For-Profit Wine in Nonprofit Bottles? The Case of Nonprofit Charter Schools Subcontracting with For-Profit Education Management Organizations

The Vietnam-America Association for Public Affairs and Policy (VAPAP), founded by the PPC's Phuong Nguyen, hosts this research presentation by Dr. Long Tran, assistant professor at the John Glenn College of Public Affairs, Ohio State University. This paper has won the VAPAP's Best Emerging Scholar Paper Award

For-Profit Wine in Nonprofit Bottles? The Case of Nonprofit Charter Schools Subcontracting with For-Profit Education Management Organizations

There is growing concern that some nonprofit public service providers may be nonprofit in name but not in fact. We assess this concern in the context of nonprofit charter schools, which sometimes subcontract their daily operations to for-profit management organizations. We use unique data from Ohio to study how nonprofit charter schools’ reliance on for-profit operators affects annual gains in student achievement and attendance. The results indicate that nonprofit charters that subcontract with for-profit operators tend to be more effective and equitable in promoting student achievement (but not attendance) than nearby traditional public schools serving similar students. However, nonprofit charters that subcontract with for-profit operators tend to be less effective (with regard to both achievement and attendance) and less equitable (with regard to attendance) than other nonprofit charters nearby. Further analysis comparing the administration and outcomes of for-profit and nonprofit operators suggests that the profit motive helps explain the inferior performance of nonprofit charters with for-profit operators. Our study offers theoretical insights for literatures on government contracting, performance monitoring, and sector boundaries, as well as practical managerial and policy implications.

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