Should we have faith in not‐for‐profit providers of schooling?

Abstract

Western governments appear increasingly dissatisfied with the rising costs and apparent static performance of their education systems. This dissatisfaction has been manifested in a critical re‐examination of the near‐monopoly of publicly provided schooling. Elsewhere in the public sector, privatization and competitive tendering have been frequently used to reduce costs and raise productivity. However, in education the inability to fully specify contracts with private providers has led to renewed interest in increasing the role of not‐for‐profit providers. In this paper we utilize economic analysis to critically examine the strengths and weaknesses of not‐for‐profit providers of schooling. We explore the nature of the specific context in which they may prove to be effective providers, using successful faith schools as a case study. We conclude that there are prima facie grounds for governments to prefer contracting not‐for‐profit rather than for‐profit organizations for the provision of state funded education. Overall, whilst extending not‐for‐profit schooling has the potential to harness sources of social capital to the benefit of school improvement, these benefits must be weighed against the risks inherent in increasing ‘strong‐ties’ social capital.

Acknowledgement

An initial version of this paper was presented at the ESRC funded seminar series on private sector participation in public sector education held at the Institute of Education, University of London. The authors are grateful for the helpful comments of participants.

Notes

1. Pupils are not randomly distributed amongst different types of school. It is therefore important to try to control for ‘selection bias’. Selection bias may occur either because a particular type of school is more likely to select a particular kind of student or because particular kinds of students (or their parents) are more likely to choose that type of school.

2. A bivariate probit model.