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1. NONPROFIT INVESTOR
INDEPENDENT RESEARCH FOR PHILANTHROPY
NewSchools Venture Fund SUMMARY
NewSchools Venture Fund (“NVF”) raises and invests capital to
Nonprofit Investor Rating: support education entrepreneurs to help them grow their
NEUTRAL organizations and connect their work with public school systems in
targeted urban areas.
Mission Statement
STRENGTHS
The NewSchools Venture Fund works as a
▲ High impact per dollar. NVF seeks to create a disproportionate
nonprofit venture philanthropy firm to
transform public education by raising capital impact relative to its dollar contribution by investing in and
from both individual and institutional establishing Charter Management Organizations (“CMOs”).
investors. Those funds are then used to ▲ Proven, scalable model. NVF has proven its model with the
support promising education entrepreneurs,
inception of its fourth fund. NVF continues to scale with growing
helping them grow their organizations to scale,
and connecting their work with public school fund sizes, more specific goals, and diversification of its funds.
systems - particularly within targeted urban ▲ Strong network of sponsors. NVF is supported by many
areas. recognized donors. Some, including the Gates Foundation, have
shown strong support through repeated large endorsements.
Financial Overview
$ in MM, Fiscal Year Ended August 31
CAUTIONS
▼ Transparency of results and impact. NVF has limited
2008 2009 2010
Revenue and Support $16.6 $20.6 $23.4 transparency of the performance of its investments, making it
Operating Expenses $19.4 $20.2 $21.3 difficult to assess its effectiveness in achieving its goals.
● Expense allocation trends. While a healthy proportion of
% of Total:
Program Expenses 93.6% 92.2% 91.7%
expenses are devoted to grants and assistance, an increasing
G&A 4.6% 5.6% 5.5% percentage is being spent on administrative costs and other items.
Fundraising 1.8% 2.2% 2.9%
● Performance measurement challenges. Data that NVF collects
from CMOs is largely self reported and does not track individual
Year Founded: 1998
student growth, making it difficult to make comparisons across other
schools and districts. The indirect impact that NVF strives for is
Contact Details difficult to measure.
NewSchools Venture Fund
1970 Broadway, Suite 350
Oakland, CA 94612 RECOMMENDATION: NEUTRAL
(415) 615-6860
NVF offers an innovative approach to transforming public education. Their
business model focuses on investing in and building CMOs, an education
http://www.newschools.org
EIN: 94-3281780 structure that NVF believes has a strong impact on student performance.
NPI recommends that NVF make an effort to increase its reporting
Analyst: James Peng transparency to allow investors and potential donors to fully evaluate the
Peer Review: Ruth Yen, Katie Davis organization’s impact and performance of its investments.
Publication Date Nonprofit Investor Research | nonprofitinvestor.org
June 4, 2012

2. OVERVIEW OF NEWSCHOOLS VENTURE FUND’S ACTIVITIES
NewSchools Venture Fund was created in 1998 by social entrepreneur Kim Smith and venture capitalists John Doerr and
Brook Byers. NVF works as a nonprofit venture philanthropy firm to transform public education by raising capital from
both individual and institutional investors. Those funds are then used to support promising education entrepreneurs in
both for-profit and nonprofit ventures, helping them grow their organizations to scale, and connecting their work with
public school systems - particularly within targeted urban areas.
Prior to making an investment, NVF screens an organization’s ability to
impact problems in education. The venture must be aligned with NVF’s
current strategy, must directly benefit the education of low-income students,
must be scalable and sustainable, and must have a further indirect
educational impact on students in need. After making an investment, NVF
assumes board seats, provides guidance, planning, fundraising, and academic
support, and helps to implement a framework for setting goals, monitoring,
and measuring results. Further, NVF shares knowledge within its portfolio
and connects its education entrepreneurs with each other through
partnerships and summits.
While the capital NVF manages and invests is small relative to annual education spend, the organization seeks to create
a disproportionate impact relative to its contribution. Since its inception, NVF has been one of the leading private
funders of CMOs – nonprofit integrated networks of charter schools. NVF believes that creating multiple schools in a
concentrated region helps to boost student performance and may lead to overall district improvement. CMOs in the
NVF portfolio generally operate 10-20 schools, serve thousands of children, and have centralized administrative and
educational support services.
