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Inside the Gift Horse’s Mouth: Philanthropy and School Reform

In the past five years, the landscape of educational philanthropy has shifted significantly. With the emergence of "new" donors such as the Bill & Melinda Gates Foundation and the Walton Family Foundation, the impact of private funding on school reform has become more and more apparent. It is time, Mr. Hess submits, to think more critically about the role philanthropy plays in shaping education policy.

By Frederick M. Hess

PHILANTHROPY plays a peculiar role in contemporary American education. From the Milken Foundation's Teacher Advancement Program to the Carnegie Corporation's "Teachers for a New Era" initiative to the Children's Scholarship Fund to the Broad Prize for Urban Education, philanthropic efforts are playing a catalytic role in current school reform efforts and helping to set the nation's education agenda. The most noteworthy example is probably the Bill & Melinda Gates Foundation's ambitious effort to reshape the American high school. Today, endowed with more than $20 billion from Microsoft cofounder Bill Gates, the Gates Foundation is the nation's leading donor to K-12 schooling. In February 2005, after several years of prominent involvement in high school reform, Gates delivered a keynote speech at the National Governors Association conference, garnering headlines like "Mr. Gates Goes to Washington" on the New York Times editorial page and "Summit Underscores Gates Foundation's Emergence as a Player" on the front page of Education Week. The assembled governors embraced Gates' proposals, with more than a dozen immediately signing up for the Gates-supported American Diploma Project network.

Despite highly visible initiatives like Gates', however, the amount given by philanthropies to education is dwarfed by state, local, and federal expenditures on public schooling. In 2004-2005, U.S. taxpayers spent on the order of $500 billion on K-12 education. Meanwhile, in 2002, philanthropic foundations reported giving just $4.2 billion to educational institutions and activities of all kinds, with most of that going to higher education. Using data both from foundations' mandatory filings to the federal government and from a survey of school districts, University of Arkansas professor Jay Greene has estimated that in 2002 private philanthropies gave only about $1 billion to $1.5 billion to K-12 schooling. This amounted to less than 1% of all education spending. In Greene's memorable phrase, foundations are casting "buckets into the sea."1

Because education philanthropy is disorderly and little studied but highly visible, it is easy both to overestimate and to underestimate its significance. We overestimate by focusing on widely publicized philanthropic gifts -- as we would focus on the tip of an iceberg -- while forgetting the import of all that lies beneath the surface. We underestimate because we rarely stop to think about how donors -- consciously or not -- can shape the politics, dynamics, and agenda of school reform. As Dan Fallon, chair of the education division of the Carnegie Corporation, has observed, "No one should be under the illusion that a foundation is going to create something remarkable in the shadow of a $440-billion enterprise. Our task is to help get good ideas into the marketplace so that society has good alternatives from which to choose."2

The challenge of understanding the role of philanthropy in education has taken on a heightened salience in the past five years. Since the late 1990s, established education donors like the Ford, Carnegie, and Rockefeller foundations have scaled back their role in K-12 schooling, while "new" donors have moved to the forefront. The shift has been stark. In 1998, the top four foundations in total giving to elementary and secondary education were the Annenberg Foundation; the Lilly Endowment, Inc.; the David and Lucile Packard Foundation; and the W. K. Kellogg Foundation. Emphasizing measures like curricular reform, professional development, and community participation, these four foundations accounted for about 30% of all giving by the top 50 education donors. In the same year, the Gates Foundation was not among the top 50 K-12 education donors, and the Walton Family Foundation ranked 26th. Just four years later, in 2002, the top two givers were the Gates and Walton foundations. Meanwhile, traditionally prominent K-12 donors, like the Packard Foundation, the Pew Charitable Trusts, and the Rockefeller Foundation, had scaled back their K-12 giving -- with Packard and Rockefeller dropping off the top-50 list completely.3

Significantly, the new donors -- typically entrepreneurs and hands-on corporate leaders from the new economy, like Bill Gates, Jim Barksdale, Michael Milken, and Eli Broad -- have exhibited little patience for educational bureaucracies or traditional giving. For good or ill, they have supported endeavors like charter schools, differentiated pay for teachers, and programs for recruiting nontraditional principals and superintendents, while importing along with their funds a private-sector mindset regarding results, accountability, and rapid execution.4

To explore the issues posed by the role of educational philanthropy and the generational shift among leading donors, I recently recruited 11 scholars and analysts to examine the subject. Their collected analyses are being published this fall in The Best of Intentions: How Philanthropy Is Reshaping the Landscape of K-12 Education. I want to share six key insights that emerged from the research and then discuss five key challenges that loom for educators, community members, policy makers, and philanthropists.

