below shows financial support came from:

Einhorn Family Trust: Supports Solutions Journalism Network (impact media)

Irving Harris Foundation: original sponsor of the Educare network with Ounce of Prevention and supporter of the Campaign for Grade Level Reading (3^rd grade literacy test score impact investment metrics)

Kellogg Foundation: grants to Knowledgeworks and the National Skills coalition as well as promoting early childhood workforce training

Overdeck Family Foundation: invests in social-emotional learning and digital education with ties to the Robin Hood Foundation

McCormick Foundation: Chicago-based foundation that funds Educare and promotes education privatization interests

Packard Foundation: involved in California early childhood education funding and supports efforts to implement the Datazone project at Franklin McKinely in Santa Clara County

Pritzker Family Foundation: supporter of the first US pre-k SIBs, funded the Heckman toolkit and the Choose Children campaign at the Silicon Valley Community Foundation, as well as the Education Innovation Laboratory at Harvard

Interactive map of Funders of No Small Matter here.

The list of partners on the film is extensive. The map lists many, but not all, of them. These highlights convey the breadth of the interests involved.

America Forward: initiative of New Profit, hosted kick off to national social impact campaign at Monhonk Mountain House outside New Paltz, NY in 2005, partner in Results for America and sponsor of the SIPPRA celebration

30 Million Word Initiative: University of Chicago-based program that focused on the “word gap” piloted at Educare

American Enterprise Institute: neoconservative think tank

Center for American Progress: liberal, Clinton-affiliated think tank

Ascend, Aspen Institute: two-generation approach to social impact investing

Bipartisan Policy Center: supports implementation of recommendations of the Commission on Evidence-Based Policymaking

Center for High Impact Philanthropy: program to advance social impact investing based out of the University of Pennsylvania and affiliated with Wharton Business School, maintains database of finalists for the MacArthur $100 Million and change competition

Center on the Developing Child, Harvard: funded by all the usual suspects with R&D accelerator focused on scaling “evidence-based” interventions that promote self-regulation and executive function

First Five Years Fund: California funding for early childhood from cigarette taxes

iLab at the University of Washington: Gates and Bezos funded neuroscience research institute focused on digital tools for early learning

National Governor’s Association: promoter of Common Core, competency based education, SEL and “what works” government

National League of Cities: Supports career ready social emotional learning, out of school learning, smart city implementation and has partnered with Third Sector on Pay for Success programs

New America Foundation: tech and impact investor backed think tank promoting workforce-aligned digital education even for young learners, digital economic systems and Blockchain programs

Nurse Family Partnership: non-profit with first proof of concept for “pay for success” home visit program tested in South Carolina via Medicaid

Ounce of Prevention Fund: Diane Rauner’s Chicago-based vehicle to advance “evidence-based” interventions for “at risk” children and families 

Sesame Workshop: global NGO/media organization promoting digital learning (edu-tainment/gaming) via the Joan Ganz Cooney Center, partner in the winning submission to the MacArthur competition, investor in ed-tech via Reach Capital

United Way of America: conduit for social innovation funds and promoter of “collective impact” human capital investing programs nationwide, dealmaker

Interactive map of Select No Small Matters Partners here.

No Small Matter was produced as a vehicle to mobilize people to support early childhood education unconditionally. The film’s website encourages people to make donations, sign petitions, and contact legislators-all elements that are tracked as part of the “impact media” structure. There is a “take action” page where you can sign up to host a screening, attend a town hall, or write and op-ed. But if you don’t have that much time, maybe you’ll settle for simply downloading a parenting app?

I will state once again that families must have access to affordable, developmentally appropriate childcare and preschool provided by caregivers who are treated as professionals and compensated in accordance with the important work they do. But we must recognize that early childhood education and healthcare are being transformed into a pipeline intended to channel vast quantities of venture philanthropy linked to outcomes-based government contracts. The financial and technology interests that aim to capture and analyze sensitive data to inform speculative investments are the ones who will benefit. Not children pushed onto surveillance play tables so their data can be harvested. Not mothers forced to track their “goals” on an app created by a social entrepreneur.

We demand care for children and families that is humane and publicly funded with no strings attached. We vehemently refuse the very premise of human capital investment markets. Allowing hedge funds the opportunity to short the lives of toddlers and poor families is unconscionable. Read the fine print of these bills and fight for justice. Films like No Small Matter should not be allowed to obscure the truth of what is happening. This is what is happening. Pay attention and fight.