Serial entrepreneur and millionaire philanthropist Pete Kadens is trying to do what President Biden hasn’t been able to get done.

Kadens has created two college-scholarship programs — Hope Toledo, which is entering its third year in his Ohio hometown, and Hope Chicago, which he co-founded with investment-management executive Ted Koenig and launched in September in the city where he ran several businesses. The goal: provide debt-free college to public-school graduates in those cities. If that weren’t ambitious enough, he also wants to pay tuition for any parent or guardian of a scholarship student who also decides to pursue higher education.

Kadens, who retired in 2018 at age 40 to focus on philanthropy, passionately believes education can help lift entire communities out of poverty. He choked up when announcing scholarships last month at several high schools in Chicago. “No one walks out of this room the same today,” he said at a ceremony at Benito Juarez Community Academy in which he shared the stage with fellow philanthropist and Illinois Gov. J.B. Pritzker. “We will walk out of here with a changed perspective on generosity, on humanity, on equality, and the fact that if we all put our minds together as a city and as a community, that we can and will do better.”

Hope Chicago

Kadens, who made the bulk of his fortune as CEO of a billion-dollar cannabis operation, may be chasing a pipe dream. He has put $16 million into the programs but needs to secure $1 billion in Chicago alone for 10 years of scholarships. Fundraising brought in $2 million or $3 million a month after its start late September, but he’s also netted responses from those who politely hint that he’s perhaps smoking too much of his old company’s product.

Such is the conundrum facing Kadens and leaders of college-promise programs popping up nationwide. Theirs is an appealingly simple idea: If you knock down financial barriers to college, more students will go — a goal made more urgent as the pandemic has depressed college-going rates. Biden and progressives like Bernie Sanders packaged the same idea in the president’s Build Back Better plan, but first lady Jill Biden, a community-college professor, acknowledged recently that it has been stripped out in negotiations with Congress.

Many philanthropists and promise backers dream of more than just sending kids to college. To them, promise programs can be elixirs for economic and work-force development, poverty, and a community’s well-being.

The track record of promise scholarships, however, suggests that it takes sizable sums to deliver benefits for a community, particularly in big cities. And local philanthropy often can’t, or won’t, put up such big dollars.

“Even on our best day, we are a very large Band-Aid,” says Saleem Ghubril, executive director of the Pittsburgh Promise. “We are not a solution.”

Born of Local Philanthropy

Nationwide, communities have fallen in love with the college-promise idea. In the past five years, the number of promise programs has grown from 50 to nearly 350, according to College Promise, an advocacy group whose tally includes some programs that aim chiefly to make college more affordable. The Upjohn Institute, which more narrowly defines promise programs and does not include state efforts, counts more than 200.

Local donors — families, companies, universities and community colleges, and others — often drive and fund programs. “You’d be hard-pressed to find a promise program that is not based in or connected in some way to an area’s philanthropic sector,” says Michelle Miller-Adams, a Grand Valley State University scholar and Upjohn researcher. “They are an innovation of local philanthropy.”

Promise programs come with great expectations, thanks to the success of the Kalamazoo Promise in Michigan. In 2005, anonymous donors pledged to pay up to 100 percent of tuition and fees at Michigan state colleges and universities for graduates of the city’s public schools. Unlike traditional scholarships, theirs were based on geography, not on merit or need: It is a promise for essentially any Kalamazoo graduate.

Mandel Ngan, AFP, Getty Images

The donors saw this as an education investment and economic-development play to help make an industrial city edging into decline more attractive to businesses and families. The bet appears to have paid off. The school district has reversed a decades-long enrollment slump, and test scores and college-going rates have jumped. Educators point to a stronger college-going culture, with more students taking Advanced Placement exams. Businesses and residents point to the promise as an incentive for their move to the city.

