(Bloomberg Businessweek) -- On a Saturday morning in Manhattan later this month, thousands of nervous eighth graders will parade quietly down Chambers Street near the Hudson River. Clutching No. 2 pencils, they’ll flow over a pedestrian bridge spanning a highway and into a modern 10-story building to take an exam that will determine the course of their lives. For many of these children, most of whom are 13 years old, it will be the continuation of a trajectory that began with their births in faraway countries or immigrant homes, followed by years of perfecting a new language and getting grade levels ahead in math, all so that on this morning they might win admission to what is arguably the best public secondary school in the nation: Stuyvesant High School.
Of the approximately 30,000 children who’ll sweat through the ordeal here and at other test sites in the five boroughs, 97 percent won’t make the grade. For the 800 or so who make it into the Stuy class of 2022, an entirely new rat race awaits, as they grub grades, run for student government, write musicals, and seek cancer cures, all in hopes of winning the next reward: acceptance to the world’s most elite universities. About a quarter will get into the Ivy League. Harvard alone, skimming off the top, will take 20 or more of their classmates, if past numbers hold, making Stuyvesant one of the biggest single sources of freshmen at America’s oldest university.
Even then, the tournament of success continues. Fanning out into the world, Stuy alumni win Nobel Prizes (four so far) and Academy Awards (seven, from James Cagney to Tim Robbins); run institutions (the University of Chicago) and elect presidents (David Axelrod); write software (BitTorrent’s Bram Cohen) and jazz rock (Steely Dan’s Walter Becker); and, increasingly in the age of hedge funds and Silicon Valley billions, make lots and lots of money. It stands to reason, then, that the illustrious alumni of an elite academy have coalesced into a generous donor base, lavishing funds upon the school that launched their success.
Except they haven’t. While private schools such as Phillips Exeter Academy can have billion-dollar endowments, and even some selective public schools sit on amounts in the tens of millions, the Stuyvesant High School Alumni Association has, at most, a paltry $2.5 million on hand. Any hopes of building an endowment have been dashed by decades of infighting among graduates, shifting allegiances of principals, and, in one case, an alumni fundraiser who blew through $4 million. Until recently, three separate nonprofit alumni fundraising groups competed for donations.
This year, a renegade group called Concerned Stuyvesant Alumni has been actively calling on graduates not to give money to the official alumni association—the SHSAA. One of the dissidents, Beth Knobel, once the CBS News Moscow bureau chief, has compared elections in Vladimir Putin’s Russia to those held by the alumni association, where seven candidates, prescreened by a nomination committee, stood this May for seven open board seats.
What the CSA is up against is the rise of the hedge fund clique. A group of financiers, who manage many billions of dollars on Wall Street, has seized control of the SHSAA board and two separate endowment funds. Some Stuy-watchers have called it a hostile takeover and accuse the new SHSAA—led by Soo Kim, class of ’93—of barring critical posts from its Facebook page and denying assistance for class reunions to organizers who don’t do as they’re told.
To Kim, who became president of the alumni association three years ago, these are mere hiccups in a greater mission to build a $20 million endowment that will fund extracurriculars and college scholarships in perpetuity. He embraces the Wall Street analogy, describing the Stuyvesant situation as akin to fixing a troubled company, as he does in his day job as the founding partner of New York-based hedge fund Standard General. “It’s a turnaround,” he says. If it goes well, it’ll be like the time he took over Young Broadcasting LLC and transformed a $300 million enterprise into one he sold for $5 billion.
Except in this case, Kim is dealing with a constituency that makes Wall Street brawlers seem tame: several decades’ worth of the smartest teens in all New York, who spent their formative years in a hypercompetitive school that breeds “prison yard behavior” (his phrase). “In a deeply un-nurturing environment,” he says, “you need to find your gang to survive.” Compared with turnarounds he’s done in the hedge fund world, Kim says, “Stuyvesant is way harder.”
