Inflection Point: Taking Stock of Philanthropy and the Charter School Movement

Though charter schools have acquired a powerful ally on the national level in the form of Secretary of Education Betsy DeVos, local backlash and scaling challenges have led to questions about the future of the publicly funded, privately run schools.

Philanthropic enthusiasm for the charter movement is at a similar inflection point. For now, support for charters seems to be holding. However, the schools have had trouble reaching scale and have yet to catalyze the system-wide transformation many backers hoped for.

Some of the field’s champions take that as a sign of the work left to do. Those foundations are doubling down on their support for the schools.

Other funders, including former stalwart backers of charters, see the failure of this model to scale and spread as a reason to pause and consider their future investments. Those foundations tend to see charter schools as an important part of the education landscape, but not as a means to transform the system.

Meanwhile, major new donors arriving on the education scene from the business world haven’t gravitated to charters in the same way that many such philanthropists did a decade ago. While these schools remain a growing sector within K-12, drawing political support and philanthropic dollars, the momentum around charters among funders has palpably slowed in recent years. Now is a good moment to take stock of how far the schools have come and what their backers see on the horizon.

A Movement Emerges

Charter schools first came on the scene in a big way in the 1990s, with early laws passed in California and Minnesota. They differed from traditional district schools in that they were publicly funded, but independently run. Schools have contracts with local, state or national governing bodies, which lay out the basics about the school, such as its name, how it will be managed, and how it will measure and evaluate student achievement.

Like traditional public schools, charter schools don’t charge tuition, but sitting outside the district means they have more latitude when it comes to hiring, paying and firing staff, managing budgets, and exploring curriculum and school models.

Many education reformers latched onto the relative flexibility of charter schools as an opportunity to stoke innovation in K-12 education and quickly provide better school options to some of the nation’s most disadvantaged students. Others cautioned that lack of oversight could mask corruption and incompetence.

Another recurring criticism of the schools was that by allowing funding to follow students, charter schools would pull money from district schools that needed it. Supporters of charters argued, though, that families, not the government, should have agency over their child’s education, and that meant funding should follow the student.

Over the last three decades, charter enrollment has grown by millions, though the schools serve a small portion of the country’s total students. About 3.2 million students attended charter schools during the 2017-2018 school year, the National Alliance for Public Charter Schools estimates.

No foundation has done more to advance the charter movement than the Walton Family Foundation, which has invested nearly a half-billion dollars to create over 2,000 such schools since 1997. The foundation has also made a wide array of other investments in organizations that work closely with charters or advocate for their expansion.

To Marc Sternberg, Walton’s K-12 program director, the growth in charter schools since the 1990s has been a remarkable success story. “The late John Walton made our first donation into the charter space right when the first charter laws were being passed. I think if he could look at the scale that this has reached and will reach—3 million students,” said Sternberg, “I think he'd be pretty excited and amazed and maybe even kind of incredulous.”

Steinberg added, “This started as a set of startup grants to entrepreneurs, teachers who were frustrated and parents who were frustrated and who wanted to make things better for their communities.”

In the early years until around 2005, philanthropists focused most of their investments on individual schools, said Jeffrey Snyder, an assistant professor at Cleveland State University who studies philanthropic support of the charter sector. Newer foundations, like Walton, the Bill and Melinda Gates Foundation and the John and Laura Arnold Foundation (now Arnold Ventures) were more likely than legacy foundations to get involved in charters during the first several years.

Later on, older institutions began to throw support behind charter schools, but their funding never caught up to the growth of new foundations’ investments, Snyder said.

Another big change was the explosion of charter management organizations on the scene. Those organizations, which could launch and manage multiple schools at once, became the primary beneficiaries of the philanthropic dollars flowing into the space, he said. Schools run by charter management organizations show modest gains against both district schools and other charter schools, some research shows.

Another critical addition to the charter sphere were intermediary organizations like the Charter School Growth Fund, founded in 2006. The fund and others like it work with foundations and individual donors to get money to successful schools and networks that are ready to grow.

Yet despite efforts to aggregate more philanthropic capital and back charter management organizations, scaling these schools has been hard. Only 6 percent of students were enrolled in charter schools in 2015, according to the National Center for Education Statistics.