Kalamazoo imitations sprang up quickly, with a variety of philanthropic backers. In El Dorado, Ark. — population 18,000 — Murphy Oil Company, which had been headquartered in the town for more than half a century, launched a promise program with a $50 million gift. UPMC, Pittsburgh’s giant health system, put in $100 million to jump-start that city’s effort.

In Denver, oil and gas company executive Tim Marquez, the son of public-school teachers, and his wife, Bernadette — who grew up in the Kalamazoo area — seeded a program with a $50 million challenge gift.

Promise Reimagined

Recent promise efforts come in assorted flavors. While often Kalamazoo-inspired and touting evidence of that program’s success, they look quite different.

Many are targeted. Rather than offer aid to a range of two- and four-year institutions, they aim to lift the numbers headed to local community colleges — or sometimes just one. The strategy, they believe, will help provide qualified workers to labor-starved area businesses.

City leaders of Columbus, Ohio, fast-tracked a program in discussion for two years when the pandemic both deepened labor shortages and hurt college-going rates across low-income students, first-generation students, and students of color. Even before the pandemic, only 43 percent of students in the Columbus city schools enrolled in college, down from 62 percent in 2010.

The Columbus Promise is a public-private venture — philanthropy is expected to ante up $4.5 million of the $9.5 million cost for the three-year first phase — to make six semesters at college tuition-free for class of 2022, 2023, and 2024 graduates from Columbus schools. Leaders anticipate an increase in college enrollment of up to 30 percent, and they hope to expand the program to make scholarships available at four-year institutions as well.

“Talent development is the new economic development,” says John Tannous, the effort’s project manager. Columbus’s peer cities, like Raleigh, N.C., and Denver, Tannous adds, have populations with higher college-attainment rates, and “we know jobs go where the talent is.”

The Harvest Foundation in Martinsville, Va., announced the creation of a $10.3 million fund this fall that will pay tuition and costs at the local community college for high-school graduates in Martinsville and surrounding Henry County for the next 13 years. To qualify, students need to earn a minimum 2.5 grade-point average and do community service while in college.

Demand for workers is growing in the rural region, which is attracting new businesses after years of hard economic times. That demand, the foundation hopes, can be answered in part by increased numbers of students heading to college.

Harvest is also determined to strengthen the college-going culture in schools, down to elementary grades. After the program was announced, photographs were sent home to the families of the region’s more than 600 kindergartners, each with their child holding a sign with messages like: “Look who’s going to college!”

Courtesy of The Harvest Foundation

Some recent promise efforts focus on adult learners in addition to high schoolers. Hope Chicago and Hope Toledo are perhaps the most extreme examples, with college aid pledged to high-school seniors and one of their parents or guardians. Kadens, who visited Kalamazoo and other promise cities after he retired, concluded that a two-generation approach would better serve his goal of reducing poverty.

“Poverty is a multigenerational issue,” he says. “The one deficit I saw in these other college-promise programs is that they’re all trying to solve it with one-generation solutions.”

New programs also provide opportunities for part-time college students and those who aren’t going on to college. The Birmingham Promise, in Alabama, which launched in 2019, includes an apprenticeship track — a wrinkle that Mayor Randall Woodfin insisted on after he saw Germany’s vaunted apprenticeship system during a trip overseas.

Initially, high-school students took paid, part-time apprenticeships and internships in fields such as accounting, health care, and engineering. Bloomberg Philanthropies backed expansion of the program with a $1.8 million grant this fall. Now full-time apprentice and intern positions are available that include a salary and college credit for one or two years after students graduate high school. “We want to create as many paths to economic security as possible for as many students as possible,” whether through a four-year degree, a two-year degree, or job training, says Rachel Harmon, the Birmingham Promise’s executive director.

Many new promise programs also provide support to scholarship recipients after they go to college, with coaches and mentors and other guidance to help them attain a degree or credential. “It’s very easy to just write a check for tuition,” says DeWitt House, a senior program officer with the Harvest Foundation. But if you don’t provide support, “you’re just wasting money.”