Stuyvesant’s brand—a school for the brainy—is so overpowering that it obscures another basic truth: It’s also a school for the poor. Almost half the students qualify for free or reduced-price lunches. Many commute from the city’s peripheral neighborhoods, as did future Attorney General Eric Holder (’69) and novelist Gary Shteyngart (’91), who both traveled 90 minutes each way from Queens. At home, Stuyvesant students might grind through neurobiology and robotics coursework in crowded apartments, with some sharing bedrooms with their parents. Paying for basic supplies—let alone travel to a chess or debate tournament—is often out of reach. That makes building an endowment an urgent problem for Stuyvesant, which despite its glitter gets the same per-student funding as any other New York public school. Kim sees students’ desperation when he reviews their applications for awards and college scholarships. “The need,” he says, “would make you f---ing cry.”
But raising money seems to be the one thing Stuyvesant alumni do poorly. Above the door to the principal’s office, dwarfing a much smaller principal sign, is a bronze-colored plaque engraved with the names of contributors to a 2014-15 “Endowment Challenge.” The plaque omits the total raised in that campaign, which barely surpassed $500,000. I ran the figure by some adroit New Yorkers involved in fundraising at public and private schools, and they practically spat out their sauvignon blanc. Parent associations at public elementary schools in wealthier pockets of Brooklyn and Manhattan routinely raise that much every year. On the Upper East Side, half a million would represent an underwhelming one-night haul at a tony prep school’s spring gala.
One day in July, I pass under the plaque and sit down with Principal Eric Contreras, a former social studies teacher with a round face and a daughter who just graduated from Stuy. It’s still summer break, and his next appointment is with a mother dressed in a sari who waits in the hallway on a bench. Contreras describes the competing alumni groups and their money squabbles as an extension of the independent spirit he sees among his students.
Stuyvesant’s sports teams, he notes, have no common mascot—each has its own identity. There’s the Vipers for girls’ fencing, the Hitmen for baseball, and for football, the Peglegs, after the wooden prosthetic sported by the Dutch governor of New Amsterdam, Peter Stuyvesant, on whose farm the original Stuyvesant High School was built. The school newspaper, the Spectator, has put Contreras on notice that “we publish without review of the principal.” He points out that Stuyvesant has two different student publications about China, because some thought the original one was too pro-mainland. “It’s a vibrant ectoplasm,” Contreras says. “It’s produced some great minds, but inevitably it’s produced some great divisions.” He adds: “It creates liabilities when it’s time to build an endowment.”
“I can’t get my kids in because I give or because I’m a leader. Nothing can help them other than getting them past that test”
Listening to Contreras, I could think of another prime example of how Stuyvesant’s combative atmosphere makes people act a little nuts: me. As a sophomore there in 1985, I ran for Student Union president and lost. Learning that an ally of my opponent had been caught with his hand literally in the ballot box, I demanded a re-vote. After a six-month appeal process that ascended to the level of the New York City Board of Education, I finally got my way, this time with official voting machines trucked in by the government. (Half the school abstained in disgust, and I lost again.)
At Stuyvesant, there was nothing remarkable about any of this. For his 2007 book A Class Apart, journalist Alec Klein (’85) spent a year at the school, during which someone stuffed the voting box with 55 forged ballots—and not clumsy ones, either, but photocopies of authentic ballots that were discovered only because of a flaw in a counterfeit stamp. The next year, a documentarian released Frontrunners, about a four-way contest for the student presidency, which a New York Post critic praised as “a microcosm of the race for the Oval Office.” Even administrators can act strangely. A 2012 cheating scandal culminated in an official city rebuke of the then-principal for plotting a dramatic sting operation to catch a star pupil in the act, rather than dealing with the matter straightforwardly.
Stuyvesant is feverish largely because the stakes are so high. It’s hard to overstate the role in upward mobility that the school has played in New York for nearly a century. But recently, the presumed meritocracy of the entrance exam—in place since 1934—has become controversial, as Stuyvesant has come to reflect the city’s racial diversity less and less. About 74 percent of students are Asian, while just 1 percent are black. The number of African American students at Stuy peaked in 1975 at 12 percent, or 303 students, according to state records compiled by the New York Times. Even during the pre-civil rights era, there were more black students than there are today.
Mayor Bill de Blasio has floated changes to Stuyvesant’s admissions criteria, recommending a “holistic” approach rather than a single almighty exam. Opponents to such reform have included Naval Ravikant (’91), a seed investor in Uber Technologies Inc. and Twitter Inc., who co-founded AngelList, one of Silicon Valley’s biggest sources of startup funding. Ravikant moved to New York from India when he was 9 years old. “Stuyvesant was my real education. Don’t wreck what works, NYC!” he tweeted in 2014, in response to a Post article headlined: “To Make Elite Schools ‘Fair,’ City Will Punish Poor Asians.”
