Are Charter Schools For Profit?

Are charter schools for-profit entities? The short answer: no.

First, let’s look at what all charter schools have in common. All charter schools are public schools. They are tuition-free, open to all students, and held to the same (or higher) accountability standards as their district public school peers.

However, unlike district schools, charter schools are independently operated, allowing them the freedom to use innovative school models and customized approaches to curriculum, staffing, and budgeting.

With this autonomy, charter schools can use a variety of different management structures.

The majority—approximately two-thirds of the nation’s nearly 7,000 charter schools—are freestanding and operate independently from any management organization.

The remaining third utilize some sort of management organization (which the National Alliance defines as “an entity that manages at least three schools, serves a minimum of 300 students, and is a separate business entity from the schools it manages”) to support their operations. The scope of that involvement can vary greatly and ranges from day-to-day school operations to back-office support and everything in between.

You may be wondering why charter schools choose to use management organizations at all, and the answer is efficiency. District schools have centralized offices that manage the operations of all the schools in the district. Because charter schools operate independently of the school district, using a management company allows them to streamline operations and, ultimately, increase the funding they can devote to classrooms.

There are two types of management organizations that operate charter schools: Charter Management Organizations (CMOs) and Education Management Organizations (EMOs). CMOs—which include well-known charter school networks like KIPP, IDEA, and Harmony Public Schools—are organizations with a nonprofit tax status. EMOs are management organizations with a for-profit tax status and include Academica and National Heritage Academies. Of the nearly 2,500 charter schools that use a management organization, nearly twice as many (23 percent) are associated with a CMO than with an EMO (12 percent).

Here is where the confusion stems—although the EMOs that manage a small share of charter schools are for-profit entities, the schools they manage are not. All charter schools are public schools.

Arizona and California are the only states to currently allow for-profit management organizations to hold a public charter school’s charter. In Arizona, fewer than 5 percent of the state’s charter schools are for-profit entities, and state statute has recently changed to incentivize school leaders to move to non-profit organizations. In California, Governor Brown signed Assembly Bill (AB) 406 into law in September 2018, which bans for-profit entities from holding charters and charter schools from contracting with for-profit entities for management services.

Whether or not a school is operated by a non-profit or for-profit entity has no bearing on outcomes. All charters schools are held to the standards set by their state. Charter schools exist to provide all children access to a high-quality public school option, and they are charged with adhering to the unique mission set out in their charter.

Kat Sullivan is the director of advocacy communications at the National Alliance for Public Charter Schools.

Watch what teachers have to say about public charter schools on our About Charter Schools page!