What Happens When You Give Child Care Providers Money — With No Strings...

Early Learning

What Happens When You Give Child Care Providers Money — With No Strings Attached?

By Emily Tate Sullivan     Apr 18, 2023

What Happens When You Give Child Care Providers Money — With No Strings Attached?
Yolanda Cardenas (center), a family, friend and neighbor caregiver in Arizona.

Last year, Olivia Hernandez was weighing a difficult decision.

Her family’s financial situation had deteriorated considerably, due to her husband’s partial loss of income and rising costs that forced them to agonize over every dollar. It was bad enough that she and her husband agreed she would need to give up her eight-year career as an in-home child care provider for a higher-paying job that could help keep the family afloat.

Caring for children is what Hernandez loved to do. It’s what she wanted to continue doing. But it wasn’t enough. Last year, Hernandez reported just $8,000 in earnings from caregiving. She knew she could quadruple that income at another job right in town.

Hernandez, a 47-year-old in Greeley, Colorado, a mid-sized city about 60 miles north of Denver, was preparing to leave the child care sector when something unbelievable happened. She learned about an opportunity to begin receiving predictable, unconditional direct cash payments, for a total of $500 per month, through a pilot program aimed at stabilizing the economic well-being of child care providers like her. For Hernandez, this money would be a life-saver.

Soon, the payments started coming in, and Hernandez, buoyed by the extra support, stayed in business. She kept her program open and continued to care for the seven children whose families relied on her — the 4-year-old and 1-year-old whom she cares for full time; the 5-, 7- and 8-year-olds she has for one hour each day; and the two children — ages 5 and 10 — whom she drops off at school each morning.

Hernandez’s story is evidence that the Thriving Providers Project is working as intended, according to staff at Home Grown, a national collaborative of funders committed to improving the quality of and access to home-based child care, which has led the planning, design and implementation of the program.

The Thriving Providers Project uses strategies from the guaranteed income sector to provide direct cash payments to family, friend and neighbor (FFN) providers and newly licensed family child care providers, with the goal of illustrating the positive ripple effects that can occur when providers experience more stability and less volatility. The idea is that when providers are better off, so are the children and families they serve.

“[If we] reduce economic hardship, reduce stress and improve the emotional well-being of the provider, we think that will actually increase, enhance and improve the quality of relationships and responsiveness” of caregivers, says Natalie Renew, director of Home Grown.

“Our hope,” Renew adds, “is to really show that it's doable, it's feasible, it's administratively effective, and that instead of spending our money in the system the way we do it now — this horrible, convoluted, very contrived system that mostly just sort of serves to underpay providers — let's move the money in the system to guarantee payments.”

Expanding a Successful Pilot

The pilot in Colorado got underway last summer, with providers receiving $250 payments every 15 days (for a total of $500 a month) for 18 months. The vast majority of the 100 providers enrolled throughout Colorado are native Spanish speakers, identify as Latina or Hispanic and care for children who are dual language learners. Nearly all of them provide care in the evenings, and most also provide care on the weekends.

Additional sites are being designed in other parts of the country, including a few U.S. cities and another statewide effort that, like the one in Colorado, aims to reach rural, suburban and urban providers.

Each pilot will have its own funding structures and regional partners, though Home Grown is involved in each site and is leading the national funding for the initiative.

In Colorado, local philanthropies and some American Rescue Plan dollars from the state are supporting the effort, Renew says. Five community-based organizations, the majority of which serve rural areas, are involved, helping to identify, recruit and enroll providers. And Impact Charitable, a local nonprofit and donor-advised funds provider, is leading the project implementation.

In New York City, Home Grown is planning to replicate this initiative with the support of private philanthropy and in partnership with All Our Kin, a national nonprofit that works in support of family child care providers. A separate program in King County, Washington, which encompasses Seattle, will pilot a new provider payment and wage supplement program for home-based and other child care providers using local funds. Home Grown is also building relationships and doing landscape assessments in Los Angeles and Nashville, Tennessee, in hopes of replicating the model there in the near future.

In addition to direct cash payments, each pilot site may choose to supplement its program with other resources.

“The cash is the part that we replicate, but each community is making a decision about what other support providers need to thrive, with a particular orientation around, ‘How do we convert income to wealth?’” Renew explains.

Joyceline Felix, the FFN consultant to Home Grown, helped develop the model being used in Colorado. As part of the planning and design, she interviewed providers throughout the first half of 2022 to understand what it is they need and what would help them most.