Key Insights

First, despite the limited amount of overall philanthropic giving to K-12 education, contributions from foundations often represent a critical share of the discretionary money available to support reform. Philanthropic giving can have a disproportionate impact -- like a small rudder steering a large ship. The vast majority of existing money in schools and school districts is committed to expenditures on salary, benefits, and other routine line items. Due to the particulars of state and district budgeting and to preexisting commitments enshrined in statute and contract, the amount of money available for research and development, reinvention, and reform is often vanishingly small -- even in districts with annual budgets of $500 million or $1 billion. Freeing up more than a small sliver of funding to support structural changes or ambitious initiatives is exhausting and politically perilous work. Until this situation changes, external sources of money loom large; that is why philanthropic dollars, while sparse, are so central to executing ambitious school reform.

Second, the issue of accountability has achieved an unprecedented level of significance. Spurred in part by the advance of educational accountability and by the No Child Left Behind (NCLB) Act, discussions of "program outcomes," "demonstrated effects," and "impact on achievement" are now routine. This was not always the case. Donors, and particularly the new givers, evince increasing interest and sophistication when it comes to monitoring and measuring performance. Several foundations have recognized that credible research can be an important lever in public policy debates.5

Third, it matters not only how strategically foundations pursue their reform agendas but what the educational ideas and beliefs at the heart of those agendas are. In his survey of education grant officers at more than 130 foundations, Bookings Institution scholar Tom Loveless discovered that most foundation program officers -- especially those who have not themselves been educators -- doubt the importance of traditional values like student discipline, testing, teacher content knowledge, and student mastery of basic skills. Such findings raise the possibility that foundation staff members endorse conceptions of teaching and learning that are at odds with the beliefs of most parents and teachers, as reflected in Public Agenda polling.6 Such a gap raises questions of democratic accountability, the sustainability of reforms, and the promise of reform agendas.

Fourth, one result of philanthropic support is the elevation of certain grantees to new levels of acclaim through a process I'll call the "American Idol" effect. At any given time, there are hundreds or thousands of reforms playing out across the nation's landscape. Attracting support from a large, nationally recognized foundation can have the effect of thrusting a given venture to center stage. The resources, spotlight, and national credibility that major donor support provides can turn districts, superintendents, and reformers into icons. Philanthropic funding lends visibility and a pedigree, attracting both journalistic profiles and evaluators eager to document results. In recent experience, this cycle has played out in San Diego, Chicago, Houston, and New York City's District 2. The small group of nationally celebrated superintendents and former superintendents are almost all champions of one of the reform models embraced by leading donors, signaling to sensible principals and superintendents that they would be well served to adopt a favored model and seek their own sponsor. None of this is necessarily harmful, but the ability of certain foundations to elect the "American Idols" of education reform deserves serious attention.

Fifth, prior success in their past endeavors has given certain new philanthropists a degree of celebrity that magnifies the impact of their giving. Business superstars like Bill Gates, Michael Dell, and Michael Milken have fame (and sometimes notoriety) that can help command the attention of major media and public officials, even apart from their wealth. Even Stephanie Sanford, senior policy officer at the Gates Foundation, has remarked, "We were not fully prepared for the . . . celebrity . . . of [Gates'] voice on this issue. We were stunned at the reach of [the NGA] speech . . . how it has helped frame the debate about high schools."7 This is not entirely new. When Andrew Carnegie in the 19th century threw his celebrity and reputation behind preferred reforms, it helped focus the agenda in a way that even a large gift from a minor figure could not have.

Finally, in some policy areas, just a handful of foundations may play a huge role in funding advocacy and reform efforts. This phenomenon may be most apparent in the case of choice-based school reform. For instance, the Gates and Walton foundations provide over 80% of foundation giving to choice-based reform, suggesting a tremendous role for them in the councils and thinking of the movement.8 To recognize this concentration is not necessarily to decry it. In truth, such oligopolies are not unusual in philanthropy and may lend coherence, provide stable leadership, and foster quality control. Of course, concentration can also narrow thinking, stifle unpopular critiques or unconventional ideas, and shut out promising entrepreneurs. The point is not to question any particular foundation's efforts but to encourage scholars, journalists, and practitioners to keep an eye on the role donors are playing.