Building schools from scratch is hard, expensive work. Unlike district schools, charter schools have to find and rent their own facilities. They also face the startup costs of recruiting talent and students. Those supporting the charter space, like Sternberg, cite the costs associated with launching new schools as one of the biggest challenges the movement faces.

Another major obstacle has been the fierce criticism of charter schools from national and local labor leaders, including Randi Weingarten, president of the American Federation of Teachers, the second largest teachers’ union in the country.

AFT has a complicated history with charter schools. Albert Shanker, a past president of the union, was an early advocate of charter schools, which he believed would allow teachers more autonomy. Unions believe the charter movement failed to deliver on that promise and see most charter schools as antagonistic to their work with teachers.

The American Federation of Teachers still has a toe in the charter space. The United Federation of Teachers in New York City, the union’s largest affiliate, runs a charter school in Brooklyn, though other schools managed by the local had to close because of poor performance.

Weingarten sees philanthropic muscle behind charter schools as a symptom of philanthropy’s underlying faults when it comes to education. “I think philanthropy thought about the charter movement as the shiny new object, and philanthropy loves to fund the shiny new object,” she said. “A lot of philanthropy is premised on what they believe is innovative, as opposed to what they believe is sustainable, scalable.”

But scale can’t be an afterthought, Weingarten said, because it’s not something that happens naturally.

“Nothing actually replicates by itself. We are in a very human-intensive business. So you have to actually think about replicating strategies and adopting them. How do you scale strategies? How do you then adapt them to different places where different human beings will think about how to adopt them?”

For Some, a Fading Fervor

Looking in from the outside, Weingarten sees the winds shifting within the charter movement. Though advocates focused on choice are doubling down on their support for charter schools, Weingarten says she thinks the movement is starting to splinter.  

“I think that there are a lot of people who were in the charter movement who saw it as a way of either creating equity, other alternatives for children, public alternatives for children, or people like Al Shanker, who saw it as a potential incubator for labor instructional practices,” she said.

“That group of people sees that there needs to be reordering of priorities, because charters have actually siphoned off too much money from public schools, have actually debilitated many neighborhood public schools, and they have not actually produced the promises that they have made. I say that as someone who still runs a charter school.”

Weingarten may be on to something, although the foundations still going full steam ahead with charters would disagree with her characterization of their motives. There does seem to be a faction of the charter movement that is stepping back to consider what comes next, and are open to charters playing a smaller role in future efforts.

One of those people is Andy Stern, a board member of the Eli and Edythe Broad Foundation and board chair of the Broad Center.

Stern started out as an unlikely ally of the charter movement. He is the president emeritus of the Service Employees International Union, which grew by 1.2 million workers under his leadership. Given the antagonism many felt charter schools held toward unions, some were surprised by Stern’s decision to get involved with Eli Broad, an early and ardent supporter of the charter movement.

Stern didn’t see charter schools as antithetical to his work on behalf of workers and unions, though.

“I got involved in charters because of the members’ of my union’s kids,” he said. “To me, giving janitors’ kids a chance to get the best education possible was everything they wanted from coming to this country. In Los Angeles, where we started, that was not their experience.”

Now, Stern’s enthusiasm for the schools is waning, and it sounds like Broad’s may be, as well.

“So I would say Eli [Broad], absent any of the recent strikes and activities, has been rethinking what he wants to do in education, as he has been thinking about what he wants to do in the arts and science, as well,” Stern said. “As he thinks about his age and what he wants to see happen in a transition, I'd say there is a natural rethinking and reprioritizing going on.”

Stern said Broad is likely to remain committed to education in Los Angeles, where charters play a significant role, but it’s unlikely his foundation will maintain its backing of charters on a bigger scale. In other words, charters are a part of Broad’s giving and will likely remain so, but it’s unlikely they’ll be the main focus.

“I don't think he sees his remaining time he’s going to spend in education as focused on charters as he once had to be,” Stern said of Broad. “I'd say there's an equal philosophical commitment to charters and an appreciation of L.A.’s charter schools and their movement. I'd also say there's an appreciation that charters are not ever going to be the answer to the education dilemma.”

Stern’s comments may shock some following the charter space. Broad is well-known for his backing of charter schools both in his native L.A. and across the country.

