Wealthy donation to state raises concerns about transparency

FILE - In this March 23, 2019 file photo, Bridgewater Associates Chairman Ray Dalio speaks during the Economic Summit held for the China Development Forum in Beijing, China. The donation by Dalio and his wife Barbara, of Greenwich, Conn., to the state of Connecticut is raising concerns about the transparency of the philanthropic gesture. So excited by the gift of $100 million for public education from the couple, Connecticut officials agreed to add $100 million in taxpayer money and create a nonprofit that won't be subject to the state's open records laws or ethics rules. Open government experts question how the public will know how their money is being spent.

HARTFORD — So excited were they about a pledge of $100 million for public education from Barbara and Ray Dalio that Connecticut state officials agreed to match it with $100 million in taxpayer money, along with concessions that have raised concerns over transparency.

At the request of the wealthy Connecticut couple's foundation, Dalio Philanthropies, state lawmakers said they agreed that the new partnership would be overseen by a nonprofit entity, and not a government agency, making it exempt from the state's Freedom of Information Act and state ethics rules. Democratic House Speaker Joe Aresimowicz defended the decision, saying the Dalios' contribution was "a golden opportunity" for the state, one that would make it a better place.

Ray Dalio is the founder of Bridgewater Associates, the world's largest hedge fund.

The arrangement has raised questions about how much taxpayers will know about where the money will go and exactly how the Dalios plan on it being spent. The partnership, which is supposed to include another $100 million in matching funds from other private contributions, has broadly been described as an opportunity to strengthen public education and promote greater economic opportunity, focusing on communities with high rates of poverty and disengaged youth.

"The fact that tax dollars are involved, to me, mandates that there be transparency," said Rep. Vincent Candelora of North Branford, the second highest-ranking Republican. "Since when does our wealthy community dictate how public policy should be crafted?"

Recent education-related philanthropic giving in the U.S. has focused mostly on improving individual school districts. That includes Facebook founder Mark Zuckerberg's $100 million donation in 2010 to the Newark, N.J., public schools. His foundation's gift was matched by private contributions and overseen by a local foundation, which was criticized for a lack of transparency.

Legislation that authorized Connecticut's investment in the partnership with Dalio Philanthropies specifies that the nonprofit "must not be construed" as a public agency performing a government function. That surprised Connecticut Freedom of Information Commission Executive Director Colleen Murphy, who said there was no discussion about exempting the new Partnership for Connecticut Inc. from FOI rules. She noted that other entities that have performed a governmental function, such as a private company that formerly oversaw Connecticut's vehicle emissions testing system, ultimately had to abide by the state's FOI Act. Meanwhile, a representative of the nonprofit Connecticut Council on Freedom of Information, which supports open government, has called on lawmakers to remove the provision.

Cadence Willse, a postdoctoral research fellow at Stanford University who has studied philanthropy in education, said Connecticut's partnership gives her pause. "I'm not sure how people will be able to understand where their tax dollars are going," she said, adding that other philanthropic efforts to improve education have tested novel strategies to see if they work, so that taxpayers don't have to shoulder the financial burden. In this case, Connecticut taxpayers will be on the hook for $20 million a year over five years.

The nonprofit provision was tucked into the new two-year state budget deal reached between Democratic lawmakers and Democratic Gov. Ned Lamont, who ran into Barbara Dalio at an elementary school in January and discussed the concept with her. Lamont's spokeswoman, Maribel La Luz, said the administration agrees with the Dalio foundation that an independent nonprofit will provide "the flexibility to move to make decisions, to have sensitive conversations."

Barbara Dalio, who leads the foundation's public education efforts, added that private conversations would be helpful so "people will feel more free to be open about disagreeing, coming to consensus."

She said she understands people's concerns about transparency and acknowledges taht the arrangement is "unique." But she insisted that information about the partnership and its activities would be made available to the public, just like the foundation's work in the past.

Dalio Philanthropies has donated more than $50 million over the past four years to Connecticut public schools, often working closely with local school districts and other organizations. The funds have paid for learning grants for teachers and programs that focus on improving graduation rates and helping disengaged and disconnected young people succeed.

It's the first time that the Dalios have partnered with the state or worked with matching funds, she said.

Barbara Dalio pointed out that the new partnership is not a public agency and is not performing a public function or operating schools. Rather, she described it as a "nonprofit charity working to support public school systems and communities."

She noted that the initial 13-member board of directors will be bipartisan, including the top Democratic and Republican leaders of the General Assembly, four appointees from the Dalio foundation and three from Lamont. That group will come up with criteria for a succeeding board that includes people with experience in education, student engagement, microfinance and other applicable areas. Dalio said she was well aware that other education philanthropic initiatives have faced criticism for being top-down, not working closely with those in the trenches.

"We are going to bring all the community together and we are all going to make those decisions together," she said. "Everything that we know we have learned from the teachers and the school leaders and the youth development organizations and the youth themselves."

Lamont has praised the Dalios for "stepping up," saying he's grateful for their contribution — the largest known philanthropic donation to benefit the state of Connecticut. "Every once in a while, just say thanks. Thanks for what you're doing. Thanks for stepping up. Thanks for making the contribution," said Lamont.  "I think that's the tone we need as well."

Lamont suggested on Wednesday that criticism of the partnership has made it somewhat challenging for him to raise the additional $100 million from private donors, telling reporters that "some of the language" in the Legislative Office Building "doesn't make it any easier." La Luz said Lamont was referring to recent comments made on the House floor by Candelora, who compared the decision to exempt the partnership from open government laws to a "group of corporate board holders" who go "to the balcony and sprinkle down dollars on, I guess, the peasants of Connecticut."

La Luz said those comments offended both Lamont and potential donors. "It's that type of silly negative rhetoric that turns good people off to public service and limits creativity and ideas," she said.

Candelora said Lamont recently asked him to tone down his criticisms. But Candelora said it is "bizarre" to think that one lawmaker's comments could be impeding donations. "It may be the lack of transparency that's causing the problem for them," he said.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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