Bloomberg Busi­ness­week,

Ac­tivist in­vestors aren’t chang­ing one thing about the sta­tus quo: wo1n Nom­i­nees of 5 big ac­tivists ——Carol Hymowitz, Bran­don Kochkodin, and Stephanie Ruhle 2011. 5went seats since to women.

Bloomberg Businessweek (North America) - - Markets/finance -

Arch­dio­cese of Philadel­phia’s 17 high schools and four spe­cial education in­sti­tu­tions. They all see a chance to im­prove a sys­tem that, de­spite crum­bling in­fra­struc­ture and tight bud­gets, pro­duces stu­dents who test bet­ter and grad­u­ate at higher rates than their pub­lic school peers.

“That’s what Wall Street does,” Bren­nan says. “We look for in­ef­fi­cien­cies in things that have mas­sive po­ten­tial, like a good com­pany with a bad bal­ance sheet. We look for up­side—and we see up­side here.”

Th­ese ac­tive donors are most of­ten drawn to in­sti­tu­tions in the poor­est, most dan­ger­ous neigh­bor­hoods, says Andy Smar­ick, au­thor of Catholic School Re­nais­sance. The lat­est tech­nol­ogy, higher teacher salaries, and up­graded cur­ric­ula are among their pri­or­i­ties, he says. “They want the room to roam” as they test new ideas.

In that sense, they share plenty with their coun­ter­parts in the char­ter school move­ment. There, hedge fund man­agers in­clud­ing Carl Ic­ahn and Daniel Loeb have ponied up mil­lions and stirred the ire of crit­ics who say they di­vert badly needed re­sources from ex­ist­ing pub­lic schools.

Wall Street’s Catholic school ac­tivists stand sim­i­larly ac­cused. And though test scores have im­proved where the donors have jumped in, skep­tics are rais­ing ques­tions about the im­pact on the schools’ religious iden­tity.

Among those con­cerned is Jamie Arthur, se­nior fel­low at the Car­di­nal New­man So­ci­ety, founded in 1993 to op­pose sec­u­lar­ism in Catholic education. Arthur says she finds some schools fo­cus too much on aca­demic ex­cel­lence alone and not enough on weav­ing Catholic val­ues into ev­ery les­son. “Hav­ing a prayer at the be­gin­ning and end of the day is great, but it’s not enough,” she says.

Prin­ci­pals, for ex­am­ple, should be prac­tic­ing Catholics, she says. That’s the rule in the Arch­dio­cese of New York. But Mcniff, the su­per­in­ten­dent, granted two ex­cep­tions af­ter a mostly lay board in­sisted the best can­di­dates weren’t of the faith. (One con­verted af­ter be­ing hired.) Mcniff backs ex­ist­ing pol­icy, but he ex­pects the de­bate to in­ten­sify.

The Se­cond Vat­i­can Coun­cil pre­scribed an ex­panded role for laypeo­ple in run­ning Catholic schools. Dwin­dling num­bers make it nec­es­sary: The ranks of U.S. priests have dropped to 38,000, from 59,000 in 1965, ac­cord­ing to Ge­orge­town Univer­sity’s Cen­ter for Ap­plied Re­search in the Apos­to­late. The num­ber of nuns has fallen to less than 50,000, from 180,000.

As for stu­dent en­roll­ment, it peaked in 1965-66, with 5.6 mil­lion in 13,000 schools. Now 1.9 mil­lion at­tend 6,500. Only 12 per­cent of Catholic chil­dren go to Catholic schools, com­pared with 48 per­cent in 1965.

The en­roll­ment trend could end dis­as­trously, says Jack Con­nors, co-founder of the Bos­ton ad agency Hill Hol­l­i­day and head of the city’s Cam­paign for Catholic Schools, which has raised $79 mil­lion. There are 90 parish schools left in the Bos­ton Arch­dio­cese, he says, down from 250 in 1965. At the rate of three closings a year, the num­ber will be zero in 30 years. “If that hap­pens, it’s the end of our faith,” he says.

Saint John Paul II is the con­sol­i­da­tion of seven parish schools in some of Bos­ton’s poorer neigh­bor­hoods; there are four retro­fit­ted cam­puses. An­nual tu­ition is $4,600. At the new Lower Mills cam­pus in Dorch­ester, only half the stu­dents are Catholic, but a 10-minute prayer ses­sion in the gym starts the day. “I be­lieve this is the best school in Bos­ton,” says prin­ci­pal Lisa War­shaf­sky, who is Catholic and su­per­vises a fac­ulty of 20 full-time teach­ers, all laypeo­ple.

Many donors aren’t Catholic. The late Robert Wil­son, a hedge fund founder who gave tens of mil­lions of dol­lars to New York Catholic schools, was an athe­ist. Stephen Sch­warz­man, the Black­stone Group CEO who, with his wife, Chris­tine, do­nated $40 mil­lion last year to the New York Arch­dio­cese’s In­ner-city Schol­ar­ship Fund, is Jewish. (Peter Grauer, chair­man of Bloomberg LP, which owns

is pres­i­dent of the fund’s board of trustees.)

San Fran­cisco Bay Area ven­ture cap­i­tal­ist B. J. Cassin and his wife, Bebe, are push­ing the fron­tiers of lay in­volve­ment. Their foun­da­tion has given $22 mil­lion to more than 50 Catholic ed­u­ca­tional in­sti­tu­tions across the U. S., in­clud­ing 18 Cristo Rey high schools, which fo­cus on low­in­come stu­dents who help pay their way by shar­ing off- cam­pus jobs. Last year, Cassin started the Drexel Fund,

Th­ese in­vestors try to in­flu­ence com­pa­nies by shak­ing up their boards

Ic­ahn As­so­ciates Third Point Part­ners Per­sh­ing Square Cap­i­tal

Valueact Cap­i­tal El­liott Man­age­ment

Over the same pe­riod, women filled

about 26 per­cent of board open­ings at 08board S&P 500 com­pa­nies Di­verse per­spec­tives “help rep­re­sent the share­hold­ers,” says Beth Com­stock, a vice chair at Gen­eral Elec­tric and a di­rec­tor

on Nike’s board A spokes­woman for Daniel Loeb’s Third Point, which nom­i­nated no women, says the firm played a role in mak­ing Marissa Mayer

the CEO at Ya­hoo!

0 The num­ber of women Carl Ic­ahn nom­i­nated

for 94 board seats he tried to fill

which puts money into a range of faith-based schools. So far, he says, more than $15 mil­lion, or half the $30 mil­lion goal for the year, has been raised.

A Mas­sachusetts na­tive who grad­u­ated from the Col­lege of the Holy Cross in 1955, Cassin can re­mem­ber the au­thor­i­tar­ian ways of clergy-run education. “The vibe now is more re­al­life,” he says, and ed­u­ca­tors “with fam­i­lies and chil­dren can re­late to the stu­dents bet­ter.”

Atchin­son of Adage Cap­i­tal was a Pres­by­te­rian when he started rais­ing money for Saint John Paul II. He con­verted a year and a half ago, in­spired by how much the fac­ulty and staff did for their stu­dents. “We need th­ese schools,” Atchin­son says, “and we need them to be run as well as they can.” �Tom Moroney

The bot­tom line Catholic schools no longer have an army of priests and nuns to rely on. Wall Street donors see a chance to make an im­pact.

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