The Roundtable is proud to present excerpts from its most recent guidebook, Investing in Charter Schools: A Guide for Donors.
Many philanthropists put improving public education at the top of their agenda, but for many years donors have struggled to have a real impact on sub-par schools. Too often, grants to support reform in existing schools have made little difference toward improving student performance.
Enter charter schools. Independently operated and free from many laws and regulations that constrict traditional district schools, charter schools strike many funders as one of the most effective ways to invest in public education. Nearly 18 years after the nation's first charter law was passed in Minnesota, charter schooling remains one of the nation's most promising efforts to produce more great public schools, especially for low-income and minority students. Forty states and the District of Columbia now have charter school laws, and more than 4,000 schools serve over 1.4 million students—about 3 percent of the nation's public school population. Families continue to clamor for more charter schools, lining up on long waiting lists for the chance to enroll their children.
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What is a Charter School?
A charter school:
- is a public school funded with public money.
- is tuition-free for all students.
- is non-sectarian, non-religious, and may not discriminate in student admissions.
- is chosen by families.
- is semi-autonomous, operating under its own charter—hence the name—and thus exempt from many of the regulations and collective bargaining agreements under which district public schools operate.
- is free to be a unique school designed to meet the needs of the students it intends to serve.
- is required to meet the same graduation standards as other schools.
- is responsible for improving student achievement and adhering to its charter contract, or else face closure.
- receives discounted funding (in most, but not all, states), thus making it partially reliant on philanthropic support.
- can be a stand-alone school or a part of a network of charter schools.
- can be nonprofit or for-profit.
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The Promise of Charter Schools
The promise of charter schools helps explain why philanthropists from coast to coast continue to play a vital role in the charter sector, as they have from the very beginning. Over the past 15 years, funders have supported school entrepreneurs during the critical start-up years. They have helped successful charter schools replicate themselves. They have backed organizations that exist to help charter schools succeed, and have educated state leaders about the need to foster a charter-supportive policy environment. And they have helped create an educational sector that liberates teachers and administrators from the constraints imposed by traditional district schools, allows more experimentation and innovation in the classroom, and provides public education choices for parents and students.
Many charter schools across the country have moved to the forefront in educational achievement, and some are producing astonishing results with traditionally underserved groups of students. The most successful have served as models for new charter schools and, in some areas, spurred innovation in traditional district schools.
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Why Charter Schools?
Donors across the country have backed charter schools because of the sector’s potential to:
- Circumvent the barriers to change in traditional district schools by starting new schools.
- Create opportunities for breakthrough approaches to educating young people.
- Provide diverse schooling options, especially to parents who cannot afford private school.
- Bring more entrepreneurial leadership into education.
- Foster greater accountability for results.
- Introduce competitive pressures for improvement into public education.
- Empower parents and community organizations to directly shape children’s education.
- Generate models that can be used in schools everywhere.
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New Opportunities, New Challenges
For all of its potential, the sector still faces many challenges. Though many funders remain excited by the possibilities of chartering, they nevertheless share a number of concerns about the state of the sector.
Quality. The quality of charter schools remains uneven. It is not uncommon to find charter schools among the very best of a city's or state's public schools—but also, sometimes, among the worst. And it has proven difficult for those who oversee charter schools to shut down those that are unsuccessful. Many funders wonder if they have done enough to insist on high quality in the schools they support.
Funding. Charter schools continue to be under-funded. Almost all states deny charter schools capital funding, forcing them to spend a portion of their operating funds on facilities. And in many states, charter schools receive less than 100 percent of the operating funds district schools receive.
Access. Access to charter schools varies greatly across the country. Ten states do not even permit charter schools, and the laws of many other states hinder the growth of truly independent charter schools. According to the Center for Education Reform, which publishes a charter school laws "report card" annually, only 21 states earn an "A" or a "B" for the quality of their charter laws.
Opposition. While charter schools have gained bipartisan support in many places, in others the political backlash against them has grown along with the sector. Even where charter schools are producing extraordinary results, they remain controversial due to the threat they pose to established interests. Opponents seek to limit the number of charter schools, restrict their autonomy, cut their funding, and place them under the authority of school districts and collective bargaining agreements.
To address these challenges and help the charter sector live up to its potential, a broader spectrum of private donors, foundations, education entrepreneurs, businesses leaders, and policymakers must take some new and different steps. Relying solely on the strategies and the players of the past is simply insufficient given the challenges of the future. Too much is at stake to allow charter schools to plateau, especially at a moment when charter schools are an option available to just 3 percent of public school students nationwide.
