As a trustee of Cornell University, Andrew Carnegie was shocked to learn about the low salary scale of professors. He realized they could not save for their old age and that many were continuing to teach far too long. He decided to endow a pension system for college teachers, and the Carnegie Foundation was established in 1905 with an initial endowment (later augmented) of $10 million, and a charter from the New York State legislature. Carnegie appointed the first board of trustees, consisting primarily of distinguished college and university presidents, and persuaded Henry S. Pritchett, then president of the Massachusetts Institute of Technology, to become president.

Under Pritchett’s leadership, the Foundation’s purposes were expanded to include “all things necessary to encourage, uphold, and dignify the profession of the teacher and the cause of higher education within the United States, the Dominion of Canada and Newfoundland…,” and a Congressional charter was obtained in 1906 for The Carnegie Foundation for the Advancement of Teaching which broadened the Foundation’s mission and added “for the Advancement of Teaching” to the name. Pritchett merged the pension fund idea with the creation of a “great agency” devoted to strengthening American education through inquiry and policy studies.

From the beginning, the Foundation had considerable influence on educational standards and policies because its trustees had to select a limited number of institutions to admit to the retirement system, and many were anxious to benefit from it. Entrance requirements, endowment and the number of full-time professors were among the criteria used in the selection. Carnegie’s instructions also made pensions available without regard to sex, creed, race, or color, but he excluded institutions that were under the control of a religious denomination.

As educational standards improved and enrollments increased, Pritchett realized that the Foundation’s endowment could not continue to support free pensions even for teachers in the colleges already on the list, let alone all qualified professors as Carnegie had hoped. Moreover, Pritchett had come to believe in the superiority of a contributory retirement system, one which could be open to all institutions of higher education and which would assure “portability” to wherever a teacher might migrate, rather than just among the institutions associated with the Foundation. After considerable study and negotiation, the Teachers Insurance and Annuity Association was established by the Foundation in 1918, with an initial million-dollar subsidy from Carnegie Corporation of New York. TIAA gradually became wholly independent of the Foundation and the Corporation. In 1952 it launched an affiliated company, the College Retirement Equities Fund, offering the first variable annuities based on the value of equity investments. TIAA/CREF had assets of nearly $380 billion by 2006.

The Foundation always conducted educational studies and projects. Probably the best-known and most influential early project was the report on medical education in 1910. In preparation for this report, Abraham Flexner visited every medical school in the country and found nearly all of them deficient. His report on the conditions he observed resulted in higher standards for the profession and increased funding for medical education and research. Other early projects included studies of engineering, dental and legal education and a report on college athletics. A study of the relations of secondary and higher education in Pennsylvania (1927-40) led to the first widespread use of objective, machine-scored tests, and the work of the Graduate Record Office (1937-47) developed tests for admission to graduate schools and also for certain professional fields. With the financial assistance of Carnegie Corporation, the Foundation brought about the merger of its testing activities and those of the American Council on Education and the College Entrance Examination Board to establish the Educational Testing Service in 1947.

Through the years the Foundation has become known for its thoughtful and extensive policy studies that helped define key federal policies and programs in higher education and student financial aid. During the 1980s, with several landmark reports, the Foundation broadened its work to recognize the interconnection of all stages in the educational experience.

In 1997, the Foundation moved to Menlo Park, CA from Princeton, NJ when Lee S. Shulman was named the Foundation’s eighth president. In 2004, the Foundation moved into a building on Stanford University land constructed specifically for its work as a center for teachers and teaching.

Currently, the Foundation’s focus is the scholarship of teaching and learning and preparation for the professions. There are also studies of moral and civic responsibility in higher education and on the doctorate. The institution’s primary activities of research and writing have resulted in published reports on every level of education, from kindergarten to graduate and professional studies. It conducts its non-profit research activities through a small group of distinguished scholars who generate, critique and monitor advances in the theory and practice of education in the United States and worldwide. As an advanced study center for teachers, the Foundation uses income from its own endowment to support its research and publication activities and does not award grants. It is governed by a board of trustees composed of leaders in education, business and government.