Through its four funds, NVF has raised nearly $180 million and has invested in more than 100 nonprofit and for-profit
organizations since its inception:
• NewSchools Fund I ($20 million, 1998–2002): Supported nine entrepreneurial nonprofit and for-profit ventures,
intended to test the hypothesis that entrepreneurs can act as agents for change, capable of influencing and
possibly even transforming large public bureaucracies.
• NewSchools Fund II ($50 million, 2002–2006): Aimed to help create dozens of new public charter schools by
developing strong, scalable, and sustainable school management organizations with the capacity to provide
thousands of underserved students with an excellent education.
• NewSchools Fund III ($75 million, 2006–2010): Backed new and expanding CMOs, continued to develop charter
support organizations to address critical infrastructure needs, invested in new tools and services designed to
improve instruction through the rigorous use of performance data, and expanded alternative pathways into
teaching.
• NewSchools Fund IV (2010–Present): NVF is currently operating out of its fourth fund, which includes the
Innovation Fund and the City Funds. The Innovation Fund seeks to build entrepreneurial organizations that will
work in concert to close the achievement gap by preparing underserved student populations for success in
college and life. The City Funds are a set of city-based funds that aim to drive impact for students in specific
low-income communities.
• NewSchools Seed Fund (2012–Present): Investments to support high-impact, K-12 education technology
companies that promote high quality, scalable learning content, and information sharing. The Seed Fund seeks
to partner with angel investors to build an ecosystem for innovative education startups.
NewSchools Venture Fund | Nonprofit Investor Research 2

3. Representative NewSchools Investments
NVF is very selective in its investments – it finances a small portion of the ideas it considers; between 10 and 15
entrepreneurs with education technology proposals apply for funding each week, while NVF's Seed Fund makes only 6-
10 investments each year. NewSchools chooses to be selective because the seed fund invests in early-stage companies,
which have the highest rate of failure. The Seed Fund’s total investments for 2012 will be about $1.5 million, part of
NewSchools’ $20 million overall annual investment in education entrepreneurs.
NewSchools CMO Demographic Mix NewSchools CMO Performance
PROGRAM RESULTS AND EFFECTIVENESS
While several investments are listed on its website, NVF does not publicly disclose information regarding the
performance of these programs. Measurement of investment performance is challenging, as NVF’s data is largely self-
reported by CMOs, does not track individual student growth, and is difficult to compare across other schools and
districts. A Fall 2011 article written by managing partner James Peyser states that about 70% of NVF CMOs are
outperforming their local districts, while 20% are performing about the same and the remaining 10% are
underperforming. Performance varies from CMO to CMO, and often even for schools run by the same charter operator,
with at least a few schools showing disappointing results.
The following statements are made on the organization’s website regarding its impact:
• NewSchools ventures run 250 schools across the country — equivalent to the 33rd largest school district in the
country
• In the 2009-10 school year, 88% of the 115,000 students served by NewSchools’ portfolio schools went on to
college
• NewSchools human capital ventures have trained more than 120,000 teachers, who have reached over 12
million students
NewSchools Venture Fund | Nonprofit Investor Research 3

4. TRANSPARENCY
There is very limited transparency into NVF’s activities and the impact of its investments – while its P&L, assets, and
granted amounts are available through the Form 990, the organization does not provide performance updates or an
annual report online. NVF does not make its Form 990s, annual reports, or any performance metrics available on its
website. There is also no MD&A or commentary surrounding annual performance, making it difficult to assess the
causes or rationale behind certain line items in the tax filings. Without data surrounding the organizations, school
districts, or performance, it is difficult for an outsider to assess how effective NVF has been in achieving its goal of
benefitting the education of low-income students.
FINANCIAL OVERVIEW
Revenue
NVF is almost exclusively reliant on contributions (~99% of total) for its revenues. The organization uses these funds to
invest in and support education entrepreneurs that are aligned with its mission. NVF has a strong network of sponsors
including the Walton Family Foundation, Google, and the Michael & Susan Dell Foundation. While contributions have
fluctuated greatly, nearly doubling in certain years, much of this has been due to large one-time contributions. In 2007,
NVF received a $30 million grant from the Gates Foundation to support up to 20 charter school developers. The Gates
Foundation previously made a similar contribution in 2003 to support the creation of five new CMOs. Contributions
have gradually increased from FY2005 to FY2010 at a CAGR of 11.6%.