Throughout its history, Stuyvesant’s population has shifted in waves—from Brooklyn Jews to immigrants from the USSR to today’s Asians, a group so diverse it should hardly be lumped together. The idea that Stuyvesant is special because the entrance exam is blind to money or race is part of what drives Kim, who arrived in Queens from South Korea when he was 5, and his allies on the board of the alumni association. One of them, Anna Nikolayevsky (’88), is the founder of Axel Capital Management LLC, a hedge fund, and a member of the boards of Lincoln Center for the Performing Arts and Girls Who Invest. Nikolayevsky emigrated from Moscow when she was 8, speaking no English, and took the Stuy test cold when her mother told her to do so one Saturday morning. “It’s one of the last true meritocracies,” she says over lunch at the private Core Club in Midtown, where the receptionist greets her by name.
Nine years ago, Nikolayevsky gave $100,000 for a Stuyvesant computer lab. It went straight to the school, bypassing the alumni groups and endowment drives. Some other donors who didn’t take that direct route are now wondering where their money went.
“The only way to describe the culture is: competitive. … It was great to go to Oberlin and take classes in Ringo Starr studies afterwards”
The story of Stuyvesant’s fundraising fumbles starts in 1999, at a moment when the alumni association didn’t see itself as a long-term money manager. The principal at the time, fearing city budget cuts, decided an endowment was needed. She turned to Neal Hurwitz (’62), a fundraiser for the United Jewish Appeal Inc., who set a goal of $12 million and founded the Campaign for Stuyvesant to raise it. Hurwitz paid himself a $60,000 salary. “I didn’t need the money,” he says. Rather, this was a labor of love for his alma mater—in fact, he says, it meant a pay cut. “I made $75,000 at the UJA in the 1980s. The ’80s!”
At first, the Campaign had office space at the school. That arrangement lasted until 2003, when a new principal established a second, competing endowment fund, Friends of Stuyvesant, and evicted Hurwitz. “We went to my house,” Hurwitz says.
The Campaign for Stuyvesant started chipping in $250 a month for a slice of his rent-controlled, Columbia University-owned apartment, according to Hurwitz and the group’s tax filings. The home-office space occupies an alcove off the kitchen, a roughly 10-by-12-foot space with two C-shaped desks and a view of a cinder block wall. Photos and promotional materials from alumni events plaster nearly every free bit of wall space. A bookshelf is filled with Stuy-related titles, including Klein’s book and volumes by Frank McCourt, who taught English at Stuyvesant before winning a Pulitzer Prize in 1997 for Angela’s Ashes.
Despite his exile, Hurwitz kept raising and spending money from that home office. For the school’s centennial in 2004, he published an ambitious color coffee-table book with an introduction by McCourt. It cost $250,000 to produce 5,000 copies, and the association turned a profit by selling about 3,000 for $75 or any donation above $250, Hurwitz says.
From 1999 to 2014, Hurwitz pulled in about $4.5 million—but there were expenses, such as travel to fundraising events and alumni cocktail parties, he says. Tax forms confirm the expenditures, which also included accounting fees and employee benefits. The fund, which had been partly invested in equities, took a hit in the 2008 financial crisis. In all, it distributed only $142,000 to students and the school. Today, all that’s left is about $330,000, which as part of an ongoing wind-down of the Campaign will be handed to the alumni association, Hurwitz says.
Stuyvesant fundraising has lately taken on a more professional sheen. Kim got involved in 2014 and began to consolidate power, persuading Hurwitz and the competing fund to fold their activities into the official alumni association, which operates out of the school building. Kim spends his days at his hedge fund’s offices in the General Motors Building, the modern landmark on the southeast corner of Central Park, where the 24th-floor conference room has a terrific view into the zoo. The contrast in scenes—from scruffy rent-controlled apartment to gilded finance suite in the sky—is rather on-the-nose as an illustration of how New York itself has changed in recent decades. In any number of ways, the city has undergone Wall Streetification and come to disdain thrift. Hurwitz concedes that he missed this shift, continuing to court doctors and lawyers for donations when he should have been wooing a new, superwealthy generation of investors. Kim’s focus on finance, he allows, just might work.
