Are Charter Schools For Profit?

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Let’s take a deeper look and debunk this common charter school myth.

Charter schools are not 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).

Graph with Total Charter Schools and Enrollment by Management Type, 2016-17

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 always not-for-profit public schools. Therefore, charter schools themselves are not-for-profit entities.

Arizona and California are notable exceptions and are the only states to currently allow for-profit charter schools. 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 status. In California, Governor Brown signed Assembly Bill (AB) 406 into law in September 2018, which requires all charter schools to be nonprofits. Fewer than ten of California’s 1,200+ charter schools are currently held by a for-profit entity, and these schools have to comply with the new law by July 1, 2019.

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!

Comments

March 27, 2019 - 11:33am
Zachary Wray

For-profit charter schools should not exist anywhere in the nation. The idea of monetizing education is antithetical to the idea that quality education should be accessible to all regardless of class or other identity. I say this because charter schools (both nonprofit and for-profit) have deprived public schools of the funding they desperately need. Charter schools harm public schools, even if that is not the intent, and with the continually massive cuts to public education, these public schools are suffering.

There are not enough charter schools for everyone to attend them, and the goal should not be to phase out public schools and replace them with charters. The unaccountability of charter schools relative to public ones is also problematic. We should be trying to make our public schools stronger and more beneficial for the children who deserve quality education, instead of empowering charters and hurting public education.

April 4, 2019 - 03:44pm
John

How is AZ incentivizing for-profit owners to switch to non-profit?

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