The theory behind the value of charter schools is compelling. Competition for students (and the funding that comes with them) can spur district schools to up their game. Charters bring funding and talent to underserved neighborhoods. They can deliver lower student-to-teacher ratios, longer school days, innovative curriculum, and more teacher training.

But charters can have negative consequences on their local districts. Districts lose the marginal revenue of each charter student, but retain the fixed costs of principals and district staff. District schools that lose a significant number of students to charters are left operating below scale. This problem is exacerbated in communities where enrollment is declining, and districts and charters are competing for a shrinking student pool. Also, districts may be required to provide space for charters, increasing their expenses. In response to declining revenue and increasing costs, districts can be forced to cut back on critical services such as support staff, counselors, and partnerships that help provide wrap-around services such as mental health therapy. These consequences are particularly acute in smaller districts. In business, the mantra of “grow or die” is gospel, but the charter theory of change is based on the district shrinking while improving its performance.

What’s more, selection bias in favor of charter schools is real. Parents who have the time to learn about charters and apply for them are more involved with their children’s education than average. This is a more powerful indicator of success than basic demographics. At secondary schools where students play a larger role in deciding which school to attend, the students who struggle most often actively resist charters, because they perceive them as more demanding.

And there are other problems. Districts often need to divert management time from improving instruction to finding space and negotiating operating agreements with charters. Boards often spend their time addressing how to minimize the impact of the new schools. This is more substantial than most funders would imagine.

It’s also important to remember that the primary obstacles to districts’ performance are execution and funding, not incentives. Most educators are already motivated to do as much as they can to support their students. They are inspired to help others, not to compete. If execution is a problem, distractions from competing with charters just make it worse.

Finally, student recruitment can divide communities; it’s common for both sides to disparage each other. Charters have marketing budgets that districts cannot match. Advocacy organizations hold rallies comparing charter and district school test scores without acknowledging the inherent selection bias of charters and the additional resources charters spend. Their message is: If you love your children, you must not let them attend a district school.

All of this leaves many philanthropists asking: How can we best support all students? How can we create great communities, not just great schools?

Funders can start by finding ways to create win-win collaborations between districts and charters so that all students, and the entire community, benefit. For example, they can:

  1. Create charters in districts with district buy-in. In some cases, local school boards deny charters their request to enter, only to have a county or state school board approve the charter. This sets up an adversarial relationship with the superintendent. Funders can seek charters where the superintendent embraces the charter as a strategic partner, and where both organizations are committed to sharing resources and learning from each other, and then fund that collaboration. This is what the Gates Foundation is doing with its District-Charter Collaboration Compact. If a funder disagrees with a district’s position, then she might get a higher return on investment by first pushing for leadership change. Launching a competitive attack may benefit a few students, but only at the expense of the majority.
     
  2. Consider the context. Before advocating or opposing a new school, funders should take the time to understand the dynamics of a community by attending a community forum or a school board meeting. For example, it is best to avoid creating charters in small districts with declining enrollment, because it creates a zero-sum mentality. These districts are already shrinking below efficient scale, and each lost student worsens the economics. Charters and districts are playing a game of musical chairs, competing for a shrinking student and revenue base. More-promising contexts generally include districts where the new charter seeks to serve less than 10 percent of the student population.
     
  3. Challenge charters to take over entire existing schools, instead of creating new ones. This would minimize the negative financial impact charters have on districts. Existing students at a school would attend the charter, thus minimizing selection bias (a lottery would be held only to replace those families who declined to remain). Taking over existing schools would save time spent on facilities and ensure that remaining district schools stay at optimal size. It would also allow schools to retain their neighborhood feel and foster stronger community building.

    While charters may object to taking over an existing school, because it’s not their model and they prefer to build schools gradually, that is a luxury districts don’t have. Meanwhile, districts and unions may object, because they don’t want to allow charters to lay off principals and teachers. But if a charter eventually reaches full enrollment, at whatever location, the district would have to reduce the number of teachers and most likely a principal anyway. And while some families may object, because they don’t want to lose their school to a charter, they could have the choice to remain or move to another district school.
     
  4. Invest in capacity building for districts. Funders should analyze which services charters provide that make them successful and fund the same services for district schools. For example, they might match every dollar they give to a charter for staff development with a dollar to the district. Due to their extra private dollars, charters can provide additional staff, such as coaches for new teachers and reading specialists, at a low student-to-staff ratio. Funders could consider investing in districts, too, to provide comparable ratios across district and charter schools.  
     
  5. Push charters and charter advocacy organizations to present intellectually honest data. Standardized test score results don’t take into account selection bias or schools’ relative financial resources, making results from charters and districts an apples-to-oranges comparison. Funding based on test results alone creates risk-aversion among charters to enrolling the most disengaged and highest need students. Worse, attacks by charter advocacy organizations on districts create distrust and hostility while offering a solution for only a minority of families. Funders need to push to see metrics beyond absolute achievement on standardized tests.
     
  6. Help build effective school boards. School board members decide how to partner with charters. Funders can support candidates who see the value in partnering and who want to protect the students remaining in district schools.

We have heard funders say they have given up on public school districts and have shifted their focus to saving the few students they can through charters. We disagree with this notion, because it negatively impacts institutions serving the majority of our children, arguably the most marginalized and least resourced.

Let’s create great charter schools that collaborate with, not compete against, district schools, and in the process create great communities so that benefit everyone.

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