The Need for Small- and Mid-sized Funders
Today more than ever, the charter sector needs an influx of small- and mid-sized funders. Smart investments, even if modest, can be leveraged to produce big results. There is a widespread feeling among charter-sector donors that additional funders must be brought into the charter sector. No one can quantify precisely what it would cost to build the sector from its current size to its potential scale, but the price-tag would surely reach into the tens—perhaps even hundreds—of billions of dollars. Current donors see this need at all levels of the sector, from national organizations needing support for scaled-up efforts to individual schools just starting out.
Perhaps more important than funds, however, is the energy, vitality, and innovation that small- and mid-sized funders can bring to the charter sector. To encourage this new wave of smart, smaller funders, this guidebook offers chapter-by-chapter advice for relatively small donors, as well as examples of truly consequential, sub-six-figure charter-related grants.
The charter sector remains heavily influenced by the philanthropic community, which has played an enormous role since its beginning. Attentive to the promise of charter schools, in 2003 The Philanthropy Roundtable commissioned Jump-starting the Charter School Movement: A Guide for Donors. Today, given the challenge of growing the charter school sector while maintaining its quality, the Roundtable has commissioned a thoroughly revised guidebook, Investing in Charter Schools: A Guide for Donors, which builds on the earlier work while drawing heavily on recent developments in the charter sector and incorporating the advice of leading charter funders.
The goal is to offer donors new to the field the best ideas about the most effective ways they can support a high-quality charter school sector, both in their communities and across the country. To that end, the guidebook draws on the deep experience of many of the sector's most active funders. It reflects their thinking about how private philanthropists can lift the charter school sector to a new level of excellence in the next 20 years. These funders have many different ideas about the best ways to support chartering. As a result, it does not offer a simple recipe for all donors to follow. Instead, it offers a menu of possibilities for readers to choose from, adapt, and implement.
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Donor’s Perspective:
“Almost All of These Schools Are Charter Schools”
Nine years ago, the [Bill & Melinda Gates] Foundation decided to invest in helping to create better high schools, and we have made over $2 billion in grants.... Many of the small schools that we invested in did not improve students’ achievement in any significant way.... But a few of the schools that we funded achieved something amazing. They replaced schools with low expectations and low results with ones that have high expectations and high results. These schools are not selective in whom they admit, and they are overwhelmingly serving kids in poor areas, most of whose parents did not go to college. Almost all of these schools are charter schools.
Bill Gates
Co-chair and trustee, Bill & Melinda Gates Foundation
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A Word of Caution
Before considering charter-support strategies, a word of caution is in order: The charter school landscape differs vastly from state to state. Depending on each individual states charter law, funding formulas, flexibility, and authorizers (the organizations that license and oversee charter schools) can vary widely. New funders, especially those working in a specific city or state, must take the time to learn about the local landscape. They must investigate and become thoroughly familiar with the state's charter laws—if the state has one.
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Leveraging Smaller Investments
The great majority of foundations do not have tens or hundreds of millions of dollars to invest in any one program. Having a more modest sum to direct, however, does not mean that a donor cannot have an important impact on the quality of the charter school sector.
Generally speaking, there are two main strategies for wielding influence with smaller grants.
Finding strategic niches. One strategy for effectively using smaller grants is to precisely target charter-related initiatives—especially those whose existence is significantly affected by your $10,000 to $50,000 investment. Patient, strategic donors can find opportunities to make their five-figure investments reap enormous dividends. (Please see the sidebar titled “Finding Market Niches in the Charter School Sector.”) And, even without finding new programs, all of the multimillion-dollar examples given throughout this guidebook have their smaller-dollar counterpart at the local level.
Collaboration. The other strategy for effectively using smaller grants is to combine funds with those of other donors to create a larger pool of resources. A funder can do this independently, simply by talking with other potential donors and developing a fund, the uses of which are left to the investors’ joint discretion. Or a funder can contribute money to already established funds, such as those managed by community foundations or those initiated by other funders for the express purpose of drawing in multiple funders to support charter schools.
Throughout Investing in Charter Schools there are a number of sidebars titled “Leveraging Smaller Investments.” In these sidebars, a variety of donors describe some of their very best small-scale, high-impact charter school grants.
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Five Strategic Priorities
When making grants or investments in the charter school sector, donors naturally want to be strategic. They want to focus their funding on activities and organizations that can make a long-term difference for the success of chartering. How can funders target their resources to maximize their return on investment in a high-quality charter sector?
Taking the charter sector to the next level—in terms of both scale and quality—will require addressing these five strategic priorities:
Building a Robust Supply of High-quality New Schools: Since the first charter school opened in 1992, the number of charters nationwide has grown tremendously. But families continue to demand more charter schools, with waiting lists growing steadily longer and parents becoming ever more frustrated. How can donors help ensure that there are enough new charter schoolsand sufficient excellence among themto fulfill the demand for better schooling options?
