Q: Describe the Gates Foundation's postsecondary education effort.
We designed the postsecondary initiative in response to Bill and Melinda's question: how can the foundation make the biggest impact on improving opportunity in America? Data shows that the single biggest predictor of upward mobility for an individual and his or her children is the level of educational attainment of their parents; a high school degree is no longer enough to support a family; and if you don't get some kind of postsecondary degree by the time you're 26, your chances of ever getting one go down significantly. So in a sense, that age marker is the last best chance for low-income young adults and the first best chance to make sure their children grow up in families able to earn a living wage. The goal of our initiative is to double the number of low-income young adults who earn a postsecondary credential with value in the labor market by the time they are 26.

If you tried to design an educational system so that everybody got a postsecondary degree by the time they were 26, it would look pretty fundamentally different than it does now. You would pay attention to all kinds of degrees (certificates, apprenticeships, two- and four-year degrees) that produce middle class incomes. You would make it much easier for credits to transfer from one degree to another and from one institution to another, so that people can attain the highest level of education they seek, even if they achieve it in steps. You'd ask yourself lots of questions, “Who says high school should last four years? Does it really need to take four years to get a four-year degree?" We think it is possible to re-engineer the pipeline backwards by starting with the key desired outcome of helping students — especially low-income students — move further, faster.

Our strategies to achieve our goal are threefold. First, is a supply-side strategy: improve the performance of our postsecondary institutions. Fewer than 40% of Americans have any kind of degree beyond high school, and that number is dropping. Our international status is dropping with it. We do an especially bad job of getting to postsecondary completion for low-income and minority young people, many of whom have to work while they attend school.

Examples of the sorts of programs we are exploring include creating a step-change improvement in community college completion rates. We're also going to fund alternative models that introduce innovation and competition. That might mean a hybrid approach that uses technology more extensively, or built-for-purpose institutions that accelerate degree completion for low-income and young adults. We want to improve what exists, seed competition, and use technology to enhance learning and productivity.

Then, the second big piece is a demand side strategy — making young adults more sophisticated consumers of postsecondary education. Ways to do this might include providing information that would help someone be able to go online to compare the graduation rates for people like them at different institutions.

We will also support young adults as decision makers and actors. That may include building stronger pathways back into postsecondary education for the majority of low-income young adults who don't enroll in further schooling when they leave high school. If they do, they often have to combine work and school. So, we're interested in the ways employers and community organizations can play a stronger role.

The last part of the strategy is to build political and public will around the goal of doubling the number of people completing a postsecondary degree. The Obama administration's budget just came out proposing a major investment in programs that will improve college access and completion for low income students. We hope to get governors and private sector leaders equally focused on that same set of goals.

Q: Much of the Gates Foundation is focused internationally. Can you imagine any of the work you're doing here on this particular issue applying or being useful to programs overseas?
Some of the new institutional designs or online approaches we hope to create would be very applicable around the world because a lot of the occupations that people are training for here exist everywhere. So yes, we hope that some of what we do could be more broadly useful.

It's also true that the U.S. is now 14th in its completion rates, so we have actually a lot to learn from other parts of the world which are doing much better than we are at getting all their citizens to complete postsecondary education, but especially among lower-income groups.

Q: As a leader at a philanthropy that is taking on complex issues that many people have worked on before, how do you look at things in a fresh way and push past the talking phase into an action plan?
That's really the $64,000 question in a lot of ways. We try to take the long view. We don't think that we're going to accomplish big changes in one year. We make multi-year commitments to a few issue areas. Within those, we set very concrete and measurable goals that give us an ability to say, “If we think we want to be here by 2025, here's where we'd need to be in 2010. These are the interim indicators we should track to see whether we're getting there and, if we're not, what have we learned? What should we stop doing? What should we do more of?"

As a foundation, we have learned a lot by paying attention to our mistakes. We started, for example, in our high school work in the U.S. very focused on creating new schools; small schools. We thought that if we could get about ten percent of the schools in the country to be new, small, and much more special-purpose, it could flip the big system.

We've learned that competition and structure is necessary, but not sufficient. That has led us to work much more with districts, at the state policy level, and on teacher effectiveness. So now we're trying to leverage that learning in the postsecondary work. How can we structure our grants so that we fail — or learn — quickly? Can we create institutions that can try things together, building a culture of evidence that allows them to compare results, working in a rapid prototyping and adapting mode. We're working with states, for example, to say “We're willing to underwrite some of the costs of R&D if you're willing to follow the evidence where it leads, and move public money toward what works and away from what doesn't work."

Q: The nonprofit sector has been hit hard by the economic crisis but the issues these organizations work on haven't gone away. Could you give me a sense of how you see the public sector and nonprofits interacting going forward?
We are entering a period of time when government will be an enormous catalyst for entrepreneurial activity in the nonprofit sector, so I think that's going be very different than we've seen in the past 10 or 15 years

I think we've all become more sophisticated about when markets work and when they don't. Hopefully, we'll keep what's good about approaches that are really trying to leverage market forces, but also understand the ways in which government funding, government rules and regulations can actually stimulate innovation to solve social problems.

Q: How are the current economic conditions shifting what's tried? What's being lost because of the economic crisis and what opportunities might come out of it?
I think it's an incredibly challenging and hard time. Many great nonprofit organizations are really, really stretched, and we will lose a part of the nonprofit infrastructure, more than you would ever want to. From an equity point of view, the people who have the least are going to be hurt the most. If you look in the higher education space, enrollments are up but resources are down. That means more and more people are being turned away. As middle-income people decide that, “Oh, maybe I won't go to a private school. I'll start at the four-year public institution, or I'll start at the community college and get my first two years cheap," it shoulders out low-income people. The positive side of it is that, often, in a time of crisis, people are much more willing to try more radical things, and more willing to say, “We can't get there by doing things the same old way." Sometimes, I think it can make people more open to more dramatic change than when things are going well.

This period of time does raise a lot of challenges to some of the hot ideas about philanthropy from the last couple of decades. It has been thought that organizations should really be able to generate revenue streams so that, long-term, they could reduce their dependence on foundations or on government. When we think about the general financing system for the complex set of innovations and services provided by the nonprofit sector, it will always require some degree of foundation and government investment.

Helping organizations develop real bench strength and the ability to look critically at their programs, using evidence about what's working and not working, is going to require a commitment to capacity-building and investment that tends not to have been the way that foundations and the nonprofit sector work together. But I think that's going to be a big challenge, and also a big opportunity.

Interview conducted and edited by Ted O'Callahan.