Expanding Child Care With Investments in Innovative Solutions

Updated August 3, 2024 | Posted August 1, 2024
By the Annie E. Casey Foundation
A play scene, with a toddler playing with colorful plastic blocks with another toddler and a woman sitting behind.

The Annie E. Casey Foun­da­tion is invest­ing in Care Access Real Estate (CARE) to boost the sup­ply of afford­able, high-qual­i­ty child care. Devel­oped by Mis­sion Dri­ven Finance, which seeks to join phil­an­thropy with tra­di­tion­al invest­ing, CARE is a real estate invest­ment trust that pools cap­i­tal from mul­ti­ple investors to acquire prop­er­ties for home- and cen­ter-based child care. CARE has raised over $10 mil­lion, includ­ing a $3 mil­lion impact invest­ment from the Casey Foundation.

While CARE alone can­not solve Amer­i­ca’s child care cri­sis, it bold­ly tack­les one of the sys­tem’s most press­ing issues — the over­whelm­ing demand for qual­i­ty care that far out­strips the avail­able sup­ply, par­tic­u­lar­ly in under­served and under­priv­i­leged fam­i­lies and com­mu­ni­ties,” said Lau­ra Kohn, vice pres­i­dent of Care and Edu­ca­tion at Mis­sion Dri­ven Finance. 

Child Care Sys­tem Challenges

America’s bro­ken child care sys­tem, dis­cussed in detail in the 2023 KIDS COUNT® Data Book, deprives chil­dren of nur­tur­ing care, pre­vents par­ents from earn­ing mon­ey to meet basic needs and has pro­found impli­ca­tions for the U.S. econ­o­my. Shift work­ers, sin­gle par­ents, stu­dent par­ents and fam­i­lies of col­or bear the brunt of the system’s failings.

Yet start­ing a busi­ness that cre­ates new child care slots is dif­fi­cult for providers, who are over­whelm­ing­ly female and dis­pro­por­tion­ate­ly women of col­or. Among the challenges:

  • Land­lords may pro­hib­it home-based busi­ness­es, raise rents sig­nif­i­cant­ly or sud­den­ly sell the rental property.
  • Home­own­er asso­ci­a­tions may resist home-based day care busi­ness­es because of mis­con­cep­tions about their effect on neighborhoods.
  • State and local reg­u­la­to­ry and licens­ing require­ments can be complex.

CARE address­es these chal­lenges by pur­chas­ing prop­er­ties for home- and cen­ter-based child care and ren­o­vat­ing them to meet licens­ing require­ments. CARE then leas­es these prop­er­ties to child care providers and serves as an accom­mo­dat­ing land­lord. The ini­tia­tive builds com­mu­ni­ty wealth by offer­ing providers the option to pur­chase the property. 

CARE Exam­ples in Neva­da and San Diego

With only one licensed child care slot for every three chil­dren statewide, Neva­da is a child care desert.” To address this, Mis­sion Dri­ven Finance part­nered with the Neva­da Depart­ment of Health and Human Ser­vices and the Children’s Cab­i­net to expand home-based care providers in the state. The state of Neva­da pro­vid­ed sig­nif­i­cant grant sup­port ($7.8 mil­lion) for CARE, a prac­tice con­sis­tent with one of KIDS COUNT’s key rec­om­men­da­tions for strength­en­ing the child care system.

As of April 2024, CARE has acquired 12 res­i­den­tial prop­er­ties in Clark Coun­ty, Neva­da. With help from local part­ners, CARE has recruit­ed and screened providers who are com­mit­ted to expand­ing their in-home child care business.

In Decem­ber 2023 and Feb­ru­ary 2024, CARE pur­chased its first two res­i­den­tial prop­er­ties in San Diego Coun­ty, Cal­i­for­nia, where 75% of par­ents have dif­fi­cul­ty find­ing day care. Mis­sion Dri­ven Finance is work­ing with the coun­ty gov­ern­ment to admin­is­ter $1 mil­lion in fed­er­al funds to help small child care busi­ness­es expand in under­served communities.

Part­ner­ing Local­ly to Expand Nationally

Although ini­tial­ly focused on the South­west, CARE expects to begin oper­a­tions lat­er this year in west­ern Col­orado and Detroit, expand­ing to com­mu­ni­ties across the coun­try in 2025.

CARE is lever­ag­ing local part­ner­ships, pub­lic sec­tor sup­port and impact invest­ment cap­i­tal to address the nation­al child care short­age and build com­mu­ni­ty wealth and infra­struc­ture,” said Tra­cy Kar­tye, direc­tor of Casey’s impact invest­ments. The Foundation’s invest­ment in CARE is advanc­ing our mis­sion and pro­vid­ing a finan­cial return that we can invest in oth­er pro­gram-relat­ed activities.”

Learn More About the Foun­da­tion’s Impact Invest­ments Work

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