Priming the Human Capital Pipeline: In charter schools, as in all schools, teachers and leaders are absolutely essential to student success. Yet charter schools face shortages of highly effective teachers and leaders, especially those who are prepared to work in their unique environments. Funders will have an important role to play over the next several years, supporting the development of a well-primed pipeline of talented human capital for charter schools and helping fund the development of innovative technologies that can decrease the dependence of the sector on finding ever more sources of talent.
Addressing Critical Operational Challenges: Severe operational challenges have made it difficult for charter schools to start and thrive. Obtaining adequate "back office" services, financing facilities and operations, and developing sound business and accountability plans are among the most prominent difficulties. Tackling these challenges would help more charter schools open, and help existing charter schools focus on creating great learning programs.
Defining and Improving Quality: Charter school authorizers are the organizations that grant charters and oversee charter schools. In theory, they exert quality control in chartering, screening out unqualified charter applicants, and holding schools accountable for results. But too few authorizers are equipped to perform these roles well. Beyond authorizers, there is minimal information available to the public about how well charter schools are doing. Donors can help by investing in the collection and dissemination of data on charter schools, and by establishing clear measures and standards of quality for charter grantees.
Forging Charter-friendly Public Policies: Charter school policy establishes the processes and conditions under which all of a state's charter schools must operate. Yet in too many states, charter school policies are hindering the potential effectiveness and the scale of the charter sector. In other states, good policies are under attack by charter opponents. Charter advocates are rarely as well-organized or well-funded as those who challenge them. Public policy will remain a major factor in determining whether the charter school sector is able to capitalize on its successes so far and continue to grow with quality.
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Quick Facts on the Charter Sector
- In 1991, Minnesota passed the first charter school law in the United States. California followed suit in 1992.
- 1,400,000 students attended 4,600 public charters schools in 40 states and the District of Columbia (as of early 2009).
- 426 new public charter schools opened in the 2008-09 school year. In 2007-08, 362 new public charter schools opened.
- 26 states impose limits or caps on the number of charter schools that may operate.
- 60 percent of students in public charter schools are minorities.
- 78 percent is the average per-pupil funding charter schools receive relative to district schools.
- 9 percent is the market penetration among Arizona’s charter schools, making it the highest market share among the states.
- 55 percent is the market penetration among New Orleans’ charter schools, making it the highest market share among the major cities.
Source: National Alliance for Public Charter Schools
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Expert’s Perspective:
Finding Market Niches in the Charter School Sector
Nobody has ever suggested that, having written Harry Potter and the Sorcerer’s Stone, J. K. Rowling should have launched a publishing company to market the book. It was never expected that Microsoft would only be viable if it started manufacturing and selling computers, or that Amazon.com should only be taken seriously if it opened a chain of brick-and-mortar stores.
Yet that all-or-nothing mindset can be found among some K-12 education reformers. Dollars are primarily directed to entrepreneurs who open highly successful new schools. Most of these schools succeed by hiring top-tier personnel, extending the school day, and creating disciplined cultures. This “whole-school-or-nothing” approach has favored truly excellent practitioners who accept conventional notions of how schools work—at the expense, however, of innovators who pioneer new ways of addressing stubborn challenges.
As a result, relatively conventional ideas (like adding instructional time) have diverted attention from radical innovations (like technology or specialization) that don’t necessarily lend themselves to “whole school” reform models. It has also favored reformers who augment rather than reinvent school practices, leading to an underinvestment in providers more likely to deliver cost-efficiencies which free up resources to drive improvement.
This “whole-school-or-nothing” mindset furthermore slows charter-sector growth because new ventures must go through the entire energy-sapping routine of launching a new school—even if only a limited portion of this energy actually builds on core expertise. Would Amazon.com have grown as fast, had as big an impact, or served its customers as well if investors had expected Jeff Bezos to mimic his competitors by building a national chain of retail outlets? Amazon’s success was precisely that its technology-driven solution wasn’t simply a “more, better” version of the familiar bookstore.
Ultimately, charter-school builders are just one key element of a vibrant reform ecosystem. Specialized new providers can help provide and finance facilities, recruit and train educators and school leaders, use technology to deliver or enhance instruction, deliver tutoring, offer data systems and management, craft curricula and instructional materials, and provide high-quality assessment and performance analysis. In doing so, they can ease the lives of charter operators and increase the likelihood of dramatic, replicable advances in quality and productivity.
Frederick M. Hess is the director of education policy studies at the American Enterprise Institute. This sidebar is adapted from “Encouraging Diverse Suppliers,” co-authored by Hess and Bruno V. Manno, senior associate for education at the Annie E. Casey Foundation.
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