Filling the Civic Gap

Meet Donald Fisher, the private billionaire with unprecedented sway over ordinary San Franciscans' lives

It's three hours into the last day of school at KIPP Bayview Academy, a nonprofit, 160-student, fifth-and-sixth-grade charter school run out of a former Catholic elementary just over the hill from Candlestick Park. But there's no noisy, school's-out scrum in the hallways. Instead, students are in class giving year-end presentations, finishing assignments, and otherwise exploiting every last minute of class time.

The silence makes it easy to hear the soft voice of 12-year-old Markia, who, like most of her classmates, comes from the poor, predominantly black neighborhood surrounding the school. She stands in the hallway pondering her future out loud.

"I'm thinking about Thacher," says Markia, referring to an exclusive Ojai, Calif., boarding school at which the horse-to-student ratio is three to five, "and Exeter," she adds, in reference to Phillips Exeter Academy, the elite New Hampshire boarding school traditionally associated with Harvard.

Gap Chairman Emeritus and KIPP Foundation benefactor Donald Fisher.
Najib Joe Hakim
Gap Chairman Emeritus and KIPP Foundation benefactor Donald Fisher.
Principal Molly Wood talks to students in the hallway at the KIPP Bayview Academy.
James Sanders
Principal Molly Wood talks to students in the hallway at the KIPP Bayview Academy.
KIPP Bayview Academy on the grounds of a former Catholic school at 1060 Key St.
James Sanders
KIPP Bayview Academy on the grounds of a former Catholic school at 1060 Key St.
Fisher's 2002 memoir, published exclusively for family, friends, and associates.
Fisher's 2002 memoir, published exclusively for family, friends, and associates.

Considering Markia's milieu, her bold aspirations don't seem far-fetched. She recently got back from a class field trip to Thacher. KIPP Bayview's eight-hour school days and incessant pro-college message, and the whirlwind energy of Molly Wood, the school's 32-year-old Stanford MBA principal, are all geared toward getting kids to think, realistically, about places like Exeter.

KIPP Bayview is one of 52 such schools around the country (including six in the Bay Area) supported by $46 million in donations and organizational advice from retired Gap Inc. founder Donald Fisher — philanthropist, social idealist, and political campaign donor extraordinaire. Forbes magazine puts Fisher and his wife Doris' combined wealth at $2.6 billion, and the Gap-derived wealth of his three sons (who all went to Exeter) at another $4.6 billion, putting his combined family just outside the top 100 in the world of billionaires. According to an April Fortune magazine report, Fisher family members own at least 37 percent of Gap, Inc., stock. The company has been struggling for nearly a decade, having lost two-thirds of its market value due to declining store sales during the early 2000s, but the stock has rebounded to trade in the same range it did 10 years ago.

Fisher stepped down as CEO of the Gap in 1995, handing greater control of the business to his sons, he says, at a time when he began thinking about how he'd spend the next stage of his life. He had spent his business life identifying what he wanted, then going to whatever lengths it took to get it. And now he's applying the same ethos to his charitable and political enterprises.

"I'm the type of person who focuses, and I tried not to be all over the lot. I ended up picking KIPP" — which stands for Knowledge Is Power Program, a charter school chain focusing on long school hours, small classes, extra teacher attention, and, above all, getting kids into college — "as the best thing I saw out there," says the 77-year-old Fisher during a meeting in his 15th-story office at 2 Folsom St.

In terms of his presence in San Francisco and California public life, however, Fisher is all over the lot. He's spending portions of his vast fortune to change the way your kid goes to school, to influence the outcome of your local city hall or statehouse election, to alter the city's skyline, to refurbish your nearby park.

"I don't have anything to gain out of anything I do here. It's to improve the life of people that live here. I care a lot about that," Fisher says. "I like to be able to think that people's lives are better because of things that I think are appropriate. But to other people, they may think they are terrible ideas."

And that's the rub.

KIPP schools, in addition to Fisher's support, received in 2004 $7.9 million from the Bill and Melinda Gates Foundation, part of some $2.3 billion the Gateses spent on education between 1999 and 2004. (In fact, Bill Gates just announced last week that over the next two years he will transition away from the day-to-day operations of Microsoft to focus full time on his philanthropic efforts.) It's an example of a trend in which the mega-rich are taking a greater role of institutions and programs once run by ordinary voters.

