Not sure how large a population there is where you live, but how about asking the parents of the children to donate items that can then be sold on Craigslist? And, better yet see if there is a parent that would coordinate such an effort; posting, selling, etc. That way the kids and parents are involved in something that will give them all ownership in this teaching tool.
The easiest and no personal expense is to go to DonorsChoose.org: An online charity connecting you to classrooms in need.
A young teacher created the web site for people to donate and it is great. You set up an account, write a small first project, launch it and get your stuff in a week or two! Then write a bigger project.
Teachers get everything from pens and colored markers and paper to computers and field trips, funding for books and Flip videos, classroom storage, tables, chairs, special needs supplies, regular supplies, batteries, anything and everything. Only public schools and only teacher. You can watch some You Tube vidoes about this site too.
I'll preface by saying I did not read all of the replies, so disregard this if you have heard it already. Are you located near a college or university with a teacher education program? If so, sometimes they have funds for studying innovative uses of technology in the classroom. Try to contact someone there and see if they need a classroom for in-service observations, etc, and write a proposal to justify the purchase of the iPad.
Also, if she plans to use the technology with a diverse student population, she may want to look into Teacher Organizations (i.e. council for exceptional children) who award grant funding for research in the classroom. Some of the requirements are minimal if she is willing to share the pros and cons with other educators in the field. That's another great way to get funding for classroom materials.
I too would recommend donorschoose.org
It is worth a look. The problem your wife may run into is that every child in her class is going to want to use the iPad. I too am an educator though I'm working in Japan at a junior and senior high.
I'll keep the message here short for you.
I made an app for teachers to use with students in the classroom environment. I'd like to offer you guys free a promotion code to it if you are interested. (PM me if you want one.)
My app is called Futaba- it is a game designed to help young learners remember vocabulary and play together in groups of up to 4 students. Teachers can change the content and that for me is the best part of it.
Futaba - Word Games for Kids for iPad on the iTunes App Store
I'd only ask that in return if you though it was useful that you help spread the word to other families and teachers for me!
Osaka Kunei Girls' Junior and Senior High
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As a former county social worker, I think involving the children's parents in collecting cans, newspapers, and bake sale, will ensure their participation and cooperation in the homework, school work and attendance, as well as raise some money for the extras needed in the classroom. Maybe this way you can even buy 2 ipads.