‘On a Shoestring’

None of these new programs — and very few old ones — are as robust as Kalamazoo’s. Scholarship recipients in other programs benefit, but the impact on school systems and the broader community is not assured.

“Cost constraints are a big issue,” says Miller-Adams of Grand Valley. “All of these are running on a shoestring.” Program leaders often have to make tough, cost-based choices.

With limited dollars, programs cut corners from their ideal and wrestle with questions like: Should we make small scholarships available to all students or award bigger grants to a smaller number based on need or merit? Four-year scholarships are expensive — do we instead offer funding for two years? One year? Can we afford to pay for support services in college?

Critically, promise scholarships are typically packaged as “last dollar” aid awarded only after Pell grants, college grants, and all other support options (excluding loans) are exhausted. In tuition-only promise programs, few, if any, dollars flow to students whose federal Pell grants cover their tuition, yet they may still be unable to pay for books, fees, housing, and transportation.

Kalamazoo, by contrast, offers “first dollar” scholarships that cover tuition and fees regardless of other aid. Recipients can use Pell or other grants to pay for housing, transportation, fees, or other costs. Kalamazoo also now covers costs at private institutions in Michigan, and in recent years, it has been investing in high-school and college staff and programs to help students prepare for higher education and then earn a postsecondary credential.

“Kalamazoo casts a large shadow,” says the Kresge Foundation’s Edward Smith, who leads a new Kresge effort, CoPro2.0, that is examining and supporting college-promise programs. “Many city and program leaders would say, ‘We’d do that if we had those resources. But we’re not bankrolled by a few families with millions to give’” like the Kalamazoo Promise.

In Birmingham, leaders prioritized a strong support system for promise students in college to ensure they get degrees or credentials. Scholarships also are available for four-year schools as well as two-year and certificate programs; community-college-only scholarships potentially can prompt students who aspire to a bachelor’s degree to opt instead for a two-year track.
Given those hefty investments, Birmingham couldn’t afford first-dollar scholarships, says executive director Harmon. “If we had a magic wand, we would absolutely be a first-dollar scholarship,” she says.

Also, donors are attracted to the idea that the program will tap other aid before turning to the scholarship. “It was really compelling to funders for us to say: ‘Hey, we are expending every other resource that’s on the table,’” Harmon says.

Columbus faced hard choices, too. The program’s first phase will include support for students in both high school and college. With equity in mind, the program will be among the first to make scholarships available to undocumented students and Deferred Action for Childhood Arrivals recipients.

For now, however, it will offer aid only after Pell grants have been exhausted (though with a $1,000 stipend for other expenses). Students from most of the city will be eligible, but not all.

Project manager Tannous says of the program: “It isn’t the one we’d build if we had unlimited dollars, but it’s not the standard promise.” Speed was critical, he adds, as the pandemic has hurt the Columbus labor market and the college-going culture of schools. “We didn’t feel we had the luxury of raising money for the next five years before announcing a program that includes every population.”

Money for the Long Run?

Kalamazoo’s anonymous donors promised to fund the program in perpetuity. Other organizations haven’t found it easy to raise money for the long run. “It’s often the case that programs at the city level start with seed funding from philanthropy, then fade out or foreclose” or change eligibility criteria as funding tightens, says Kresge’s Smith. The grant maker’s CoPro2.0 effort was created to help make promise programs more equitable and financially sustainable.

In Muskegon County, Mich., a public-private partnership introduced scholarships for all graduates of three schools, then added a requirement of a 3.5 grade-point average in 2018 when the program expanded to 16 schools. Officials said the requirement ensured the program was funded for the long run, but the next year, few students in high-poverty schools qualified.

Some areas simply don’t have a roster of grant makers, wealthy families, or big-revenue corporations. In Jackson, Mich., officials abandoned their planned promise program when two years of fundraising netted only a few thousand toward the $2 million needed.

