There are two types of management companies: for profit and not-for-profit. Even the not-for-profit companies still need to be able to pay for central administrative costs, buildings and future growth from proceeds derived from the management agreement.
Colorado's charter school movement grew largely through grassroots efforts. Conversely, across the country many states have a charter school community that's operated predominantly by management companies. Only a handful of companies operate in Colorado, including Imagine, Inc., White Hat Management, Edison Schools, Mosaica Education, Inc., and National Heritage Academies.
Management companies operate public charter schools via a written performance agreement with the charter school governing board. In the past, some management companies have recruited and selected board members they believe will agree to everything proposed by the management company. Imagine's founder, Dennis Bakke, received media attention when an email he wrote about this very subject was revealed.
Colorado sample contract language has an attachment with provisions for management companies (or Education Service Providers) and charter school boards to consider before reaching a final agreement. Districts can use this list of provisions as a way to ensure transparency and fairness. For example, one of the provisions is that both the management company and charter school board have separate legal counsel representing them in negotiating the agreement.
There will continue to be an increase in the number of charter schools operated by charter schools, both nationwide and in Colorado. For companies that have found the "magic formula" and have both academic and financial success in the venture, it only makes sense. It's wise for potential charter school authorizers to do their homework before authorizing a new school that will be operated by a management company, however.