This impending social transformation hasn't received much public notice, aside from some hoopla over the giving habits of tycoons such as George Soros and Bill Gates. But if KIPP is any guide, these magnanimous magnates are at the vanguard of a trend that may shrink the portion of public life that's subject to public input.

Two decades of vast national wealth creation, along with plummeting income and capital tax rates at the highest levels, have spawned legions of very rich Americans. Many of them have transferred their wealth into personal tax-advantaged nonprofit foundations because, as Fisher notes in his 2002 memoir, Falling Into the GAP: The Story of Donald Fisher and the Apparel Icon He Created, "Philanthropy is a good investment, as far as taxes are concerned." Indeed, earlier this month the Senate failed to pass legislation that would have abolished the inheritance tax, thus helping to protect the tax sheltering role of private philanthropic foundations.

Meanwhile, in the area of politics, changes during the past few years in campaign finance laws have elevated the importance of rich, ideological donors, as opposed to interest-group donors. And "entrepreneurial philanthropist" business whizzes such as Fisher, who seek to achieve maximum social change for each dollar spent, have discovered a great synergy between supporting their philanthropic goals and financing the nonprofits that now dominate American politics.

There's much to like about this arrangement. Government social services have been declining for decades, especially in California, so it's comforting to see philanthropists fill some of the gaps. It's also hard to visit a KIPP school without leaving impressed by the dreams of Markia — or the hard work of her teachers, who spend their summers recruiting new students at parks, shopping centers, and anywhere else 10-year-olds congregate.

But it's also easy to imagine an end game in which KIPP and other charter academies supplant regular public schools. As the chain grows, for example, it will hire more and more teachers, whose job includes spending summers recruiting more and more kids. The increased student population will mean hiring more teachers, whose salaries are paid by the state. (A 2000 state ballot proposition backed by Fisher, venture capitalist John Doerr, NetFlix founder Reed Hastings, and the California Teachers Association now requires school districts to provide free facilities to charter schools when they recruit new students.) And more teachers means more recruiting.

As this snowball effect keeps rolling, and as more kids shift to charter schools — the Fisher-backed chain is now contemplating a new S.F. high school — the San Francisco Unified School District will be compelled to close ever more publicly run schools.

The city's school system might thus transform dramatically without a single vote having been cast.

Maybe this change will work out for the best. There's something to be said for enabling principals to get rid of bad teachers, and KIPP (along with many of its sister charter chains) is neither unionized nor encumbered by extensive rules that protect teachers' jobs. It's likewise hard to criticize the idea of encouraging smaller schools, or of focusing on getting kids from poor families into college.

But as the ideologically minded mega-rich like Fisher and Gates take ever greater control of American public institutions, it's worth taking a closer look at one of these unelected philosopher-kings so that we might imagine what sort of future he's got in mind for the rest of us.

In left-tilted San Francisco, it's easy to forget that Republicans such as Donald Fisher can be committed idealists. A bike ride around the city can cure that oversight.

If you peruse the old Presidio Army base (Fisher was among the founding board members who turned it into a national park), or notice in your neighborhood a refurbished public school building (paid for with money from a Fisher-backed facilities bond), or live near a San Francisco Boys & Girls Club (a charity that was among Fisher's early philanthropic ventures), you've come across the handiwork of the founder of the Gap.

If you walk through Golden Gate Park's glories — the Hall of Flowers (Fisher spent $1 million toward refurbishing it) or the new de Young Museum (he gave "substantial money" to it and the under-reconstruction California Academy of Sciences, he explains) — you've seen his work.

If you take in a game played by the S.F. Giants (a club briefly part-owned by Fisher in an effort to keep the team in the city), or walk by the growing University of California campus at Mission Bay (a development spawned by Fisher's matchmaking efforts), you're viewing yet more of his civic artifacts. The Edison Charter Academy, which Fisher paid to establish in San Francisco, and the growing KIPP chain are likewise Fisher's doing. He's also the longest sitting director of the California State Board of Education.