Pittsburgh offers perhaps the best example of how the vicissitudes of philanthropy’s backing can influence the shape — and impact — of programs. Launched with the high-school school class of 2008, the city’s promise program has provided scholarships for more than 10,000 students — more than 70 percent coming from low-income families — along with wraparound services. The promise of scholarships has contributed to growth in the city’s population after decades of decline, says Max King, who helped start and direct the Pittsburgh Promise in his roles as top executive at both the Heinz Endowments and the Pittsburgh Foundation.

Alexandra Wimley, Pittsburgh Post-Gazette, AP

“It’s been wonderfully successful,” he says of the program.

Still, fundraising hasn’t been easy. UPMC kick-started the organization with a 10-year, $100 million contribution. It was a matching gift, but the organization fell $56 million short of the $150 million match goal. (UPMC still made its $100 million gift.) Most years, the program has awarded a maximum of $5,000 in last-dollar aid to students.

Altogether, the organization has raised $230 million since 2008 — a remarkable sum, yet still about $35 million shy of what it needs to continue through 2028. Executive director Ghubril is confident that goal will be met. Beyond that, the future is uncertain. “We’ve heard loudly and clearly from funders that it’s time to wrap things up,” he says.

That’s perhaps to be expected. Local foundations and donors — like most philanthropy — typically have a short attention span. “Some bright, shiny object comes along and everybody says, ‘Oh, let’s go after that,’” King says.

Also, place-based grant makers and philanthropists also often shy away from long-term commitments, in part because of competing demands for their support for other groups. The Pittsburgh Foundation, for instance, was the lone philanthropy that renewed its initial 10-year commitment to the promise program for another 10 years. (Some made rolling three-year or year-by-year commitments.)

The Pittsburgh Promise also hasn’t recorded Kalamazoo-like eye-popping numbers that would wow donors. The city’s college-going rate has climbed four percentage points, to 54 percent — an improvement when such numbers have slumped nationally, but not a stunning change. Enrollment in the city’s public schools, meanwhile, has dropped by roughly a quarter, to about 20,000 students.

Were the millions put toward scholarships worth it? King says early discussion of the Pittsburgh Promise considered a host of possible benefits for the city. “And I remember saying, ‘Even if we don’t achieve all that, we still will have sent thousands of capable young people to college. And that’s a success.’”

Deeper Pockets

Promise backers argue that philanthropy is fulfilling one of its traditional roles: to test and prove a concept that the deeper pockets of government can bring to scale. Ironically, they are in part addressing a problem that government itself has created: State legislatures since the turn of the century and particularly after the Great Recession have cut their support to higher education, leaving families to cover more of the costs.

Ultimately, if states or the federal government decide to fund tuition-free college programs, “the promise concept will have played a brilliant bridging role to a new future,” King says.

This happened in 2014 in Tennessee, when then-Governor Bill Haslam persuaded his legislature to make the state the first to offer tuition-free community college to all of its high-school graduates — a direct outgrowth of a philanthropy-driven Knoxville program Haslam had helped launch when he was the city’s mayor.

If the federal government moves to cover tuition, philanthropy-backed promise programs can pivot and begin to cover costs such as mentors and coaches in high school and college.

Kurt Steiss, THE BLADE

Kadens, however, is not waiting for the government to step in. He’s hired Janice Jackson, former CEO of Chicago’s public schools, to run Hope Chicago, which he expects to raise $100 million — a tenth of its $1 billion goal — in the first year. Eventually, he will try to land an anchor gift for the Chicago effort — say, $500 million — from a big player like the Gates Foundation, maybe, or MacKenzie Scott.

Ultimately, he envisions Hope programs across the country. “My dream is not just Toledo and not just Chicago,” he says. Whether Joe Biden gets it done or not, he believes this is an idea for the nation.

Reporting for this article was underwritten by a Lilly Endowment grant to enhance public understanding of philanthropy. See more about the grant and our gift-acceptance policy.