The Broad Foundation still gives to a few charter groups, including the Charter School Growth Fund and Green Dot Public Schools, a charter management organization. Great Public Schools Now is also on that list, an organization that grew out of a plan to double the number of charter schools in Los Angeles.

Although the foundation spent a little more than $1 million in support of charter schools last year, a spokesperson for the foundation said that those funds represented a continuation of previous commitments from Broad, not new grants.

The foundation’s support of charter schools has been in decline for a while now. Broad’s support of charter schools reached a high water mark in 2007 at around $50 million in grants, but the foundation has failed to top that number in the intervening years.

Stern thinks other supporters of the movement have similarly cooling attitudes toward charters, that it’s not just Broad and his foundation.

“I think for Eli and for most people I know, people are not unhappy with good charter schools,” Stern said. “People believe these leaders are trying to, and generally succeeding in providing quality education, in many cases better than comparable school districts.”

“So I think there's a question of, not whether charters should exist or not whether they're an important part of the environment, but whether they're really going to be the next iteration of positive change for students.”

For Stern, charters fell short on several promises, the biggest being that they didn’t force system-wide change in the way reformers had hoped.

“I think there was a theory that competition matters and accountability matters. I think that is true. You always need to find people who are finding better ways to do things, particularly when there's substantial room for improvement, particularly on an equity basis,” he said. “There was a belief that if people could find better ways of doing the work, there would be a knowledge transfer between charters and districts both ways.

“I think the sad reality, and probably the biggest disappointment, is that people have tended to live in silos,” Stern said. “It's almost like they're competing companies instead of mutually supportive efforts to educate children. I think because of that, they've turned into sort of competing forces against each other, as opposed to competing to see who can provide better education to kids.”

Stern also sees diminishing returns in cities that already have a strong charter presence, especially with the costs and labor associated with building new schools.

“I think people are thinking, ‘Is having two more charters in Los Angeles or 10 more in New York really going to be the difference between quality education or not for additional students in New York?’” he said.

“This is a moment of, no one’s running away from what they built, but people are wondering what’s the next level of innovation in education,” he said.

A Mixed Record

While key funders like the Charter School Growth Fund have focused resources on “growing the nation’s best charter schools,” as CSGF puts it, the larger landscape of charters includes many schools that haven’t performed well. Because of the nature of charter schools, whose agreements may differ by state, city, or even by school, it’s difficult to get a full picture of the schools’ performance. However, a few studies provide valuable snapshots.

In some areas, charter schools have exceeded their district counterparts, according to a 2009 study by the Center for Research on Education Outcomes (CREDO). The study is one of the few to measure charter performance across several states.

The 2009 research revealed 17 percent of charter schools performed better than comparable district schools. When students in charter schools did better than their peers in district schools, it was most commonly in grade school reading and middle school math.

Charter schools beat district schools on other, nonacademic metrics, too. They’re more likely to employ diverse teachers and staff, according to the Center for Public Education. That could have something to do with their concentration in urban areas, the center posited, though so far, no research has examined that question.

However, successes come with drawbacks. For the most part, any edge charters had over district schools in math or reading disappeared when charter and district high schools were compared in the 2009 study. And although 17 percent of charter schools did better than district peers, more than double that, 37 percent, fared worse than equivalent district schools. The remainder, just under half, did about the same as their traditional peers.

A more recent study from CREDO released in 2017 drew more of a distinction between different types of charter schools and their management, which provided a rosier picture for some charter schools. The schools managed by charter management organizations performed better than both other charter schools and district peers in math and reading. The differences were small but significant, researchers found.

Charter management organization schools account for about 22 percent of charter schools in the country, though they draw most of the philanthropic dollars. Standalone, independently run charter schools make up nearly 70 percent of charter schools, and performed about the same as district schools in math and slightly better in reading.

The Way Forward for Charter Schools

Supporters of charter schools aren’t deterred by the schools’ struggles to scale and see the results, like those in the 2017 CREDO report, as reason to continue the work. They point to long wait lists for schools as proof of demand for charters by parents and communities, and aren’t discouraged by the backlash bubbling up in cities like Chicago and L.A.

The local backlash has made the effort harder, but Walton’s Sternberg is quick to point out that the work has always been difficult. He sees the growing opposition to charter schools as a symptom of the present political moment, which he is hopeful will pass.

