Americans are slowly familiarizing themselves with the promising education reform strategy known as “charter schools”: independent public schools of choice that are freed from most bureaucratic hassles in return for their promise to produce superior results. If they deliver those results—for the same or less money as “regular” public schools—and succeed in winning and holding clients, they keep their charters and remain in operation. If they fail, they risk institutional death, either because nobody wants to attend them or because their charters get withdrawn.
It’s a tantalizing idea, and a popular one, judging from the waiting lists at most of today’s 800 charter schools, the velocity with which new schools are coming into existence, and the eagerness of many states to pass enabling legislation.
Like any new venture, charter schools encounter their full measure of start-up problems: bureaucratic hassles; facility woes and other capital needs; cash-flow gaps; a frenetic start; governance and management challenges; lack of business acumen and managerial savvy; staff malfunctions and training shortfalls; and irregular enrollments. The first year is usually a struggle, even with good planning, and the second year brings fresh challenges. And while most charter schools have been able to weather these, some have faltered, a few have closed, and more than a few are teetering.
If it sounds like there is a role for philanthropy, it’s because there is. But that role extends beyond the usual one of satisfying capital needs. Indeed, as they contend with these and other problems, charter schools stand to get a lot of help from a new kind of giver—the “civic entrepreneur.” Civic entrepreneurs are people who are as exacting in their benefactions as in other domains of life—as persnickety in their giving and volunteering as in selecting their health plan, house, car or daughter’s college. Their philanthropy is strategic, more like a long-term investment than a one-shot act of generosity. And it focuses on the things that matter most: accountability, strong incentives, attaining objectives, and changes in individual behavior.
Civic entrepreneurs need not be super-rich. Millions of ordinary people already give to community institutions and millions volunteer their time. What distinguishes civic entrepreneurs from other donors is their keenness to tackle tangible problems in their communities by opening paths to self reliance and opportunity.
Based on our experience, it’s premature to conclude that charter schools are a huge success and will continue to multiply. They need help if they’re to flourish as genuine options for many American children. And civic entrepreneurs are capable of providing much of that help. We have spotted a number of stages in the life cycles of charter schools where civic entrepreneurs can do them great good. This article discusses two of them: lowering the barriers to entry, and mustering the requisite resources—especially talent and skill—to start up and succeed.
Lowering the barriers
If charter schools are to be an option for significant numbers of families, it’s obvious that there must be many more of them. Yet the barriers to entry are high. It’s risky, costly, and onerous to bring a charter school into being. No, it shouldn’t be too easy. Starting a school isn’t something to take lightly. But today it’s so hard as to be daunting. Keep in mind that the higher the barriers to entry, the fewer will be the number of people intrepid enough to make the effort to start a charter school or see it as a viable alternative for their child.
Access to capital is by far the most difficult barrier: getting hold of a building, refurbishing, furnishing and equipping it, installing the necessary technology, and laying hold of books and other instructional materials. Charter schools typically have just one budget, meant for operations. They typically have no access to bonds or other forms of public borrowing for their capital needs. And private vendors don’t regard them as good credit risks, since they have little collateral and their very existence (hence their flow of operating dollars) is assured only for the term of their charter, rarely more than five years and sometimes just two or three.
Civic entrepreneurs can help charter schools get started by assisting with the acquisition of facilities, equipment, and materials. Here are suggestions on how to do that, along with examples of what’s been done.
1. Provide direct support. Whether through outright grants or access to borrowed capital on reasonable terms, help charter schools obtain the wherewithal to get launched. The Fenton Avenue Charter School, for example, received grants totaling $164,000 from the Riordan Foundation to purchase new technology hardware and software. Fenton used this support to secure nearly $1.2 million in contracts with Educational Management Group and General Telephone Electronics. These contracts have allowed Fenton to enhance its educational program by being wired with fiber optics, obtaining software, placing multi-media computers in every classroom, and creating a closed-circuit television channel (the first for a California elementary school).
Support for facilities is less common but now growing. For example, the Ball Foundation of Glen Ellyn, Illinois has entered into an agreement with Continental Homes of Arizona to build new Ball-operated charter schools for homeowners in Continental communities. The Foundation will pay for the building and reimburse Continental Homes for the cost of the land. The school will also function as a community center, including adult education and after-school care. The Foundation has already provided a grant of $221,000 to a group in Chandler, Arizona that wanted to open a Ball Charter School. Most of that went for facility renovations.
2. Create a financing authority. Like other public entities, charter schools can benefit from the advantages that accrue to using either public or private financial authorities to build or renovate facilities. Such an outfit may get access to bond-financing on favorable terms, may pool the loans to several charter schools to reduce the risk to lenders, or may furnish a revolving loan fund of privately-raised dollars. A group of Washington, D.C.-based philanthropists and investors have launched a nonprofit venture called the Charter School Development Corporation. Supported by private money, its mission is to provide both working capital and capital for school facilities and equipment. It wants to create a foundation partnership that would pool funds that can be held as a portion of the credit needed to guarantee construction bonds.
3. Consider gifts of property. Donate or lease facilities at low cost to charter schools, and encourage other firms and groups to do the same. A former parochial school, an unused warehouse, or part of a shopping mall can be turned into a terrific charter school site. For example, Carole Little and her business partner, Leonard Rabinowitz, donated a $6.8 million former fashion headquarters to the Accelerated Charter School in Los Angeles. A panel that includes Rabinowitz has promised to undertake a $50 million fundraising effort over the next two years.
