Going Exponential: Growing the Charter Sector’s Best

The for-profit and nonprofit sectors feature hundreds of examples of organizations that have “gone exponential” – growing at rates of 40 percent or higher for a decade, or longer.   Meanwhile, the nation’s best charter school operators are growing much more slowly.  The 10-year growth rate in charter enrollment is about 17 percent.  But according to the National Study of Charter Management Organization Effectiveness, the average CMO is adding only 1.3 schools per year.  Only five CMOs in the study expect to have 30 schools in their networks by 2025.

Here’s the problem: the top 10 percent of charter schools in the U.S. serve 167,000 children annually. At the current sector growth rate, they’ll reach 1.7 million kids by 2025. But millions of low-income students in the U.S. are not on paths to diplomas because they are not reaching basic standards, and millions of other children also need better options.  If just this elite subset of charter schools grew at the 40 percent rate we see in other sectors, they could serve some 26 million students every year by 2025.  Even if only half of the nation’s best charter operators grew that quickly, they could collectively serve every low-income child in American in 15 years.

The barriers to more rapid growth have been widely documented and discussed on the pages of Education Next.  Yet, organizations in other sectors have faced and overcome similar barriers.  In Public Impact’s new report for the Progressive Policy Institute, Going Exponential: Growing the Charter Sector’s Best, we scoured the research about these rapid growers and distilled lessons and recommendations for the charter sector.

Here are a couple of quick examples.  Rapid exponential growers typically generate the money they need to expand early on, by achieving positive operating margins and revenue growth.  These results attract investors, enabling rapid growers to invest in innovation and systems.  What if, say, the top 10 percent of charter schools could effectively charge more for their service, earning  performance-based bonuses?  Instead of having to plug operating deficits with fundraising, the best operators would have the resources they need to expand.  If the bottom 10 percent charter schools received less, we might hasten the closure of chronically bad charter schools at the same time.

Fast exponential growers also intensely seek out ways to reach more customers in different ways. Think Starbucks selling coffee on grocery store shelves, reaching millions who don’t live near a Starbucks.  What if charter operators could similarly reach students without setting up entire new schools, sidestepping the need for a school leader and facility?  What if they could engage in “micro-reach,” supporting select teachers in existing schools to deliver their programs in their own classrooms?  What if a teacher, a small team of teachers, or a community-based organization could form a “micro-charter,” serving just 10, 20 or 100 students without the a full-scale school building and administrative structure?

These are just a few examples from the report, and just the tip of the iceberg of what innovative thinkers within the charter sector will likely come up with if they start applying the lessons of rapid growers to the best charter operators.

– Emily Ayscue Hassel

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