This is an area where we have fallen short. For instance, in early 2005, I analyzed the newspaper coverage of five leading foundations during the past decade and found 13 positive stories for every critical assessment.9 We all, obviously, respect the generosity and public-spiritedness of these donors. Because we are talking about private efforts to reform public institutions, however, that appreciation must be accompanied by unsentimental scrutiny.

Five Challenges

What should we make of these insights? What do they mean for educators, philanthropists, or policy makers? They flag at least five challenges -- significant but often overlooked -- that will help determine the value of today's philanthropic ventures.

1. The challenge of "strategic" giving. Donor efforts to promote coherent reform can clash with giving intended to foster a market for diverse ideas and entrepreneurial approaches. An open market that embraces experimentation will be messy, uncoordinated, and full of failures. However, if donors reject faddishness and if ideas are weeded out based on their merits, new and effective approaches can flourish. Finding ways to advance strategic visions of reform without stifling entrepreneurial activity is, of course, the tricky part.

The urgency of the challenge is highlighted by the experiences of some of the leading givers themselves. After all, in the early 1980s, no expert in the technology sector foresaw that Bill Gates and Paul Allen would triumph with Microsoft, while hundreds of competitors would fail. Ultimately, Microsoft thrived not because of a coordinated effort to anoint the "best" firm but because of its competitive performance. Carried too far, strategic giving is akin to trying to preemptively select the "best" enterprise before permitting events to unfold. While this urge is understandable, given the limited dollars available to philanthropists, the dangers of hubris are real.

Strategic giving can hold traps for recipients as well as donors. Even highly focused giving can create constituents who will become advocates. Whether funding a reading program or a middle school design, grants forge a group of district educators and community members with a stake in a program's survival. District personnel may see the grant as a way to procure extra resources, while community members may see the program as a statement that their school is important. Whatever the specifics of a given case, major philanthropic initiatives will generate testimonials from participants, attract positive news coverage, and become part of the school district firmament. When programs find constituencies, claim district support, and then pile up gradually alongside (or atop) one another, the collection of "focused" initiatives can actually make it more difficult for districts to maintain coherence. The gradual accretion of such gifts can bog down decision making and create fragmentation between conflicting fiefdoms. None of this is insuperable. Nonetheless, the weight of accumulated initiatives and grant conditions poses one more constraint on burdened district officials, educators, and would-be reformers.

2. The lure of geniality. Philanthropists give to K-12 education with the best of intentions -- to be good citizens and to give children a more promising future. The last thing many donors want is for these efforts to provoke controversy. Marquette University professor and former superintendent Howard Fuller has noted that many major donors insist on collaboration and consensus, a recipe for what Fuller terms "illusionary change."10 This preference for unobjectionable and consensus-driven initiatives means that givers tend to shy away from structural reforms that challenge existing arrangements of staffing, evaluation, compensation, management practice, and school choice.

Foundations that publicly embrace structural reforms like charter schooling, school choice, performance-based compensation, or the recruitment of nontraditional educators can raise eyebrows. Unless grantors and grantees play down the radical nature of their activities, they can find themselves on the firing line. For instance, even when giving to school choice programs, most donors explicitly reject the notion that they wish to support educational competition.11 Faced with the possibility of being attacked for their civic efforts, it is easy for donors to soft-pedal the true extent of their desired reforms and to give support in conventional, inconspicuous, educator-directed ways that do not provoke criticism. The reality is often an amiable gentlemen's agreement -- akin to Ted Sizer's famed "Horace's Compromise" -- in which foundations agree not to push too hard and educational experts manage to avoid finding fault.