The open secret about school fundraising in America is that it’s rarely unselfish—something is nearly always for sale. It can be a public transaction, like naming rights for a new gym. Or it can be undetectable, like shifting a marginal son or daughter from the “deny” pile to “admit.” From preschool to college, admissions staffers are in dialogue with the development offices that raise money. Donors are encouraged to believe that tithing can tip the scales toward something they want. And so one reason Stuyvesant has less in its coffers is that with its implacable test-based admissions, it simply has less to sell. Kim gives money to the university he attended, Princeton, but contributing to Stuyvesant “is a truer expression of altruism,” he says. “I can’t get my kids in because I give or because I’m a leader. Nothing can help them other than getting them past that test.”
Kim is the picture of a Princeton preppy, with a blue-and-white checked shirt and a shaggy head of hair, as he details his plans for Stuyvesant’s alumni organization at Standard General’s offices. “My goal, ultimately, is to leave an association where I can’t get in,” he says. “Where I don’t have enough time, I don’t have enough gravitas, I don’t have enough generosity [to] get on the board.” That may be so, but in the meantime, Kim is stocking the board with people who look a lot like himself. One major addition, in 2016, was Boaz Weinstein (’91), the hedge fund manager famous for betting against a J.P. Morgan trader, known as the London Whale, who lost the bank billions in 2012.
Weinstein, the founder of Saba Capital Management LP, shared Kim’s frustrations with Stuyvesant’s fundraising apparatus. Around the middle of 2010, he recalls, he reached out to the school about giving money. It took a year for someone to get back to him, he says. Eventually, in 2012, he gave $1 million—the school’s biggest-ever gift—to build the Boaz R. Weinstein Library and support the robotics club and the speech and debate team. “Given how sentimental so many alums are about their years at Stuyvesant, it’s amazing how few give to the school and its needs,” Weinstein says, “compared to the generous donations that these same people make to their college endowments.”
This year, new board members included Stuart Spodek (’88), the lead portfolio manager at BlackRock Inc.’s Obsidian Fund, a hedge fund that’s President Donald Trump’s single biggest investment outside real estate; Peter Boyce II (’08), a principal at General Catalyst Partners who’s also chairman of Harvard’s alumni association for tech entrepreneurs; and Hal Diamond (’78), formerly a director at S&P Global Ratings. They’ll need to make peace with organizers of the Concerned Stuyvesant Alumni and other factions, who have several specific gripes. They range from serious—such as better disclosure about the disbursement of scholarship funds, including one in memory of a graduate killed on Sept. 11, 2001—to less so, like being excluded from Facebook groups. But even the minor squabbles matter insofar as they affect how much money eventually makes its way toward the enrichment of New York City’s brightest, neediest teenagers.
Patching things up would be easier if alumni could bond over pleasant memories of bygone school days, but even the most grateful grads can have a hard time mustering the warm and fuzzies for Stuyvesant. As much as the school is a transformational gift, it’s also an ordeal to be moved beyond. Shteyngart, the novelist, remembers the tumult well. “The only way to describe the culture is: competitive,” he says. “People want to win at all costs, to be acknowledged as the best in their field. I barely walked out of there standing. It was great to go to Oberlin and take classes in Ringo Starr studies afterwards.”
The internecine behavior in Stuyvesant’s orbit is so entrenched that it’s become the subject of academic study. Sociology professors Syed Ali of Long Island University (’85) and Margaret Chin of Hunter College (’80), who are writing a book on the life paths of their fellow alumni, found that Stuyvesant graduates defy the received wisdom of social science. Most research into U.S. social mobility has found that parents’ income and education are predictors of how their kids turn out. At Stuyvesant, however, impoverished grads move up a rung in a single generation, and it’s not just because they’re smart kids and would have succeeded anywhere. “There’s something different going on at Stuyvesant,” Ali says. The secret, he believes, is a student culture that normalizes extreme achievement—by any means necessary. “At minimum,” he says, “we learned how to hustle.”
To contact the author of this story: Vernon Silver in Rome at vtsilver@bloomberg.net.
To contact the editor responsible for this story: Daniel Ferrara at dferrara5@bloomberg.net, Nick Summers
©2017 Bloomberg L.P.
