April 22, 2020

Want to Support Your Community’s Equitable Recovery from COVID-19? Invest in Child Care

During this crisis, local philanthropy has an essential role to play in bolstering a pillar of their local economies: child care. Two immediate ways they can do this: offer direct emergency funding paired with local advocacy and help providers navigate the hurdles to securing and gaining access to new public support.

By: Elise Tosun, Katherine (Kat) Kaufmann, Shannon Rudisill

"We are the frontline of this country’s economy," says Diane Price, president and CEO of Early Connections Learning Center in Colorado Springs, the state’s oldest nonprofit child care organization. A functioning child care system is, of course, a vital resource for the healthy development of the 15 million children under age 6 with working parents. However, Price stresses that economic productivity, racial equity, educational attainment, a skilled and healthy future workforce, and healthy communities also depend on available and accessible child care provision. That multiplier effect is something that parents, and many policy makers and business leaders understand.

Unfortunately, for many child care providers across the nation—especially those serving lower-income working families and communities of color—the COVID-19 pandemic is an existential crisis. Communities across the country could wake up to find that the essential organizations on which so many working families depend for safe, nurturing, developmentally supportive child care no longer exist, threatening these communities’ ability both to educate young children and restart their economies. Given the high stakes and the urgency of the situation, funders can provide local support in two key ways: providing direct emergency support paired with local advocacy over the next few weeks or months, and helping child care providers navigate hurdles and gain access to new public support.

The crisis facing child care

The United States has about 129,000 child care centers (a mix of nonprofit, for-profit, and faith-based) and 115,000 licensed home-based providers, who fill a critical need for families not well-served by centers. To bring those figures to a more local scales, Harris County, TX (home to Houston) has 1,412 centers and 1,400 home-based providers and Burlington, VT, has 73 centers and 72 home-based providers. Child care businesses are disproportionately owned and staffed by women of color. These women have been essential source of support for working families in their communities and a bulwark of their neighborhood economies. Yet they earn on average $10.82 an hour, and often lack both health insurance and paid sick leave.

Child care is financed primarily by families, so for child care programs to be financially sustainable, they must strive for full enrollment every day, collect tuition on time and in full, and match annual revenues to expenses, according to the Administration for Children and Families. These requirements are challenging even in normal times. Since the pandemic, nearly every child care center in the United States has had at least one, if not all three, of these elements at risk. Providers operate with thin margins and few, if any, reserves; one month of missed income can mean catastrophe.  

COVID-19 has undermined the already fragile position of child care providers. While a few providers continue to operate, serving parents who are essential workers or unable to work from home, most others have closed. With all seeing tuition revenues decline dramatically, their viability is under threat. A March survey conducted by the National Association for the Education of Young Children showed that 63 percent of providers surveyed in March said they would not be able to survive a closure longer than two to four weeks. Many are also wrestling with whether to lay off staff, which risks having trained and experienced educators not returning to work on the other side of the crisis. "My biggest fear now," says Janet Dotolo, of Melrose Day Care Center and Preschool in Melrose, MA, "is that I won’t be able to reopen when it is safe to do so, because my staff won’t come back."

The effects of the pandemic on the child care system will perpetuate racial inequities nationally and locally. Home-based child care, which is often the best choice for families in low-income communities looking for flexible, affordable, conveniently located, and culturally and linguistically aligned providers, is particularly at risk financially. Chances are high that many of the providers who run these businesses (who are more likely to be women of color) will permanently close their doors, with devastating effects on their livelihoods and families in their communities. It is difficult to imagine what will arrive in their place—and how far in the future that will be. As such, supporting child care providers is an essential pillar of equitable COVID-19 recovery efforts and longer-term efforts to build racial equity in communities.

Local funders—including local COVID-19 response funds—have begun to respond. As of mid-April, approximately 20 funds across the country are supporting child care in their communities. Some have named child care organizations and providers as potential recipients of emergency support; some are establishing emergency child care programs for first responders, healthcare, and essential workers; and some are advocating locally for child care providers in their regions.       

Their help is sorely needed. To be sure, parents and public funding are the primary payers to the child care system. And, the federal government is stepping in to help. The CARES Act stimulus package dedicated $3.5 billion to support child care, and a call for $50 billion in the next stimulus was recently proposed in the Senate. While philanthropic dollars will never provide more than a small share of funding, this small share can produce outsize leverage—if invested wisely, especially in this moment. In the past few decades, philanthropic support has played a critical role in demonstrating what works and encouraging government at all levels to make investments in early learning and care for children from birth to five that are high-quality and focused on the populations facing the biggest barriers to access. Today, some funders are investing in national efforts to support our youngest children and their families in the COVID-19 response. However, if we are to turn the tide in the coming weeks, philanthropy in every community in our nation must make intentional investments in local child care in two ways.

