Charter schools are new kinds of government schools that operate as schools-of-choice. Unlike traditional government schools, no students are assigned to charter schools on the basis of the neighborhoods in which they live. Charter schools rely solely on voluntary choice for their enrollment. Charter schools receive government funding based upon the number of students they are able to attract, not based on local property taxes or other revenue streams. If charter schools do not attract students, they do not receive funding.

In general, charter schools can be defined simply as government-sponsored autonomous schools, substantially deregulated and free of direct administrative control by the government. The essential idea behind charter schools is to grant educational professionals and others greater freedom to create and operate their own schools in exchange for their agreement to be held directly accountable for their performance. Charter schools are designed to provide educators greater managerial freedom than that which is enjoyed in district-sponsored schools-of-choice and to give parents a much greater choice among government schools.

In their most uncompromised form, charter schools operate as independent government schools with control of their own budgets and staffing. Non-educators as well as educators can create them, or they can be conversions of existing government or private schools. They are authorized via a charter by governmental authorities such as school districts, public universities, or the state board of education.

A charter is, in effect, a performance-based contract: If the school does not perform up to the academic standards outlined in its charter, the charter can be revoked by the authorizing governmental body. Generally, these standards are at least as stringent as those that apply to all district-operated government schools.

Charter schools are typically exempt from some rules and regulations that apply to district-operated schools, not including those pertaining to health and safety, public accountability, and non-discrimination. Generally, however, charter schools cannot be selective in their admissions policies beyond any means used by traditional government schools.

Charter schools generally receive no government funding for start-up expenses or for their physical facilities, nor can they charge tuition. As a result, charter schools must raise voluntary private resources in order to be established.

Charter schools have been described as government schools "operating in a private school environment." Charter schools have similarities to private schools such as their level of autonomy and their incentives to satisfy parents and attract students. But they depend on government for their funding and their legal authorization.