Revenue Breakdown Contribution Growth
$ in '000 $ in '000
$50,000 $43,842 $50,000
$43,011
$40,000 $40,000
$30,000 $23,405 $30,000 $24,445 $30,000 $23,082
$20,630
$16,627 $20,099
$20,000 $15,622
$20,000
$11,916
$10,000
$10,000
$13,011
$0
2007 2008 2009 2010 $0
2005 2006 2007 2008 2009 2010
Contributions Program Services Investment Income
Contributions received Gates Foundation
NewSchools Venture Fund | Nonprofit Investor Research 4

5. Expenses
Though this figure has trended downwards slightly over the past few years, program expenses hover around 92% of
total expenses, a generally healthy portion for similar organizations. Fundraising expenses have more than doubled as a
percentage of total expenses from FY2007 to FY2010, bringing in less contributions per dollar spent on fundraising year
over year. While NVF has shown success raising contributions over the years, the higher relative spend reflects a more
challenging fundraising environment.
When viewing expenses by spend category, there are some noticeable trends. The percentage allocated to grants
(NVF’s investments in organizations) has decreased by about 7% since FY2007 while spending has increased for salaries,
wages, benefits, and other expenses (occupancy, IT, service fees, and other), indicating a negative trend that we should
continue to keep an eye on. More specifically, according to their Form 990s, over the past three fiscal years NVF has
increased spending on “other” fees for services and conferences/meetings, totaling $1.7 million (8% of total expenses) in
FY2010. With no MD&A surrounding increased expenditures, it is unclear what these costs are attributable to.
Expenses by Function Expenses by Category
$ in '000 $ in '000
$25,000 94% $25,000 72%
$21,306 $21,306
$20,177
Grants & Assistance % of Total
Program Expense % of Total
$19,391 $19,444 $20,177 $19,391 $19,444 70%
$20,000 93% $20,000
68%
92%
$15,000 $15,000 66%
Expenses
Expenses
91%
$10,000 64%
$10,000
90% 62%
$5,000 $5,000
89% 60%
$0 88% $0 58%
2007 2008 2009 2010 2007 2008 2009 2010
Program Expenses Fund-Raising Grants & Assistance Other
Administrative Expenses Program Expense % of Total Salaries, Wages & Benefits Grants & Assistance % of Total
NewSchools Venture Fund | Nonprofit Investor Research 5

6. Fiscal Year Ended October 31 2007 2008 2009 2010 Source:
Revenue and Expenses
Support: 98.1% 94.0% 97.9% 98.6%
Contributions $43,011,182 $15,621,678 $20,198,842 $23,081,820 IRS Form 990 (Tax)
Revenue
Program Services 94,621 278,207 134,560 213,439 IRS Form 990 (Tax)
Investment Income 736,238 727,101 296,659 110,146 IRS Form 990 (Tax)
Total Support and Revenues $43,842,041 $16,626,986 $20,630,061 $23,405,405
% Growth 76.0% (62.1%) 24.1% 13.5%
Expenses:
Program Expenses $17,987,133 $18,201,119 $18,597,199 $19,531,817 IRS Form 990 (Tax)
Administrative Expenses 1,154,144 894,985 1,130,962 1,165,324 IRS Form 990 (Tax)
Fundraising Expenses 250,213 348,176 448,658 609,055 IRS Form 990 (Tax)
Total Expenses: $19,391,490 $19,444,280 $20,176,819 $21,306,196
% of Revenue 44.2% 116.9% 97.8% 91.0%
Revenue Less Expenses $24,450,551 ($2,817,294) $453,242 $2,099,209
Expenses by Category
Grants and Assistance $13,730,494 $12,493,436 $12,732,741 $13,638,140 IRS Form 990 (Tax)
Salaries, Wages & Benefits 3,620,920 3,988,966 4,794,842 4,589,898 IRS Form 990 (Tax)
Other 2,040,076 2,961,878 2,649,236 3,078,160 IRS Form 990 (Tax)
Total Expenses $19,391,490 $19,444,280 $20,176,819 $21,306,198
Expenses by Function (% of Total Expenses)
Program Expenses 92.8% 93.6% 92.2% 91.7%
Administrative Expenses 6.0% 4.6% 5.6% 5.5%
Fundraising Expenses 1.3% 1.8% 2.2% 2.9%
Total 100.0% 100.0% 100.0% 100.0%
Expenses by Category (% of Total Expenses)
