The provision of schooling is largely provided and financed by governments. However, due to unmet demand for education coupled with shrinking government budgets, the public sector in several parts of the world is developing innovative partnerships with the private sector. Private education encompasses a wide range of providers including for-profit schools (that operate as enterprises), religious schools, non-profit schools run by NGOs, publicly funded schools operated by private boards, and community owned schools. In other words, there is a market for education.
The main rationale for Public-Private Partnership (PPP) programs is the potential role of the private sector for expanding equitable access and improving learning outcomes. In low income countries excess demand for schooling results in private supply when the state cannot afford schooling for all. In high income countries, however, "differentiated" demand leads to a demand for private schooling, as a sophisticated clientele demands different kinds of schools. By providing demand-side financing and contracting private organizations to provide support services, governments can provide better choices to parents and grant them an opportunity to fully participate in their children’s schooling. The education market highlights the importance of effective regulatory frameworks and contractual instruments to ensure quality and effective use of public resources.