Organizing for success
How do charter schools develop the leadership and muster the expertise that they need to flourish, when even the best-intentioned founders often lack crucial elements of know-how? They may, for example, have terrific education ideas but be utterly ignorant about the multi-faceted business aspects of charter operations. Or they may know lots about business but next to nothing about curriculum and testing. In the near term, they need ready access to whichever forms of expertise they lack. Over the longer run, the charter movement urgently needs ways of augmenting the supply of people who possess the savvy and know-how as well as the desire to create and lead successful schools. Today there is no obvious place to go for training as a charter leader, no clear “apprenticeship” route, and no obvious leadership clearinghouse.
Civic entrepreneurs can help those who are already interested in creating charter schools, and boost the supply of such people for tomorrow. They can, for example:
1. Supply training and technical assistance. Civic entrepreneurs can provide financing to underwrite training and other types of technical assistance centers that head-off or resolve start-up and implementation problems or that provide professional preparation for teachers and administrators. These centers can also provide on-site management reviews to assess a school’s organizational strengths and weaknesses, do policy research, brief legislators, undertake media outreach, and do fundraising for individual schools. Creating such technical assistance centers has been a common form of support for the charter movement, though much more is still needed, especially in states and communities that are new to the charter idea. Here are some examples:
The Pioneer Institute’s Charter Schools Resource Center assists schools in Massachusetts. Activities include fundraising from private sources to help with facilities and other start-up costs, annual research reports on the status of the state’s charter schools, and regular contact with state legislators to keep them informed of how charter schools are working. The Center’s work is supported by foundation grants, CEOs for Fundamental Change in Education (an organization of Bay State business leaders), and individual donors.
A partnership between the Minneapolis and St. Paul Foundations has helped launch a new resource center under the University of Minnesota’s Center for School Change. The center provides technical assistance to nearly 20 groups in the Twin Cities that want to create new charter schools. The foundations want to use the charter idea as part of a community development strategy for low-income neighborhoods and minority communities.
California State University in Sacramento is the home of The Charter Schools Development Center that provides extensive technical assistance across the state to schools with start-up and operational issues. It’s particularly known for “bootcamp” workshops where individuals are put through rigorous training on how to start a charter school and on management and finance issues. The budget is supported by private foundations, with the University providing in-kind assistance.
These assistance centers illustrate how civic entrepreneurs can support the creation of organizations that provide much-needed services to charter schools. There are also examples of financial support directly to charter schools or to groups that want to create such schools. For example, through the Fisher Family Foundation, Donald and Doris Fisher of San Francisco (founders of The Gap clothing chain) will give $25 million to groups in the Bay Area that wish to become Edison charter schools. The money will help pay for the schools’ start-up costs, including planning activities, staff development, and capital requirements. In New Jersey, the Prudential Foundation began a $10 million revolving fund so that New Jersey charter schools can borrow money as much as seven months before the school opens for “start-up” and “early operations” expenses. (Money may not be used for buildings and must be paid within a year or two.) The interest rate is 2.5 to 5 percent depending upon the school’s level of collateralization. Finally, both the Challenge Foundation and the Walton Family Foundation provide support to individual charter schools for a variety of start-up and on-going activities, particularly in the areas of curriculum and staff development.
2. Donate services. Business owners can loan employees from their firms (or recruit other firms to do so, or even pay for consultants) to help start charter schools or to work with school founders and operators to train the people they need to operate successfully. For example, the San Diego Chamber of Commerce Business Roundtable for Education supports a charter school consortium that meets with outside experts to assist those schools. It pays for—and enlists those who will donate—business, legal, managerial, and other kinds of assistance. The Colorado Lawyers Committee provides pro-bono work for charter schools, including writing proposals and helping those whose charter requests are rejected and decide to appeal to the state.
3. Support professional development. Civic entrepreneurs can provide scholarships, fellowships, internships, and other “mentoring” relationships for educators, parents, and other interested individuals to train and incubate talent that will go on to create and lead charter schools, including funds for site visits to successful schools that can serve as “role models”. For example, the San Diego Chamber Business Roundtable gives charter school representatives “scholarships” to attend statewide conferences. It also provides business mentors to charter school principals and members of charter school budget committees.
Charter schools are a positive influence with the potential to visit radical change on the educational status quo and do great good for children. Implicit in them is a major redefinition of what we mean by public education and a profound alternative to the familiar bureaucratic monopoly. In the face of relentless attacks by forces that are alarmed by the prospect of charter school success, however, we must wonder whether the charter school movement will grow up big and strong enough to demonstrate its full potential. Charter schools are also a powerful engine for the renewal of civil society, particularly those aspects that attend to the community’s neediest members. That is exactly the sort of project that civic entrepreneurs should be embracing.
Chester E. Finn is president of the Thomas B. Fordham Foundation and John M. Olin Fellow in the Washington, D.C. office of Hudson Institute. Bruno V. Manno is a senior fellow with Hudson Institute, and a member of the Fordham Board of Directors. Both were involved in a multi-year national study of U.S. charter schools. A related article on support for charter schools, also by Finn and Manno, may be found in the September 1998 issue of Policy Review.