“What has changed in the last year is, I think, the dissolution of a safe place for people who don't agree on everything to come together to find something to agree on,” he said. “We’ve got an environment now that encourages tension and maybe even discourages thoughtful policy-making to bring people together and resolve those tensions.”

“That can make this work harder. That can make, frankly, any change agenda harder,” he said. “So as much as possible, we want to be kind of bridging that and helping reconstruct, even if it's at the community level, a safe place for good ideas to be developed and to take root.”

Sternberg says this has happened in cities that have quietly embraced charter schools.

“Cities not quite in the media spotlight are learning and moving and changing how they operate,” he said. “That's exciting to us, and inspires us to keep going.”

He praised the “vast middle of the country where folks are moving the work. Systems are working together across sectors to really try new things and move the needle.”

Sternberg also noted that overall enrollment numbers aren’t the movement’s only measure of success. “For us, this is not just about more charter enrollment. This is about systemic change. This is about systems, reshaping how they behave to respond in new, creative, innovative ways to old stubborn problems.”

“The charter investments for us are critical, but they are they are a means to an end,” he said. “The end we really seek is systems responding, entire cities lifting up student performance and creating pathways to that same kind of idea of more students living their best lives.”  

To get there, Walton is focusing on a few areas. In 2016, the foundation pledged $1 billion over five years to expand the charter sector, and to back other initiatives promoting school choice.

One way the foundation hopes to promote growth in the sector is through two nonprofit lending funds it launched last year. The two funds give charter schools access to capital to start up and expand. The funds will make it easier and more affordable for charter schools to find, secure and renovate their facilities. Time, energy and resources can be redirected instead to teachers and students.

The facility problem is unique to charter schools, and supporters say it has hampered their growth. Unlike district schools, charter schools have to find and pay for their own facilities; in traditional public schools, this is provided by the district. The two new funds hope to ease that burden.

Heading into the next decade, Sternberg says it’s not enough to scale what works; the foundation also needs to support new, innovative school models and lift up diverse leaders. “There's a tension here. We want to both continue to scale what's working, as measured by parents asking for more, and communities raising their hands and student performance data,” Sternberg said. “We also know that not every community wants the same thing. So a focus on diverse models and a diverse cohort of leaders of those models that can deliver the same kind of quality experience and the same kind of outcomes is really a lot of what's next. And that's about listening to communities and about reaching new communities.”

“I think one thing that has been clear in the last decade, two decades, is, you know, there are certain kinds of schools that work and that have proven scalable,” he said. “Our view is, that’s awesome. Let’s continue to support that and let’s turn to a new set of ideas that may look completely different, but respond to an equally important demand.”

What Funders Want

As its name implies, the Charter School Growth Fund is also intent on scale. Since 2006, the fund has distributed $350 million to support the growth of charter schools. The fund picks its charter partners based on academic track records, desire to grow, long-term sustainability, and leadership. Its grantees span 28 states. Currently, the fund works with about 60 networks and 30 early-stage schools, single schools, or two-school networks.

CSGF is backed by more than 30 foundations and donors with 12 new, significant funders added in the last three years, said Julie Maier, its chief operating officer. All that puts Maier in a good position to know what funders are looking for in the schools they invest in, and in the sector more broadly.

“I think college success was a big focus early on,” Maier said. “More recently, we’ve seen both those long-term champions of the movement and new funders interested in understanding what are the key experiences students have that can help them have successful lives both economically and personally.”

Three trends have emerged, Maier said. Those include a desire to lift up diverse school leaders, promote innovative school models, and provide instruction that takes into account the development of the whole child.

Educational approaches that take a more holistic approach to student development, most notably social and emotional learning, are gaining traction across the sector, so it’s not surprising to see shades of that show up in the Gates Foundation’s recent charter work. The foundation is zeroing in on helping charter schools better serve students with special needs.

As a result of a strategy revamp in 2017, Gates pledged 15 percent of the $1.7 billion dedicated to education grantmaking over five years to charter schools. That number will actually be closer to 12 percent, or $255 million, a spokesperson from the foundation said.

In terms of percentage of total giving, that number is fairly consistent with past Gates giving to charter schools. Since 2000, the foundation has invested about $600 million in charters, about 12 percent of the $5 billion in giving during that period, the foundation spokesperson said.