1. Meet child care providers’ immediate needs while raising awareness about the child care crisis   

In the immediate term, child care providers need support for fixed costs (rent, utilities, employee salaries), new expenses for those that stay open to provide emergency child care (hazard pay, protective equipment), and their work to serve families’ basic needs (such as emergency food or household supplies).

In Philadelphia, for example, the new Emergency Fund for Stabilization of Early Education—jointly launched by the William Penn Foundation and Vanguard, and administered by Reinvestment Fund—is making grants to sustain basic expenses, support new methods of helping families during the closure period, and support future needs related to reopening. The intent is to minimize the loss of capacity and expertise in child care organizations, so that children and families continue to have access to high quality early learning opportunities once this crisis has passed. The emergency fund also seeks to ensure equity by awarding extra points in its grant review process to providers that serve students with special needs or students from families for whom English is a second language.

Funders may need to proactively expand the circle of support to reach providers who need it most. "Our focus has been on figuring out how to support providers who are currently not able to access other sources of funding, such as government relief," says Michelle Sioson Hyman, deputy director at the Silicon Valley Community Foundation (SVCF). "We’re trying to make sure that all kinds of providers are eligible for at least one of our response funds." For her part, adds Sylvia Puente, executive director of Chicago’s Latino Policy Forum, "What I’m finding is that some of the organizations we work with are not as well-known in philanthropy, and we don’t have anyone sitting at the table advocating for them."

How can local funders and response funds—especially those who may not have supported early childhood organizations in the past—ensure that they reach the providers that need it most? By plugging into the local organizations that exist in every community and that have expertise and relationships within local child care systems. For example:

  • In many communities, Child Care Resource and Referral (CCR&R) agencies are an important source of expertise and child care provider coordination. They provide child care referrals and other parenting supports, provider training, and technical assistance, and conduct other activities to increase the quality and availability of child care. "They have a direct line to all the providers and can help us communicate with them," explains SVCF’s Hyman. 
  • In parallel, it will be essential to engage organizations with knowledge of and connections to child care providers in communities that are particularly hard hit by the health impacts of COVID-19 and by unemployment. These may include community action agencies, which have deep roots in their communities, including communities of color and rural communities. Other organizations like Latino Policy Forum in Chicago, affiliates of UnidosUS, or affiliates of the National Domestic Workers Alliance, will be able to reach the large number of immigrant women working in child care.   
  • Families and child care providers both face the inability to access basic support for material and emotional needs. Organizations that distribute basic goods and services to families, such as local family resource centers and diaper banks, may also be able to help both families and providers who need support.
  • Many communities will also have shared service alliances—which are networks of typically smaller centers or family child care homes that share costs and administrative and program services. These may be legally and administratively equipped to distribute funds to multiple providers.

For funders specifically interested in helping home-based providers, Home Grown (a national funder collaborative) has developed a toolkit for establishing an emergency fund that meets the needs of local providers and caregivers. Topics include determining goals, understanding emerging and ongoing needs, choosing a funding approach, and selecting partners. Inspired by this toolkit, the Commonwealth Children’s Fund, in Massachusetts, is planning to launch a matching fund to complement local and regional Massachusetts funders’ commitments to support home-based care providers in their areas.

While providers on the front lines are most vulnerable at this moment, CCR&Rs, shared services alliances, and locally focused organizations and collaboratives are also stretched during this crisis and may need additional support given additional pressures on child care. "We have to support providers and the entire system—the connective tissue that makes child care possible," says Lynette Fraga, executive director of Child Care Aware of America, a national organization which works to advance a child care system that effectively serves all children and families.

And, in concert with providing emergency assistance, investments in advocacy may have an outsized impact now. Local early childhood advocates can elevate local attention to the current and imminent child care crisis. For example, the Commonwealth Children’s Fund has also funded Strategies for Children—an early childhood advocacy group—to communicate to policy makers and the broader public specific examples of how child care providers and the families they serve are being affected by the crisis.

