Philanthropy and the Growth of Charter Schools

This year marks the 25th anniversary of Minnesota’s law on charter schools, the nation’s first. Charter schools now constitute the fastest-growing school-choice option in the United States. These independently operated public schools—nearly 7,000 of them and counting—provide options for almost three million students across 43 states. Skimpily funded at about three-quarters of the per-pupil dollars traditional schools receive, however, and with little to no capital funding for facilities, many charters have trouble making ends meet. And although private philanthropy (plus tons of entrepreneurial energy) has helped address this inequity, these charitable efforts have sparked vociferous debate within the philanthropic community and beyond—about diminished philanthropic support for traditional district schools when money goes to charters, and about philanthropy’s role in shaping the priorities of charter schools and other education initiatives.

A Slope on the Playing Field?

Chartering has unleashed a wave of giving that has drawn hundreds of millions of dollars into K–12 reform efforts. Some—we suspect much—of this money likely would not have entered the education field at all were it not for the flexible and tantalizing vehicle of charter schooling. But there’s no avoiding the fact that not all the private funding for charters and related endeavors has been additive. Some has been diverted from the district sector and entities associated with it.

Sarah Reckhow and Jeffrey Snyder of Michigan State University chronicled this trend in a study on the makeup and giving patterns of the top 15 US educational grantmaking foundations from 2000 to 2010. They found, among other things, that a significant number of new donors and foundations entered the K–12 arena during that time. Seven sizable organizations in this group—the Walton Family Foundation, the Michael & Susan Dell Foundation, the Robertson Foundation, the Broad Foundation, Fisher Fund, Daniels Fund, and the Silicon Valley Community Foundation—actually displaced more established philanthropies in terms of the size of their contributions to the sector. (The Bill and Melinda Gates Foundation held its spot as the largest K–12 donor over the period studied and is still the largest today.)

These newer entrants employed different approaches to funding than many of their older peers. For example, they often provided support for “jurisdictional challengers” such as charters as well as organizations such as Teach For America and the Charter School Growth Fund, all of which compete with or offer alternatives to long-standing K–12 institutions. Among the top 15 philanthropies, funding for district schools dropped from about 16 percent of total grant dollars in 2000 to 8 percent in 2010, while funding for charters rose from 3 percent to 16 percent.

Finally, Reckhow and Snyder found greater convergence in grantmaking, as the new foundations—and some older ones—teamed up to support similar activities and programs, sometimes in the same places. By 2010, five grantees (Charter School Growth Fund, Teach For America, KIPP, DC Public Education Fund, and NewSchools Venture Fund) together received more than $150 million from the top 15 foundations—a sum that amounted to 18 percent of those foundations’ total giving.

Private money makes up less than one percent of all public school revenues, essentially a drop in the revenue bucket. But both charter and district schools actively pursue such funding, and district schools recently have raised just slightly more than charter schools—$571 versus $552 per pupil per year, respectively. As both charter and district schools actively pursue such funding, there’s no escaping the conclusion that the charter sector and other jurisdictional challengers in K–12 education have fared pretty well, given the relatively small size of the population they serve, at least in some communities—and sometimes at the expense of districts and their programs.

It’s equally true, though, that even as some charters have succeeded at private fund-raising, others reap little or nothing from philanthropic sources. In the District of Columbia, for example, between 2012 and 2014, eight of the city’s 100-plus charter schools accounted for 75 percent of all charitable dollars received by the entire sector—and three of them brought in half. This asymmetry is partly caused by capital campaigns that attract very large gifts for a few fortunate or enterprising schools. So while philanthropic dollars are surely welcome when they arrive, they’re ultimately, and for many schools, a shaky source of support.

Philanthropy’s Role

It’s important to keep studying philanthropy’s funding patterns regarding K-12 education in general and charter schools in particular. The environment is continuing to evolve. But we also believe there’s a different and potentially more vexing issue regarding charter-related philanthropy that’s not receiving enough attention: how the evolution of the education sector has intersected with the evolution of philanthropy itself. It’s worth considering whether today’s strategic and venture-focused approaches to philanthropy have led major donors to try to mold the charter sector by deciding which populations should be served by what kinds of schools located in which communities. By focusing their largesse on grantees that advance their own agendas, are these funders failing to give enough consideration to other important needs and promising opportunities in the education sector?

A related issue concerns philanthropy “partnering” with government agencies that seek to leverage private dollars to advance their own agendas. This was a feature of some Obama administration K-12 education programs that required recipients to match federal monies with philanthropic dollars; the result was hundreds of millions of philanthropic dollars spent on projects selected by the government.

Even as we laud the private generosity that has brought many fine charters into being to serve tens of thousands of needy children, we must ask whether philanthropy’s role in shaping the education sector over the past two decades has excessively narrowed its scope and constrained its possibilities. When the bulk of available donor dollars has gone into missions determined by the donors themselves, there’s not much left with which to explore other potentially valuable roles for chartering or to serve populations of children with other needs—either through charter schools or other innovative means.

And that’s without even getting to the question of whether philanthropy’s interest in charters and programs linked with them has kept district schools and district-linked programs from doing all they could for other needy children. As we observe the 25th anniversary of the birth of US charter schooling and the significant role that philanthropy has played in this movement’s development, let us celebrate what philanthropy has done for education in the past, but not be confined by its past role going forward. 

Read more stories by Chester E. Finn, Jr., Bruno V. Manno & Brandon L. Wright.