School & District Management Commentary

Charter-Management Organizations: More Pluses Than Minuses

By Michelle B. Nayfack, Priscilla Wohlstetter & Joanna Smith — October 23, 2009 6 min read

If you keep up on current developments in education reform, you’ve probably heard about charter-management organizations, or CMOs—networks of charter schools sharing the same mission and educational philosophy that are managed by nonprofit organizations. CMOs like the Knowledge Is Power Program, Aspire, and Green Dot Public Schools are making the news on an almost daily basis as they grow their networks beyond the locations where they first began educating children. Politicians are now mentioning CMOs in high-profile speeches about education, and philanthropists are offering significant financial support to help them expand more rapidly.

Related Commentary

In “Charter-Management Organizations: Expansion, Survival, and Impact” Thomas Toch writes that much-lauded CMOs may not be able to meet the administration’s ambitious plans for them.

Read this related commentary.

Currently, 15 percent of all charter schools are affiliated with charter-management organizations. In fact, the Los Angeles Unified School District—the nation’s largest district authorizer of charter schools—had more CMO-affiliated schools up for renewal this year than stand-alone charter schools. Early research on CMOs finds that they do particularly well in educating targeted populations like urban middle schoolers. But many are transitioning into K-12 school networks, even though their initial successes were at the elementary or secondary level exclusively.

Given the growing pervasiveness of CMOs, their disproportionate visibility compared with other charter schools, and the relative absence of research on these school networks, now is an opportune time to raise some important questions. Most pointedly, are they a worthwhile addition to the education reform landscape, and if so, why?

As a model of charter school governance, CMOs are so new that it would be naive to blindly argue for or against them. Like all new reforms, they have vocal supporters and critics. But if we examine the potential benefits of CMOs in light of their most commonly cited critiques—namely, that they run the risk of looking and operating like the school districts they were meant to replace—it’s clear that CMOs hold more promise than problems.


Economies of Scale. At their most basic level, charter-management organizations are a direct response to the challenge of small scale and limited impact that has plagued the charter school community. They allow individual charter entrepreneurs to capitalize on curricula and school programming that work well on a small scale, by streamlining many of the administrative tasks that dominate day-to-day operations at stand-alone charter schools (accounting, mandated reporting, and the like). This division frees up school leaders to focus on school-based issues that directly relate to improving student achievement.

Innovation has always been a cornerstone of the charter movement, and CMO critics argue that the benefits of economies of scale require sacrifices in innovation. But these critics often define innovation solely in terms of classroom-based practices or overall school mission. We should broaden this concept to include novel ideas taking shape at the organizational level.

CMOs are able to incubate new educational programs, evaluate and refine them, and then scale them up strategically. In traditional school districts, there is no mechanism for doing this, so education programs that work are largely limited to their creators or, still worse, central offices force universal mandates on all schools, regardless of student populations or school needs.

In addition, many charter networks are experimenting with new recruiting and leadership-training practices that include performance-related compensation and mission-relevant professional development. They also are paving a new path completely, by reinterpreting state charter school policies, so that they can grow their networks across state lines.

Flexibility, Not Bureaucracy. CMOs have the opportunity to develop their own organizational structures. While some may see this as a negative (are CMOs just reinventing the school district wheel?), many charter-management leaders see this as a positive. They are focused on building organizations that are less bureaucratic, less hierarchical, and more team-oriented. Also, with flexibility comes the ability to grow more quickly and to adapt to new environments more effectively. Many CMOs have been able to expand their networks beyond their original sites because they’ve built organizations that are adaptable.

The development of CMOs, in fact, is a direct response to one major critique of stand-alone charters: that they are constantly re-creating systems of operation each time they open. This makes the first few years of a stand-alone charter’s existence highly volatile. School leaders are trying to establish excellent teaching and learning practices and efficient governance processes. Charter-management organizations, on the other hand, benefit from an established framework of systems and processes for opening and managing new campuses.

Ultimately, balancing bureaucracy and flexibility presents a challenge, but with CMOs, the motivation to remain nimble seems to be translating into the creation of lean central offices that provide more benefits than hindrances.

Fundraising Made Easier. As with stand-alone charter schools, CMOs find it challenging to finance facilities and operations. In stand-alone charters, the principal often wears the fundraising hat. But this hat frequently gets lost in the pile of other hats he or she must wear. Principals often also lack the skill sets and connections necessary to successfully raise large quantities of money for their schools.

By contrast, many CMOs hire central-office staff members with expertise in fundraising, and therefore have been fairly successful at raising capital for school facilities and programming. But while this money has allowed for rapid growth, some CMOs have become dependent on the financial support they receive from local and national foundations, so they feel pressured to comply with all of their funders’ demands.

Will this dependence on philanthropic suport ultimately create school networks that are unsustainable? Many argue that it will. CMO leaders respond, however, with business plans that include timelines for becoming self-sustaining through growth, a strategy that drives down unit fixed costs. The funding debate is still largely unresolved, and by no means straightforward.

Moving forward, it will be important to think about three additional, and as yet still open, issues. First, while it is tempting to think of the charter movement as a homogeneous entity one either supports or opposes, it is extraordinarily context-specific. Each school or network of schools is governed by its state’s charter policies and bound by its community’s economic and political realities. Therefore, all CMOs are not created equal, just as stand-alone charters have been shown to be quite variable. As a new governance model, CMOs have strengths and weaknesses separate and apart from those of their stand-alone charter counterparts, and also different from one another’s.

Second, it is not clear whether there is an optimal size for CMO networks. At present, very few CMOs manage networks of more than 15 schools. Yet most of these networks have ambitious long-range plans for growth. Will some of the benefits they now capitalize on disappear as CMOs grow?

Lastly, as CMOs become more prevalent, they must also take center stage in local and state policy discussions. Important questions about how to regulate their growth, if it is allowed at all, are still largely unanswered. Should states offer open charters so that CMOs can grow quickly? How should charter authorizers treat CMO-affiliated schools?

Ultimately, early evidence from CMO research seems to show more promise than cause for panic. In today’s environment, in which education reform is on the forefront of the political agenda, CMOs are an exciting response to the age-old challenge of creating change that is both scalable and sustainable.

A version of this article appeared in the October 28, 2009 edition of Education Week as A Productive Step Forward?


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