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An important feature of American federalism is the ability of states to experiment with new policies that, if successful, might be more broadly adopted. The core mechanisms studied in the literature on the diffusion of state-level experiments are learning and competition. I build on an emerging body of literature studying how state-level policy experimentation also catalyzes and fosters coalitions of organized interests, with political implications in the broader federal system. In this paper, I draw attention to the role of wealthy foundations in the American political economy, and propose a novel mechanism: philanthropists respond to state-level experimentation by shifting their grant-making, and as a result, become vested in the preservation and expansion of new policies.
Empirically, I study the case of charter school policy. State policy has been instrumental to the steady growth of charter schools in recent years, which in many states and districts now challenge the traditional public school model, as well as teachers unions. Drawing on elite interviews, I show that charter school growth has, in addition to empowering charter school networks as political actors, also drawn wealthy foundations into the charter policy space. State experimentation with charter schools led foundations to realize that charter growth aligned with their existing education policy goals. Foundations made early investments in supporting charter schools, and later developed political operations to protect those investments. Leveraging case studies and quantitative data on non-profit spending, I show that foundations have used their extensive resources to promote pro-charter policies across the states and at the federal level—more broadly than charter school networks and other advocates would likely have been able to on their own.