Mobilizing districtwide reform or pursuing structural change requires foundations to be more accepting of conflict than has historically been the norm. As Harvard University professor Ronald Heifetz, author of Leadership Without Easy Answers, and his colleagues have observed, "For foundations [to assert public leadership] they must become accustomed to setbacks, uncomfortable public pressures, and a time frame that tries the patience of both foundation executives and stakeholders. What's required is leadership that views controversy and conflict as allies rather than obstacles in achieving reform."12

The philanthropic community may be in the midst of a slow, awkward evolution from the earnest efforts of an earlier age to a savvier, more politically aware approach. As Raymond Damonico concluded in a study of the famed Annenberg Challenge effort in New York City, "This was a non-confrontational approach to reform. The Annenberg Challenge was not set up to challenge the status quo; rather it relied upon much the same set of relationships and processes that had yielded the status quo in large public school systems."13 Today's donors have set out on a different course, still seeking to avoid confrontation, but very much intent on building new relationships and processes outside and inside of traditional school systems. How effectively they will negotiate that balance remains to be seen.

3. Pipelines versus programs. Donors have a perpetual choice between supporting "programs" or "pipelines." Programs, which are far more common, are those ventures that directly involve a limited population of children and educators. Pipelines, on the other hand, primarily seek to attract new talent into education, keep those individuals engaged, or create new opportunities for talented practitioners to advance within and influence the profession.

Pipeline initiatives, such as Teach For America (TFA), the National Board for Professional Teaching Standards (NBPTS), and New Leaders for New Schools, do not expect to significantly reshape a teaching force of more than three million. Rather, they aim to change the face of educational leadership, create new educational advocates and entrepreneurs, and remake the culture of teaching. It will be several years before many of these efforts bear fruit, when we see how effectively they have drawn talented educators, retained high performers who might have departed, or seeded alumni across schools of education, state governments, and reform organizations.

Of course, foundation staff members have traditionally preferred to support specific school programs and educators rather than pipeline initiatives that promise a more indirect impact. For the new givers, supporting identifiable programs and people readily complements their emphasis on demonstrable results. Because pipeline ventures like TFA or NBPTS have a tenuous and hard-to-demonstrate impact on student achievement -- at least in the short term -- and because of the likelihood that many long-term effects will show up outside the classroom, it is easy to underestimate their actual benefits. The challenge is that donors are not inclined to support pipeline initiatives, are unlikely to fully appreciate their potential benefits, and are embracing accountability frameworks that may reinforce these existing biases. We must all learn to think more carefully about the value of pipelines as well as programs.

4. Balancing performance and patience. To expand upon an issue arising from the pipeline discussion, the risk of underestimating the long-term benefits of efforts like NBPTS raises an explicit challenge of its own. The new focus on disciplined management strategies and short-term measurable results is a healthy corrective for philanthropies that have too often supported glitzy programs or the latest fad to little evident benefit. However, a laudable focus on core performance metrics, like math and reading achievement gains, can morph into an excessive and exclusive fascination with short-term outcomes.

There is a sensible balance to be struck, but recent lapses and outrages evident during the technology boom and bust of the late 1990s remind us of the dangers of placing too great an emphasis on near-term, visible results at the expense of investing with patience. For example, philanthropic investments in TFA or NBPTS -- whatever their particular merits and short-term effects on student achievement -- have profoundly influenced state and federal policy, public thinking, teacher preparation programs, and debates about how to improve teacher quality.14

Indiana University professor Leslie Lenkowsky has identified an instructive historical case, pointing out that the Carnegie Corporation's support for Gunnar Myrdal's research on the education of black children during the 1940s was regarded by the foundation as a failed grant. It was only later, when Myrdal's work proved seminal in changing educated opinion and affecting judicial rulings on school segregation, that the value of his efforts was clear.15

There is a healthy tension for donors -- attend to outcomes but ensure that this concern for accountability does not unduly deter investing in ambitious visions that may not demonstrate near-term effects. This balancing act calls for donors to measure progress using a broad array of appropriate metrics, not merely test scores or graduation rates. In the case of the NBPTS or TFA, for instance, it would make sense to consider the effect of the program on interest in teaching among nonteachers, the rate at which program participants become effective educational leaders, how long participants remain in the education sector, and so on. In the end, the sensible embrace of accountability must not become a stifling exercise in bean counting.

5. The political economy of evaluation. Finally, philanthropists, reformers, and practitioners are unanimous in their support for program evaluation and enhanced accountability. When it comes to ensuring the quality and utility of those evaluations, however, attention to technical issues has generally been accompanied by inattention to professional complications. In theory, foundation staff members, practitioners, and evaluators all want to do the right thing and support high-quality program evaluation. At the same time, these individuals are often anything but disinterested about what it means "to do the right thing" when it comes to evaluating philanthropic initiatives.

