Should Donors Invest in Private Schools? (And if So, How?)

Every now and then we get asked by education donors whether and how they should fund the private education sector. It’s an important question: around 20 percent of children enrolled in primary school in low income countries attend private primary schools. When asked, officials in education ministries in developing countries are least satisfied with the advice they get from donors on private schools, compared with advice on curriculum, teachers, textbooks and exams (Crawfurd et al,; forthcoming, figure 1).

But it’s tricky to support the private sector in a manner that is fair, equitable and not to the detriment of public schools. It’s also a controversial space to enter; the Global Partnership for Education prohibits funding for “commercial” providers of education unless circumstances are exceptional, and the IFC recently announced a freeze of all investments in for-profit K-12 schools.

To assist donor agencies as they grapple with this question, we have compiled five recommendations for donor engagement with the private school sector.

1. Don’t forget about public schools

As private school enrollment grows, maintaining public spending in education is key to ensuring equitable distribution of opportunities. Fortunately, many countries increase per capita spending on public education even as more students enroll in private schools. These countries tend to be more democratic and less unequal. The relationship between public spending and private school enrollment is less clear in countries with weaker democratic institutions and higher income inequality (figure 2).

Figure 2. Public spending on primary education, private provision, and participatory democracy

In the absence of broad-based democracy, the interests of children in public schools may suffer as elites have little incentive to continue investing in public education once the children of the rich and powerful are in private schools. These are the countries where donors need to be especially cautious to not cause any reduction in public spending on education.

Donors engaging with the private education sector should encourage ministries of finance to protect social spending and not divert resources away from public schools as enrollment in private schools expands. Donors supporting the private education sector should in parallel provide support to public education to demonstrate the need to maintain spending on public education. Improvements in public schools also force private schools to improve to keep up and compete. 

2. Avoid investments in big school chains

Philanthropists and DFIs like school chains. From the Silicon Valley billionaires who fund Bridge International Academies, to the IFC—which put 80 percent of its total education investments between 2011 and 2015 into school chains, they are attracted to the single entity which they can grant or lend to, or take an equity stake in. They also like the often-claimed potential to scale that chains have.

But the reality is that very few school chains ever actually scale. The vast majority are smaller than a single government school district (figure 3). And chains also grow slowly: the private school chains who are members of the Global Schools Forum have grown by an average of around 1.1 schools per year (according to 2021 data). By comparison, in India alone the number of independent private schools grew by over 15,000 per year between 2011 and 2016. All of this gives us little reason to believe that there will ever be more than a few very big global chains.

When it comes to performance, very few school chains have undergone rigorous independent evaluation. Of those that have, where they do deliver better learning outcomes the difference is often small (Crawfurd and Hares, forthcoming). One of the most rigorous and most recent studies shows that outsourced schools run by chains in Liberia perform slightly better than government schools but at high cost and with some harmful effects.

School chains are not, and will not become, a substantial component of public education systems, and will be peripheral to solving the twin challenges of getting kids into school and getting them learning. They are not the best investment for large donors.

3. Invest in improving the market for independent low-cost private schools

In contrast to school chains, tens of millions of kids are enrolled in independent  low-cost private schools across the developing world. This is a sector that has already scaled (even if it doesn’t really reach many of the poorest children).

Rather than trying to pick winners and back specific schools, donors (and governments) should try to fix some of the market failures facing these schools. Promising approaches for donors to support include provision of information to parents about private school performance, supporting governments to provide a strong and fair regulatory environment for private schools, providing financingto private schools, and improving the market for books, materials, and teacher training.

There’s some good, rigorous research to draw on - most notably 15 years of research on private schools in Pakistan. And—while results are mixed—there is practical experience to learn from: IDP Foundation’s work with low-cost schools in Ghana, a massive effort by DFID to support independent schools in Lagos, the Punjab Education Foundation and Sindh Education Foundation’s decades of experience in Pakistan, and USAID’s emerging work through CATALYZE.

4. Help governments engage private schools to increase school places

Public-private partnerships are not a silver bullet for improving quality. But they may represent a cheap way to rapidly expand access to school for cash-strapped governments. The limited evidence we have on when governments have tried to improve quality by hiring private management to run public schools shows mediocre results and an abundance of incomplete contracts. But governments have successfully bought seats at private schools when public places are scarce, and at much lower cost than providing new public places. This may be an attractive option when looking to rapidly scale up preschool or secondary school (Crawfurd and Hares, forthcoming).

Subsidised places at private schools are most likely to be effective policy in areas where access is very low. In areas where enrolment is already high, they may simply subsidise richer children who would have attended private schools anyway.

Donor support could include technical advice and capacity building efforts targeted at public officials and civil society organizations that work closely with the private sector. Some countries have more experience of promoting and regulating private education than others. In this regard, donors could play an important role by funding and facilitating policy dialogues between countries on issues related to private education. Donors could also fund evaluations of new secondary school public-private partnerships. Some caution is due; cost-savings are typically driven almost entirely by lower private school teacher salaries, which may not be a palatable option.

5. Invest in knowledge that is useful for policymakers

Education policymakers in low- and middle-income countries could benefit from further evidence on how to engage the private education sector. Given the relative paucity of rigorous research on private education, government regulators may have a hard time making evidence-based policy decisions.

Donors can invest in evidence generation and transmission to help answer relevant questions. For example, more evidence is needed on whether reliance on private school provision undermines public support for public financing of education, particularly when the elite have opted out of public education. There is some limited evidence that attending private schools does not substantially change political engagement, but further evidence would be welcome. Supporting scholars at local research institutions who are proximate to policymakers may increase the uptake of evidence.

Note: This blog was updated on 11/1/21 and 11/2/21 to more accurately reflect information about the Global Schools Forum.