Grants and Assistance 70.8% 64.3% 63.1% 64.0%
Salaries, Wages & Benefits 18.7% 20.5% 23.8% 21.5%
Other 10.5% 15.2% 13.1% 14.4%
Total 100.0% 100.0% 100.0% 100.0%
Abridged Balance Sheet
Cash and Short Term Investments $8,177,363 $5,193,865 $6,374,806 $7,996,152 IRS Form 990 (Tax)
Grants Receivable 35,055,433 22,207,694 19,291,614 15,583,599 IRS Form 990 (Tax)
Investments 9,364,341 21,758,089 26,146,544 31,684,285 IRS Form 990 (Tax)
Other Assets 1,313,864 1,850,212 350,810 245,850 IRS Form 990 (Tax)
Total Assets $53,911,001 $51,009,860 $52,163,774 $55,509,886
Accounts Payable $1,257,458 $1,187,414 $1,833,052 $3,104,098 IRS Form 990 (Tax)
Fund Balances 52,653,543 49,822,446 50,330,722 52,405,788 IRS Form 990 (Tax)
Total Liabilities and Net Assets $53,911,001 $51,009,860 $52,163,774 $55,509,886
NVF has maintained a strong balance sheet over the past several years with minimal liabilities, large cash balances, and
healthy grants receivable.
NewSchools Venture Fund | Nonprofit Investor Research 6

7. THIRD PARTY RATINGS
• Charity Navigator rates NVF with an Overall score of 57.65 out of 70.00, or a 3-star (out of 4) rating. NVF is also
assigned a 56.45 for Financial and 59.00 for Accounting and Transparency. While NVF satisfies Charity
Navigator’s checklist for information provided on the organization’s Form 990, it notes that the website lacks a
donor privacy policy, audited financials, and access to its Form 990.
• Philanthropedia’s expert network rated NVF a “2010 Top Non-Profit” with 32 experts viewing NVF as the
nonprofit with the most impact in its field, while 4 experts disagreed with that assessment
o Strengths include:
 Significant track record bring various organizations together and getting good work from them
 Ability to pull together thought leaders from around the country and deliver meaningful
networking opportunities
 Staff – NVF is a magnet for talent, the brightest and most savvy in any sector
o Areas for improvement include:
 Suffering from a lack of leadership energy and could use a higher, more vibrant profile
 Junior staff is not as strong and does not add as much value to their supporting organizations
 The melding of conservative methods for a liberal cause is under political scrutiny from labor
unions and the democrats that represent their interests
GET INVOLVED
• Submit an idea for funding from NVF: http://www.newschools.org/entrepreneurs/submit
• Invest in NVF: http://www.newschools.org/invest
• General information: info@newschools.org
• Opportunities at NVF: http://www.newschools.org/team/join, dcrecruiting@newschools.org
DISCLOSURES
James Peng certifies that he does not have any affiliation with NewSchools Venture Fund and has never made a donation to the
organization. Additionally, James has not supported directly competing organizations in a greater capacity than a nominal donation.
NPI analysts and NPI as an organization do not receive any form of compensation from reviewed charities.
This report is for informational purposes only and does not constitute a solicitation for donations. While the reliability of information
contained in this report has been assessed by NPI, NPI makes no representation as to its accuracy or completeness, except with
respect to the Disclosure Section of the report. Any opinions expressed herein reflect our judgment as of the date of the materials
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Opinions and recommendations in our reports do not take into account specific reader circumstances, objectives, or needs. The
recipients of our reports must make their own independent decisions regarding any organization mentioned by NPI.
NewSchools Venture Fund | Nonprofit Investor Research 7