Because Gates is such a large grantmaker, a small percentage of Gates’ giving can still mean hundreds of millions of dollars for a sector. While the foundation may downplay the importance of charter schools when it comes to its education strategy, its size means that it can end up giving more to the sector than other foundations that are more vocal in their support of the movement.

Going forward, the Gates funding earmarked for charter schools will largely help the schools become better at addressing students with special needs. Notably, the dedicated charter funding doesn’t share Walton’s emphasis on scale and expansion, but it does share some of that foundation’s interests in innovation and serving a more diverse set of student needs.

Bob Hughes, the foundation’s director of K-12 education, has deep ties to special education. Before Hughes got his start in public education, he worked as an advocate for parents of children with disabilities in New York City for three years.

“I think of special ed as a pretty seminal issue in public education because it provides us with an interesting lens on how we're treating all students,” he said. “The motivation is, you know, if we can get better on students with disabilities generally, I think we're going to improve education overall in the district and charter space.  

“I just think that I've always believed that if we can figure out education for kids who are furthest from standards, we’ll know a lot more about how to serve all students.”

The focus on special education tied back to what Gates heard from the charter field, Hughes said. The schools as a whole have not served special needs students well in the past, though there are exceptions. Charter educators were aware of this inequity and asked for help to correct it, he said.

“When we started to think about what role we wanted to play in the charter movement going forward, it just became very clear to us that one thing we could do as charters mature and become a permanent part of the landscape in the United States education system was to focus on special education in those schools to build up some of the bright spots,” Hughes said.

“The foundation is committed in this refresh, but to a certain extent, has always been committed in its strategy to really improving the outcomes of black, Latinx and low-income students,” he said. “That really continues to be our North Star and the work we're doing.”

Beyond Charter vs. District Divide

To some funders, one way forward for charter schools is increased collaboration between charter and district schools.

Hughes said he thinks special ed is an area where charters could learn from the work district schools are doing, and conversely, districts could learn a lot from whatever comes out of Gates’ work with charters.

“I think that that the sectors have really interesting things they can learn from one another. I think charters are very entrepreneurial and very flexible—there are obviously district schools that are, as well,” Hughes said. “Similarly, one of the things we've been encouraging some charters to do is to look at really high-performing schools that are focused on students with special needs in the district space.

“I think that cross-collaboration and pollination of ideas is helpful. I think we're going to learn a lot operating in both contexts.”

In many ways, cross-sector collaboration was always a hope within the charter movement. Sternberg cited system-wide transformation through charters that push districts to innovate and excel as Walton’s ultimate aim.

And Stern’s enthusiasm for charter schools cooled in part because the schools failed to deliver on early visions of collaboration and cooperation that would lift up student performance in traditional district schools, too. “We're at a natural inflection point where we’re able to show there are better ways to do traditional education with poor and minority students and get good results,” he said. “But also, I think they’ve shown that that can't be, as of now, easily transferred back and forth between the charter and public worlds.”

However, Stern does see hopeful signs in the form of newer funders that seem less interested in the ideological divides that pitted charter advocates and district loyalists against each other. Speaking specifically of the Chan Zuckerberg Initiative, Stern pointed out the funder’s work with the Summit Learning charter organization to create the free, online personalized learning platform. CZI took something the charter network was doing successfully and made it available for other schools.

It looks like Summit wasn’t a one-off for CZI, either. Earlier this year, the funder gave $1.6 million to Valor Collegiate Academies, a charter network in Tennessee that’s known for social and emotional learning. The grant will fund an effort to codify the schools’ methods and expand the reach of the network’s training model, Compass, so that it can reach more charter and district schools.

Stern also thinks the way forward for education may lay outside the charter versus district divide, and instead in big ideas that can cut across charter, district and private schools. In some ways, Stern sees new ideas like personalized learning making old divides irrelevant, as neither type of school has an edge.

“It’s not like charters are leading the personalized education movement,” he said. “It's not to say there aren't charters doing personalized education, but there are also lots of public schools and other kinds of innovation being done having nothing to do with charters.”

“I think there is a growing belief that charters are part of the ecosystem, but they're not the next wave of massive change.”