Foundation staff members have committed millions of dollars to particular programs, provided them with very public endorsements, and invested their foundations' prestige in these efforts. Quite naturally, they may regard criticism skeptically and be inclined to chalk up disappointments to imperfect implementation rather than fundamental flaws in the reform.

Practitioners and reformers, of course, are invested in their programs and regard them as effective. A lot of these practitioners are right -- pilot programs frequently impress because of the advantages of impassioned leadership, extra resources, exceptional faculty, and a common culture forged by a shared bond.16 Documenting the success of a pilot effort can open the door to additional resources and opportunities. The imprimatur of a respected researcher can transform a practitioner into a national figure or a reform proposal into a national movement. Negative findings from an evaluation -- or even explicit recognition that program success may be hard to replicate -- can seem like a rebuke to the reformer and undermine her professional standing or ability to attract funding.

Meanwhile, researchers have strong professional incentives of their own to frame evaluations positively or in a balanced fashion that permits the subject to cull out positive findings. Researchers compete fiercely for the right to evaluate high-profile reform initiatives and are usually hired by donors or grantees, which poses some obvious challenges. Winning access to schools, districts, and foundations is a delicate process, one that requires careful attention to building relationships and one that is impeded if a researcher is regarded as unduly critical or impolitic. Moreover, leading evaluators have often achieved their status based on their previous work, meaning they are frequently asked to evaluate reforms that are in accord with their own proposals. Given all of this, evaluators have strong incentives to be circumspect in their criticism, to suggest that the subject of their research is promising, but to allow that continued observation and analysis will be essential.

This confluence of forces means that evaluations do little to flag bad ideas and provide only limited information for state and district officials. However, the increasing availability of student achievement data and the effort to devise common standards for educational evidence promise to alter the political economy of evaluation. Transparency of results makes it easier for skeptics to assess initiatives and for disinterested parties to examine advertised benefits. Establishing accepted rules for what constitutes permissible evidence could help ensure that evaluations are judged based on consistent standards. Only time will tell whether these trends will have such rosy results, or whether donors, educators, researchers, and entrepreneurs will themselves devise new safeguards.

The Importance of Democratic Scrutiny

One of America's great strengths is the ability to weave together the idealistic and the pragmatic in ways that serve our common interests. America's most significant successes have come not from central planning or intricate programs for social betterment but from the noisy cacophony of a free people trying, failing, cooperating, and competing. Philanthropy has always been an integral part of that pageant. Especially in the world of public schooling, where district bureaucracies, state statutes, and established cultures can be resistant to fundamental change, philanthropy -- in all its scattered, untidy variety -- has the chance to ensure a competition of ideas.

This competition is plagued by questions about the impact, efficacy, and role of philanthropic activity in a democratic community. We don't have easy answers for these questions. More worrisome, we rarely have no-holds-barred discussions about philanthropic giving itself. I write here not to offer pat solutions but to stir a more skeptical, sophisticated, and engaged discussion about the hows, whys, and wherefores of K-12 philanthropy.

The impact of philanthropic efforts and the influence of select donors suggest the need for rigorous, public debate over objectives, strategies, and performance. Such debate inevitably entails critiques that may seem incomplete, wrongheaded, or unfair. Only this kind of scrutiny, however, will unearth blind spots or wishful thinking. The point is not that skeptics are always right but that most efforts to change policy or organizations enjoy mixed results. The value of skeptics is that they raise unpleasant issues. Whether or not donors agree with such assessments, they are essential to forestalling the hubris and groupthink that may otherwise ensnare would-be reformers. Open, honest, and skeptical discussion is the linchpin in the democratic compact governing philanthropic attempts to reform public institutions.

Absent such scrutiny, calls for more formal and aggressive federal regulation of private philanthropies have mounted in recent years. In 2005, for instance, the ranking members of the Senate Finance Committee promised to introduce legislation designed to regulate the tax-exempt sector. Increased federal data collection or reporting requirements could make much sense. After all, tax-exempt status is a publicly awarded privilege, and abuses call for appropriate federal action.

