Are Nonprofit Baby Care Business Models Working?

As budgets and programs are slashed at the federal, state, and local levels, the recognition of early childhood/pre-K as an important investment, even worthy of increased funding, is on the rise. For the most part, this focus on pre-K programs and childcare targets the population of preschool children, ages 3 to 5. The gap comes in recognizing the importance and need for infant and toddler care and the lack thereof. And the reason is clear: While no less important in the developmental and socialization of the young, the costs associated with infant and toddler care make it a challenging investment for childcare/early childhood programs. As Martin Levine reported yesterdayin a NPQ newswire:

Research for Action, a Pennsylvania-based nonprofit, recently published a study of the economics of early childhood in Pennsylvania and the struggle to afford excellence. The Philadelphia Business Journal summarized RiA’s findings in a few words: “Revenues were 30 percent lower than costs.” To cope, providers are forced to compromise their standards. Classroom size increases and teacher qualifications are lowered.

As one digs deeper, it is clear that costs for caring for infants and toddlers exceed those of caring for preschoolers. State regulations for caregiver-to-child ratios are understandably higher for younger children. More staff is needed, and childcare programs cannot cover these costs even as they pay subsistence wages. In their study of early education centers in Pennsylvania, Research for Action provided a detailed look into the costs of early childcare in six centers across the state.

Researchers found that for the average infant served, centers received 38 percent less money than needed to serve that child. For toddlers, revenues were 30 percent lower than costs.…To offset this high cost gap and make ends meet, providers often opt to serve more pre-K school children than infants and toddlers and maintain school age programs, which may help subsidize the true cost of infant and toddler classrooms.

Childcare programs are not the only ones caught in this web. Parents, particularly low-income parents who need to work and who often must return to work soon after giving birth to a child, struggle with costs. “About 60 percent of funding for child care in the United States comes directly from parents. In comparison, families pay only about 23 percent of the cost of a public college education, with the remainder subsidized by philanthropic contributions and state and federal funds.”