Photograph: John Arnold, a former hedge fund manager who retired last year at 38, and his wife, Laura, expressed frustration with Washington.
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By John Schwartz | Originally Published at The New York Times. October 8, 2013

A wealthy Houston couple have donated $10 million to Head Start to keep its programs running through this month despite the government shutdown.

John and Laura Arnold, who made billions in a hedge fund founded by Mr. Arnold, gave the money to the National Head Start Association.

Head Start, the government-financed program that provides meals, medical screenings and preschool training for nearly a million children from low-income families, has been facing severe shortages because of the stalemate over federal funding in Washington. Programs serving about 7,200 children were awaiting grants that would normally have been issued Oct. 1.

In announcing their gift, the Arnolds expressed frustration at the shutdown.

“Our representatives’ inability to resolve their differences has caused severe disruptions in the lives of many low-income Americans,” they said. “We believe that it is especially unfair that young children from underprivileged communities and working families pay the price for the legislature’s collective failures.”

The money will go directly to programs in six states — Alabama, Connecticut, Florida, Georgia, South Carolina and Mississippi — that have closed for lack of funding or are about to run out of money.

Officials of the Head Start Association praised the Arnolds but said this was no way to finance a major national program.

“The Arnolds’ most generous act epitomizes what it means to be an angel investor,” said Yasmina Vinci, executive director of the National Head Start Association, in a statement, but “angel investors like the Arnolds cannot possibly offer a sustainable solution to the funding crisis threatening thousands of our poorest children.”

If the crisis ends and the funding is restored, the Arnolds’ donation will be treated as a no-interest loan and will be repaid.

If, on the other hand, the debt fight in Washington drags on, things will only get worse for Head Start. On Nov. 1, Head Start programs in 41 states and one United States territory that help more than 86,000 children could lose federal money.

The programs were already under financial pressure because of sequestration, the across-the-board budget cuts that went into effect in March when lawmakers failed to reach a deficit reduction deal. Those cuts caused 57,000 children to lose their slots in the program.

With the loss of the October grants, state and local governments in Florida and Massachusetts provided funding to keep some programs open. Programs in other states, including Alabama, closed.

The Arnolds have a foundation that focuses on what its Web site refers to as “transformational change” by taking an entrepreneurial, multidisciplinary approach to issues including criminal justice, education and public employee benefits. The Head Start money, however, came from the Arnolds themselves. “They were very moved by the fact that so many kids were going to be impacted by the current shutdown,” said a family spokesman, Gary Larson. The Arnolds declined to be interviewed.

Local Head Start programs are run by public and private agencies, not solely by the federal government, and are eligible to receive outside money, said Sally Aman, a spokeswoman for the organization. Asked to elaborate, she said, “You would get a much better answer if you called the government, but they are closed — as you may know.”

Jennifer Preston contributed reporting.