And if you've had your mailbox cluttered with glossy political fliers, answered your phone to hear a recorded political message, or noticed a billboard paid for by an obscure political committee, you've encountered another Fisher hobbyhorse.

He is one of the more prolific, eclectic, and omnipresent political donors in California. Though he's a Republican, he often supports moderate Democrats, and regards Nancy Pelosi and Dianne Feinstein as personal friends. State records show that Fisher and his wife donated $1.2 million to political causes around the state last year. But that's no good measure of his efforts to influence state and local politics.

Thanks to the vagaries of modern campaign-finance law, much politicking nowadays is done through nonprofit, charitylike corporations with no obligation to identify their donors. Fisher, by his own account and those of other San Francisco political insiders, has been a Johnny Appleseed for this type of organization. The result has been a citywide political scene influenced by a thicket of secretive campaign-funding front groups with names like the California Urban Issues Project and Citizens for Reform Leadership, which in turn are subsets of local Fisher-launched, business-friendly political groups such as the Committee on Jobs and SFSOS.

This largesse has earned him fans among the political moderates who've benefited from this patronage. When I met Fisher last week, for example, he'd just gotten off the phone with Mayor Gavin Newsom, who's trying to raise money for a San Francisco Olympic Games bid.

But it has also earned him the enmity of the city's more liberal politicians, many of whom have been subject to political mailers sent by groups Fisher has supported.

"I think he's a mean, rich old man who's trying to be relevant and is afraid of dying," says Aaron Peskin, president of the San Francisco Board of Supervisors.

"He's got guys scaring him, and he responds to it," says Matt Gonzalez, former president of the Board of Supervisors.

"I don't have a problem with people who have opinions, but being wealthy doesn't make you more important than people who aren't wealthy," says S.F. school board member Jill Wynns, who clashed with Fisher over his attempt during the 1990s to give the for-profit Edison Schools chain a foothold in the city.

Politicos frustrated by the increasing influence of the mega-rich have a lot of hair-pulling ahead of them, however, because those folks are only going to take a larger role in public life. Their time might be better spent examining what makes these emerging power brokers tick.

Though the Gap's headquarters at Folsom and Embarcadero was built with the sale of unassuming casual wear, the suite of Chairman Emeritus Donald Fisher is dressed to impress. The opulence of the office suite is an imposing contrast to Fisher himself, a slender bald soft- and plain-spoken man dressed in the understated style of the company he founded.

On the 15th floor, the elevator bank opens out into a blond-wood-floored art gallery that seems a block long and is the width of a large apartment. To reach Fisher's sanctum, a visitor wends through and past a forest of avant-garde paintings and statues before arriving at an office with a panoramic view of the bay, like the one Fisher enjoyed while growing up in the exclusive neighborhood of Seacliff.

"I remember [Fisher] contacted my husband 15 years or so ago, and he said, 'I want headquarters with an unobstructed view of the Bay,'" recalls Ellen Magnin Newman, a high school classmate of Fisher's who is married to former S.F. Redevelopment Agency President and former S.F. Planning Commission President Walter Newman. "My husband ... knew the real estate market pretty well, and my husband helped him get it."

For Fisher, "getting it" meant cutting a deal with the Redevelopment Agency to condemn and seize the property at 2 Folsom, whose owner didn't want to sell at Fisher's price. According to a 1997 SF Weekly investigation by Chuck Finnie, the Redevelopment Agency's preferential treatment to Fisher was worth some $18 million in property discounts.

"That's the beauty and excitement of this gray area of my life, which might start with Gap business and take me to much broader areas of influence, or begin with something very private, only to bring me back to our business in a new and rewarding way," writes Fisher in his memoir. These themes of intersecting worlds of personal and business life, and of wanting something and getting it by hook or by crook, runs through the 724 pages of Falling Into the GAP, a professionally edited and published book co-written with Fisher's longtime ad man Art Twain, and distributed, as the introduction points out, "solely to family, friends, and business associates."

By his own estimation, Fisher was a champion athlete (he swam in local meets and in college), a ladies' man (beautiful girls were everywhere), a bon vivant (scenes not set in nice parts of San Francisco are set in Lake Tahoe, San Diego, or offshore), and a man deathly afraid of losing.

