Democratic trends paint a seemingly bleak picture for small schools. Declining school enrollments and school closures have led to an unprecedented trend towards school closures and amalgamation of schools across Canada. Since student enrollment is the most common basis for funding formulas in Canada, small schools typically receive a smaller funding allocation than larger schools, thereby limiting budgets for staffing, curriculum development, programming, and resources. Economies of scale suggest that a logical financial solution is to close small schools when student population drops below a sustainable level. Such closures, however, may be short sighted. The authors' investigation of small schools suggests that Canada is beginning to lag behind in the educational debate over the long-term social impacts of small schools on student achievement, social cohesion, and civic engagement, and that small schools offer potential for longer-term benefits, which may offset short-term costs, if alternative policy decisions are enacted. In this article, the authors contend that small schools show demonstrable benefits in the form of educational success rates and community engagement, benefits that must be factored in to any proposed school closure decision, and discuss the social and educational benefits of small schools for students compared with large schools. (Contains 18 notes.)