2. Guide child care providers past hurdles to federal, state, and local government funding

In mid-March, as part of the CARES stimulus package, Congress authorized $3.5 billion in funding for child care through the Child Care Development Block Grants and included child care providers as authorized recipients of state fiscal stabilization funds. In addition, child care providers, like other small businesses, were made eligible to apply for funds from the $350 billion Paycheck Protection Program (PPP) administered by the Small Business Association (SBA). Although the SBA loan program is already nearly depleted, it is possible that more funding will be authorized in future weeks and months.

ec logoAre you a local funder engaged or interested in this work? We'd like to hear from you. Please contact us at the Early Childhood Funders Collaborative to share your experiences and thoughts.

Prior experience with relief and stimulus packages should temper optimism that federal loan funds can be an easy and effective solution for struggling child care providers. To begin with, the loan pool is finite, and child care providers will have to get in line quickly to benefit.  Further, the early days of the program suggest that there may be a lot of obstacles in the way, which may continue if further funding is authorized. For example, some lenders only accepted applications from current customers or businesses over a certain size. In past catastrophes, (e.g., Hurricane Harvey in Texas) child care providers needed help to navigate fragmented, complex, and slow-moving funding relief from state and federal sources. Child care providers will need technical assistance to ensure that they are aware of these benefits in the first place, know which lenders to approach, and then to help them complete their applications. 

Local funders and COVID-19 response funds can help child care providers navigate and access the complex array of federal, state, and local stimulus dollars that will be or have recently been authorized. National organizations like First Five Years Fund and CLASP are already working to clarify and communicate eligibility, and develop guidance on how to apply that is tailored to child care providers. Local organizations—in turn, likely making use of national sources of expertise—can help providers access this funding. Local support could come from child care resource and referral agencies, shared service alliances, or community development financial institutions such as Local Initiatives Support Corporations, Low Income Investment Fund, or others, depending on the community. Let’s Grow Kids in Vermont, for example, is subsidizing local finance, legal, and HR professionals to give child care providers professional help in applying for SBA loans at no cost to the providers. Funders can start now to ensure that one or more relevant local agencies are connected to the national and regional organizations tracking the federal, state, and local funding possibilities and realities, reaching out to providers, and developing the needed capacity to help providers access this large and potentially vital source of federal funding.

* * * *

Amid the dynamic and rapidly evolving COVID-19 pandemic response, a few trusted resources can help funders stay up to date. Child Care Aware of America hosts webinars and blogs providing regular updates on the challenges facing providers and emerging solutions. The Early Childhood Funders Collaborative disseminates resources specific to funders, and the First Five Years Fund and Alliance for Early Success provide information and updates on advocacy efforts.

Given the reality of finite resources, funders investing in emergency response are inherently faced with hard choices about where funding might do the most good—and its longer-term impact on the child care ecosystem in their communities. Philadelphia’s Emergency Fund for Stabilization of Early Education is one example of a local funder who is trying to get this balance right. "We’re giving priority to those that score highly in quality rating or those who have demonstrated a commitment to quality improvement. We’d like to see the post-crisis landscape have a lot of high-quality providers," explains Elliot Weinbaum, program director at William Penn Foundation. "We also want to see the fund support the existing system—across center-based and home-based providers. These grants can bring us into relationship with more providers than we have supported in the past, including some that will consider shifting how they work to achieve greater stability and quality."

This pandemic has exposed the fundamental fragility of our child care system. As funders work to relieve the immediate pain and retain the existing services through the emergency, they should also re-emphasize advocacy and direct organizing in support of child care, so that young children and families can be confident that child care will still be there after the crisis, just as schools will be. This includes advocacy at the national level—for example, support for child care sector advocates’ letter to Congressional leaders in March asking that $50 billion be dedicated to the child care sector as part of the stimulus. At the state level, policymakers can be encouraged to use stimulus funding to ensure the long-term sustainability of the child care sector. Beyond ensuring that child care businesses survive for the sake of the parents and children they serve, we also need to ensure that providers themselves who have been behind the scenes caring for children for years are also taken care of. "When all of this passes," says Lynette Fraga, of Child Care Aware of America, "the decisions we make today will lay the foundation for what the child care system might look like after the pandemic."

Katherine (Kat) Kaufmann is a partner in Bridgespan’s Boston office, and author of Achieving Kindergarten Readiness for All Our Children: A Funder's Guide to Early Childhood Development from Birth to Five and "Collaborating Towards Kindergarten Readiness at Scale." Elise Tosun is a manager in Bridgespan’s Boston office. Shannon Rudisill is executive director of the Early Childhood Funders Collaborative, established in 1992 to improve collaboration among funders, foster peer learning, identify issues of common concern, and incubate ideas for advancing the field.

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