Returns Are In Veteran educator’s newest project aims to make a profit—but not too much of one.

Christiane Grauert

It took 17 years for Daniel Hollinger to build the Rock Creek International School into an educational powerhouse.

Hollinger founded the private school in 1988 with a class of just five pre-kindergartners and a vision for an “internationalist” education. As the school expanded over the years, slowly adding the higher grades, so did its prestige. By 2004, it boasted a rigorous International Baccalaureate curriculum, and the U.S. State Department hailed it as offering “the first English-Arabic dual language immersion program in the United States.”

Things fell apart after that. Rock Creek’s board of trustees ousted Hollinger in October 2005—about a year before the school collapsed under financial distress, leaving parents scrambling for a new place to send their kids. It took Hollinger about two months to figure out what to do with his life: Start a new school that doesn’t have a board of trustees.

Hollinger opened the Coeus International School last fall with an enrollment of about 80 kids in six grades—a level that took Rock Creek years to reach. Some of that has to do with Hollinger’s reputation and loyal followers. But Coeus’ quick start also has to do with the fact that this school is a business.

Coeus offers the same sort of curriculum that Rock Creek did, but Hollinger chose to make the school a for-profit institution, an uncommon arrangement under which a group of investors have ponied up cash for the startup with expectations of returns down the road. The investment will allow Coeus to expand far faster than Rock Creek ever could have and in a fraction of the time. It’s Rock Creek on steroids.

“The idea is that by providing a high quality service or program that we will attract families and students and be able to grow and develop and provide some decent return to our investors,” says Hollinger, 50, who speaks slowly and chooses his words carefully. “We’re also very clear that our primary motive is not to have the greatest possible return on investment.”

A nonprofit school must rely on tuition and philanthropic giving, chiefly from alumni, in order to cover its expenses, which Rock Creek failed to do in the end. The benefit of the nonprofit model, says Myra McGovern of the National Association of Independent Schools, is an extra layer of accountability: its trustees. A nonprofit’s board is supposed to monitor finances and keep parents informed. Private schools like Rock Creek don’t just fall apart. McGovern calls Rock Creek’s implosion “incredibly unusual.”

The Rock Creek board certainly had its differences with Hollinger. A series of articles in the Washington Post early this year detailed the collapse of Hollinger’s previous school, with anonymous sources laying the blame for bad money management at Hollinger’s feet and also alleging that he had some problems with his “personal judgment”—specifically, that he allowed marijuana use at his house during a school event. Hollinger denied the allegations and insisted that the school was in “excellent shape financially and educationally” when he left.

Hollinger declines to discuss the Rock Creek situation. The Post reported in June that he’s seeking more than $1 million from Rock Creek, invoking an anti-disparagement clause in his severance package.

Regardless of whether it was Hollinger or the trustees who screwed up at Rock Creek, a typical layer of private-school oversight will be missing from Coeus. When the business progresses further, Hollinger says it will establish a board of directors. For now, he’s the boss, and the school won’t need to wait for alumni to start giving it money.

Joan Volpe is an investor in the school and a grandparent of children who switched to Coeus from Rock Creek. Like other investors, she expects a return on the money she’s put in, but she also plans to pioneer the Coeus dividend reinvestment program—she wants to plow her profits back into the school. “I have tremendous respect for Danny,” she says. “I had never seen somebody who was so able to take a vision, a belief, and to manifest it, to make it real, to make it tangible.”

Hollinger says there are six investors in the school besides himself, and that the total capitalization is $1.4 million—$1 million of that comes from Hollinger and his wife. (At Rock Creek, Hollinger earned a salary of $150,000 in 2004, according to the school’s tax forms; he says he’s put everything he has into Coeus.)

In addition to internationalism, Hollinger’s new “Peace Education” program endears conscientious World Bank types who want the best in progressive education for their kids. Coeus opened last fall in a Van Ness office building offering grades five through 10; this fall more than 150 students will attend grades K–12. (Rock Creek peaked around 250 after 17 years and never added a high school.) Hollinger is planning to open a second Coeus campus in Northern Virginia in 2008.

His goal is to go global with his educational model. He says it’s something he has wanted to do since before leaving Rock Creek. The purpose of the for-profit model was primarily “to be able to raise capital to expand the school in D.C. but also to be able to establish similar schools in other cities and other countries.”

This fall this school will offer dual-immersion language programs in French, Mandarin, Arabic, Spanish, and Greek. Hollinger wants to start up an international school in every country where languages studied at Coeus are spoken.

The new school isn’t short on local cred, either. Such D.C. luminaries as artist Sam Gilliam, former Post columnist Colman McCarthy, and former Fugazi drummer Brendan Canty have joined its “Professionals in Residence” program, according to the Coeus Web site.

Coeus curriculum director Noel Sheppard followed Hollinger from Rock Creek, where he’d been a teacher. Like several Coeus faculty members, Sheppard is also an investor.

“We haven’t created Coeus to become millionaires,” he says. “It’s designed for the ethical or socially conscious investor.”

Coeus’ prospective investors are promised no returns in the first three years but returns of between 20 and 30 percent after approximately eight years. And Hollinger’s promises carry a lot of weight with investors who consider him a visionary.

Hollinger estimates that about 10 staff and faculty members at Rock Creek and about 25 out of 80 Rock Creek students of eligible ages followed him to Coeus for its first year. Even before he’d decided to open a new school, many teachers and staffers asked him what he would be up to and if they could be a part of it, he says.

“He has been very successful in attracting top-quality educators,” says Virginia Rojas, an education consultant who has advised Hollinger on issues of staffing, resources, teaching strategies, curriculum, and language development.

Elena Silva of Education Sector, a D.C.-based education think tank, says that for-profit management has been expanding in public schools for the past decade. People are more and more comfortable, she says, with for-profit models. “The corporate model in schools is expanding,” she says. “It’s definitely something we’re going to see more of.”

Leave a Comment

Note: HTML tags are not allowed in comments.
Comments Shown. Turn Comments Off.
...