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The Reinvestment Fund is coordinating efforts in several cities to expand access to high quality childcare using detailed analysis of existing local supply and demand. As access to pre-K becomes more common, childcare could be the next frontier for funders focused on early childhood learning and development, as well as those looking to bolster working families.
Ira Goldstein, the fund’s president of policy solutions, describes the Reinvestment Fund as “a financial institution with a public purpose.”
“We lend money; we make grants; we do research,” he said. “All with an eye toward building up wealth and economic opportunity for people in places for whom that’s a challenge.”
Childcare has been a mainstay of that work since at least the 1990s, Goldstein said, which makes sense given the fund’s mission to encourage economic opportunity. Childcare has backers among the early childhood development field, but it’s also seen as a tool for economic advancement, especially for women. Access to affordable childcare can mean the difference between returning to work or foregoing an income to stay home with a kid. For single moms, the contrast is especially stark.
Furthermore, the importance of the first five years of a child’s life is becoming increasingly clear as more research on early childhood development emerges. By 18 months, disparities in a child’s vocabulary start to appear, based on their parents’ income and education levels, according to the Harvard Center on the Developing Child. By age three, kids with college-educated caregivers have vocabularies that are two to three times bigger than kids whose parents didn’t finish high school.
That means kids from low-income households are more likely to enter school already behind. Once kids fall behind, it’s very hard to catch up. That means funders interested in early childhood development are increasingly expanding their work to include interventions to reach kids before they enter school. Sometimes that means reaching parents or creating literacy-rich public spaces. It also means tackling childcare. The Reinvestment Fund is part of that work.
About five years ago, the Reinvestment Fund started collaborating with foundations interested in expanding access to high quality childcare in their cities. So far the work includes collaborations with the William Penn Foundation in Philadelphia, the Richard W. Goldman Family Foundation in Atlanta and its surrounding counties, the Bainum Foundation in Washington, D.C., the Foundation for Newark’s Future in Newark, N.J., and the Nicholson and the Henry and Marilyn Taub foundations in Paterson City and Passaic County, N.J.
The starting point for each of these collaborations was a detailed analysis by the fund of the supply and demand for childcare in each city to identify where there were gaps.
Elliot Weinbaum, the director of the William Penn Foundation’s Great Learning program, recalled entering the childcare field.
“One of the first things we did in that space was figure out how many childcare providers there are in Philadelphia, which sounds like people should know that information, but it turns out many cities do not,” he said. “Philadelphia was among them, until four years ago.”
“That was our baseline information. What is the scope of our challenge here?” Weinbaum said. “No one could really tell us.”
So the foundation partnered with the Reinvestment Fund to get some answers. Since then the foundation has put about $20 million into the Fund for Quality, which is housed and managed by the Reinvestment Fund. Vanguard has put an additional $3 million into the Fund for Quality.
Weinbaum says the Fund for Quality has led to the creation of more than 2,000 new seats in high quality childcare facilities. The work has also helped turn more than 6,000 low quality seats into high quality seats. That means each year, more than 8,000 more children end up with high quality childcare. The goal is to add another 1,400 by 2020.
The emphasis of the projects in Philadelphia and the other cities is sustainability, said Reinvestment’s Goldstein. To achieve that, foundations needed more detailed data than is the norm in the childcare sector, he said. For example, it’s important to account for where people work, not just where they live, since many parents drop kids off on the way to jobs. It’s also important to capture the lower quality childcare available in the area. Understanding the competition influences the business plan for new or expanding centers.
“The analysis itself is very different than what’s being done in most quarters now,” Goldstein said. “Because we look at it through the lens of a group that’s making investments to close gaps, we have to know with some specificity what the totality of childcare is, not just what has been licensed and certified.”
After it’s collected, the data is loaded onto the Reinvestment Fund’s Policy Map and made available online. The fund updates the maps annually, so foundations can see where investments are paying off and where gaps persist.
For the Bainum Foundation in Washington, D.C., it wasn’t just the Reinvestment Fund’s data analysis that made it an attractive partner, said Noel Bravo, the funder’s senior director of program development. The foundation set a goal to add 750 more high quality childcare slots in Wards 7 and 8, the city’s most disadvantaged neighborhoods, by 2020. Bainum put $3.8 million into the Early Learning Quality Fund, which the Reinvestment Fund will use for loans to expand childcare in those neighborhoods. An additional $700,000 went to advance work, like mapping supply and demand.
“The advantage of using the Reinvestment Fund is that, while we are an operating foundation and we have a staff here dedicated to this work, there are limits to how much of that work we can take on directly,” Bravo said. “Reinvestment Fund is a perfect partner, in many ways, for bringing a lot of expertise around early learning practice, but also a tremendous amount of facility expertise, in terms of understanding what design standards are and what construction processes are and also the business side of things.”
The Reinvestment Fund also brings business expertise to the childcare facilities it works with. That is especially useful in a sector like childcare, where the focus of the business is on the kids, not the business management side, said Bevin Parker-Cerkez, the fund’s senior director of early childhood education.
“Our lending work really focuses in on business capacity in working with any sort of organization really, helping them understand finances, working through operating projections, budgets,” said Parker-Cerkez. “In sectors like early childhood education, where you have a lot of small business owners or nonprofits that are 90 percent focused on educating children, sometimes those business practices fall to the wayside.”
For now, foundations are providing the backbone of funding, but the hope is that local and state governments realize the need and take on the work in the future, Goldstein said.
In D.C., government funding will be necessary to carry on this work on the long term, Bainum’s Bravo said. “No matter how wealthy a foundation is or how many foundations collaborate together, we’ll never have the resources that the public sector has to invest in these things,” he said. “So to get to a real sense of scale, it will be critically important to engage in that public-private partnership.”