"If there is an engine that drives us toward success," he writes, "I think winning is the force that drags us behind it, while fear of losing pushes relentlessly from behind. For me, rear propulsion has been my greatest source of energy."

So he trumped his father's middling business successes, first by turning Downtown flophouse hotels into SRO residences. Improvements included ripping out individual telephone lines in the rooms and replacing them with a single phone in the hallway.

Soon after he started the Gap in 1969 as an all-Levi's jeans outlet, Fisher ran into what he calls "union trouble," in the form of a 1971 organizing drive at his warehouse by the International Longshore and Warehouse Union. In response, Fisher emptied out his warehouse on a Sunday morning and moved to another facility, so that his employees arrived Monday to an abandoned workplace — and no job.

"I then made a sweetheart deal with the shoe clerks union," Fisher writes.

When that contract was up and the Teamsters organized his workers, Fisher brought in scabs. With the help of some adroit lawyering, Fisher then extended his sweetheart deal with the shoe clerks union.

He also encountered union hassles when making TV commercials for the Gap, so he had spots produced in a nonunion shop in Mexico City. For Fisher, that meant "paying an emotional and financial price in aggravation and bribes."

Working as a retailer of Levi's meant struggling against another meddling organization — Levi Strauss management. In his book, Fisher describes maneuvering his way around the company's stipulations about how Levi's-sponsored advertisements should look; eventually, he got out from under the supply, distribution, and price constraints of Levi's by creating Asian knockoffs of other name-brand clothing. By last year the chain Fisher created included 2,850 North American stores, and the company's various divisions enjoyed net sales of $16 billion.

In 1995, though, Fisher resigned as CEO of Gap Inc. and began focusing more on his role in public life.

After Fisher stepped down, he says, he gave some thought to what to do with the next phase of his career, and settled on philanthropy. Though he's known locally for his large donations to museums, UC Berkeley's Haas School of Business, and political lobbying groups, Fisher has devoted his greatest energy and money to schools. This endeavor — like his building of Gap Inc. — appears to have been inspired by a fear of losing and a zest for fighting what he views as staid, old bureaucratic institutions (such as labor unions).

"I think of education in this country as the most serious social problem we have today," he says. "If we aren't competitive intellectually, we're going to lose in the world economy. If you look at what's happening in China, India, the Baltic countries, the European countries, you see that we're falling behind. ... I guess I could have focused on health, poverty, homelessness. But I decided education was the thing that was most important to me. ... It's an enormous industry that is quite bureaucratic and basically, in my opinion, not very well run."

His first foray into this area in 1998 was significant: a pledge of $25 million to help establish the for-profit Edison Schools in California. In backing Edison, Fisher applied the same union-battling spirit that he had employed against the ILWU and the Teamsters during the early days of the Gap.

"I liked Edison's philosophy on teaching and appreciated that they weren't held back by the constraints that plagued public schools since they weren't part of the local public school system bureaucracy," Fisher writes. "Public schools had a policy of seniority and tenure that allowed poor teachers to remain in the classrooms. Teachers' unions perpetuated this problem by making it difficult to release inadequate teachers from their schools. But the Edison Schools were generally charter schools and were not unionized. So they could hire the best teachers and fire the worst ones."

The U.S. Securities and Exchange Commission, however, found in 2002 that Edison had lied on its financial statements. The company had falsely claimed in government filings that school district payments going directly toward teacher salaries and other school operating costs were Edison Schools Inc. revenues.

Fisher moved on to other education ventures, working to expand KIPP, which had been founded in 1995 in Houston. He made an arrangement with the Haas School of Business (where he's a benefactor) to run a training program for KIPP administrators.

"I liked the philosophy of training school leaders in business," Fisher says. "You've got to hire and fire teachers, motivate people, raise extra money from what the school system can give you. And I was interested in the fact that the KIPP schools were charter schools. There's a lot more freedom in what could be done there than there was in the public system."