It would be regrettable, however, if these deliberations were used as an opportunity to promote a more intrusive or regulatory role for Congress or the executive branch. Such measures would strike at both the openness and flexibility of the American system and the ability of individuals to marshal support to test new and better ideas -- all in a dubious attempt to quiet the inevitable, unruly dissonance that ensues. Simply put, so long as we disagree on what is wrong with our schools, we are going to disagree on what sensible remedies will look like.

Nearly 200 years ago, Alexis de Tocqueville famously declared, "Nothing, in my opinion, is more deserving of our attention than the intellectual and moral associations of America. The political and industrial associations of that country strike us forcibly; but the others elude our observation, or, if we discover them, we understand them imperfectly, because we have hardly ever seen anything of the kind."17

Ultimately, Tocqueville thought the genius of America resided in "the infinite art with which the inhabitants of the United States managed to fix a common goal to the efforts of many men and to get them to advance to it freely."18 That "infinite art" of cooperation among free, independent individuals and organizations has served us well for more than two centuries. As we strive to prepare a new generation of Americans for the challenges of the 21st century, let us keep faith with that proud heritage of voluntary endeavors and nongovernmental initiative.


1. Jay P. Greene, "Buckets into the Sea: Why Philanthropy Isn't Changing Schools, and How It Could," in Frederick M. Hess, ed., The Best of Intentions: How Philanthropy Is Reshaping the Landscape of K-12 Education (Cambridge: Harvard Education Press, November 2005), pp. 51-79.

2. Quoted in Frederick M. Hess, "Re-Tooling K-12 Giving," Philanthropy, September/October 2004, p. 28.

3. The Foundation Center Statistical Services, Top 50 U.S. Foundations Awarding Grants for Elementary and Secondary Education, Circa 1998 (New York: The Foundation Center, 2000); and idem, Top 50 U.S. Foundations Awarding Grants for Elementary and Secondary Education, Circa 2002 (New York: The Foundation Center, 2004).

4. Richard Lee Colvin, "A New Generation of Philanthropists and Their Great Ambitions," in Hess, pp. 21-49.

5. Wendy Hassett and Dan Katzir, "Lessons Learned from the Inside," in Hess, pp. 251-78.

6. Tom Loveless, "How Program Officers at Education Philanthropies View Education," in Hess, pp. 113-35.

7. Stephanie Sanford, remarks at the American Enterprise Institute Conference, "With the Best of Intentions," Washington, D.C., 25 April 2005.

8. Brian C. Hassel and Amy Way, "Choosing to Fund School Choice," in Hess, pp. 195-218.

9. Frederick Hess et al., "Rethinking America's Schools," Philanthropy, March/April 2005, pp. 16-26.

10. Howard Fuller, remarks at the American Enterprise Institute Conference, "With the Best of Intentions," Washington, D.C., 25 April 2005.

11. Hassel and Way, op. cit.

12. Ronald A. Heifetz, John V. Kania, and Mark R. Kramer, "Leading Boldly: Foundations Can Move Past Traditional Approaches to Create Social Change Through Imaginative -- and Even Controversial -- Leadership," Stanford Social Innovation Review, Winter 2004, p. 28.

13. Raymond Damonico, "Introduction: An Unprecedented Challenge," in idem, ed., Can Philanthropy Fix Our Schools? Appraising Walter Annenberg's $500 Million Gift to Public Education (Washington, D.C.: Thomas B. Fordham Foundation, 2000), p. 1.

14. Jane Hannaway and Kendra Bischoff, "Philanthropy and Labor Market Reform," in Hess, pp. 171-93.

15. Leslie Lenkowsky, "The 'Best Uses' of Philanthropy for Reform," in Hess, pp. 81-112.

16. Richard F. Elmore, "Getting to Scale with Good Educational Practice," Harvard Educational Review, Spring 1996, pp. 1-26.

17. Alexis de Tocqueville, Democracy in America, trans. Harvey C. Mansfield and Delba Winthrop (Chicago: University of Chicago Press, 2000), p. 180.

18. Ibid, p. 489.


FREDERICK M. HESS, a former high school social studies teacher, is director of education policy studies at the American Enterprise Institute, Washington, D.C. This article draws on his forthcoming book, The Best of Intentions: How Philanthropy Is Reshaping the Landscape of K-12 Education (Harvard Education Press, November 2005). Ordering information can be found at http://gseweb.harvard.edu/~hepg.