Last year Fisher's family foundation, the Pisces Foundation, spent $8.7 million on donations to trade associations lobbying on behalf of charter schools, and to charter school chains in the process of expanding. It gave $1.2 million to the California Charter Schools Association, a trade group dedicated to lobbying and other activities; $1 million to the National Alliance for Public Charter Schools, another trade association; $520,000 to a group called GreatSchools Inc., which provides school rating services; $900,000 to Green Dot Public Schools, an L.A.-based charter school group; $1 million to Leadership Public Schools, a San Francisco-based charter school chain with facilities in Richmond, San Jose, Oakland, and Hayward; $500,000 to the Oakland Unified School District, which recently embraced charter schools; and $1 million to Teach for America, which trains top college graduates to teach for two years in struggling schools. The foundation also gave numerous smaller grants to individual charter schools around the country. And Fisher recently pledged $6 million to KIPP's national efforts, on top of the $40 million he's already given, said Steve Mancini, KIPP Foundation's spokesman.

He has complemented the pro-charter, anti-union thrust of his philanthropy with political lobbying and giving. Last month, for example, leaders of the Service Employees International Union and the American Federation of State, County, and Municipal Employees urged Californians to boycott Gap stores as retribution for a $25,000 donation by Fisher to oppose the failed Proposition 82, which would have expanded California's unionized public education system to preschools, the vast majority of which are now privately run. The unions also cited a $100,000 contribution to oppose the measure from the California Business Roundtable, of which Fisher is a board member.

Last year, Fisher gave $94,700 to an independent campaign expenditure committee run by EdVoice, a $1.5 million-a-year Sacramento lobbying group Fisher helped found, and on whose board he currently sits.

"Its objective is to be a balance to the teachers' unions in the legislature," Fisher told Philanthropy magazine last year.

Fisher has also used his role as a member of the State Board of Education to lobby for policies that make it easier for charter schools to open new branches and lure students and state subsidies away from public schools.

"If you don't get your charter because the district hardballs you, you go to the county; if they refuse, you go to the state. The state has overridden the counties and districts, and granted charters to groups they rejected, which makes the counties and districts more inclined to grant charters themselves," Fisher said during his Philanthropy interview.

These efforts all seem to lead in the same direction — a publicly run school system that shrinks year by year, replaced by privately run schools backed by the foundations of Fisher and his fellow entrepreneurial philanthropists. It's a radical transformation that might have seemed impossible a few years ago, but it was likewise improbable that a 1980s discounter of Levi's might transform into the country's leading producer of casual wear.

It's easy to watch the steady decay in California's public services, such as schools, and the steady ratcheting up of foundation spending taking its place, and to admire the philanthropists who've bridged the gap. It's tempting to view the many millions of dollars of personal wealth now poured into independent expenditure committees — like the ones that helped elect our mayor, funded recent state Senate and Assembly elections, and turned the tide on state ballot propositions — and feel indifferent. After all, magnates come in all stripes; many have opposing views, and oftentimes their donations cancel one another out.

In any case, there's a strong possibility that Markia, the 12-year-old KIPP Bayview student, wouldn't be fantasizing about attending Exeter if it weren't for Donald Fisher.

But Fisher's long game (or as long as a 77-year-old can have) goes beyond trying out new ideas in a handful of schools with the goal that they might seep into public education at large. Rather, he's an old union-buster who made billions by outwitting what he saw as lumbering, outdated organizations such as Levi Strauss, and who sees the same complacency and inefficiency in public schools. Now, his political donations, his lobbying, his philanthropy, and his leadership of institutions such as the State Board of Education, EdVoice, and the California Business Roundtable may shift public education on a scale similar to the changes he created in American retailing.

I'd be loath to tell a billionaire to stop donating to a charitable cause he sincerely believes will improve the lives of the least fortunate. But we haven't really thought out what happens when we give up our democratic powers to a growing army of ideological philanthropists.

That said, there are ways to resist this trajectory. Every time a candidate, ballot measure, or lobbying front group is the beneficiary of large donations from ideologically motivated tycoons, voters get the option of accepting this trend as unavoidable and maybe even beneficial. (Or they can resist the urge to support these well-funded candidates and measures, and reject the view that the Donald Fishers of the world should determine everyone's best interest.)

Fisher's own example and advice might be useful for those who believe citizen control of the public realm is worth fighting for.

"I don't think we can sit back and wait for someone else to take the lead, just so we don't have to expend energy or money," Fisher writes. "We've got to utilize the recourse it takes to advance our causes and hold up our part of the deal."

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