“We were thinking and picking their brains for what it would look like to provide holistic help, not just cash,” Felix notes.

The planning team considered components such as mental health resources, professional development and classroom learning materials, but ultimately determined that the greatest needs were for peer mentoring and mental health support.

Colorado Providers Feel a Difference

The first payments went out to Colorado providers in July 2022, and already, the cash is lending stability and decreasing volatility, just as designed.

Hernandez, who was about to accept a better-paying job outside of the sector right before the Thriving Providers Project payments began, has been using the extra money to cover utilities: gas, electricity and water. Colorado experienced a particularly cold, snowy winter, and with natural gas rates high, energy bills have been astronomical for many people throughout the state in recent months.

What’s leftover, Hernandez says, goes toward food and gasoline for shuttling the kids to and from school.

Additionally, she is among the 80 percent of providers who have opted into the peer support groups, an experience that she feels has been as life-giving as the cash payments.

“The emotional support,” she tells EdSurge through a Spanish interpreter, “has been a big, big help.”

Home Grown is working with RAPID, a survey program based out of Stanford University that gathers information about young children and their caregivers, to collect frequent and consistent data on how the pilot is going. Participating providers are invited to fill out short monthly surveys and longer quarterly ones, Renew says.

Nine months in — or about halfway through the 18-month pilot — providers say that they’ve been better able to cover their basic needs than before, especially the costs of food and health care, according to preliminary RAPID survey data. Participants’ housing instability has been greatly reduced as well, and they say their schedules have become more predictable.

“We are collecting their data, but we’re also collecting their stories,” notes Felix. “Data and stories give us a compass of where this is going.”

Felix, who is in touch with the Colorado providers often, shares some of the anecdotes she’s heard since the pilot began.

Hernandez shared with Felix that, before she started receiving direct cash payments, she had been turning away friends and family members who dropped by her home, ashamed that she had nothing to offer them — not a snack to eat, let alone a seat at her dinner table.

“Thanks to this money, she’s able to open the door to her family members when they come over,” Felix says. “To me, that was a big indication this money is being put toward essential stuff [like] food.”

Another provider wanted to do something for the kids in her care around the holidays. The children wanted to celebrate with pizza, so in December, the provider had a pizza party with them.

“She felt proud she could buy them a pizza to celebrate the holidays,” Felix recalls. “That was huge for them.”

There was another provider who was able to replace part of her gutter, which had been allowing rain to pool at her front door, sometimes freezing into ice overnight and creating an unsafe walkway for children and families. Yet another caregiver traded in her small sedan for a van that now allows her to transport more children to and from school. And another told Felix she was using the money to buy her kids warmer jackets for the winter.

“From food and heating to safety and transportation, this money has helped a lot of people in many different ways,” Felix says. “But they have been the ones deciding what to do with the money because there are no restrictions. To our pleasant surprise, they’ve been putting the money toward the kids in their care, toward living expenses and rent.”

Many providers have told Felix that they’re able to be more present now too — that they can focus on the children more.

Payments in Practice

Both Hernandez and Carmela Enriquez, another Greeley-based provider participating in the Colorado program, charge families set rates that should total about $220 to $275 a week in earnings. But that assumes every family pays the full, agreed-upon amounts, which is not always the case.

In reality, FFNs experience unreliable, inconsistent payments, Felix explains. Often, they will accept children earlier in the day or keep them later into the evening without requesting additional pay. Or perhaps a child’s grandparent will be in town visiting for a few weeks and can provide the child’s care themselves. And since providers are typically paid based on attendance, not enrollment, that equates to weeks of missed income.

Because many FFNs know the families they work with, they can be very accommodating — to their own detriment — about missed and late payments. In fact, it’s not uncommon for FFNs to trade services with families in lieu of monetary compensation, or to take in some children at no cost.

These nuances help to explain why, even though Hernandez budgets for $275 a week in earnings — or a little over $14,000 a year — she only brought in about 60 percent of that last year. (Her income last year is actually on par with what paid FFNs earn nationally.)

Three of the children Hernandez cares for are with her for just an hour, so she charges their parents only $5 a day. But in that hour, she picks them up from school — which costs her gas money — and feeds them food she bought with her own income.

“In reality, it’s not enough,” she acknowledges.

Enriquez cares for two 9-year-olds and one 4-year-old, often keeping them in the evenings and on weekends while their parents are working. She is supposed to be making about $220 a week, she says, but “it’s rarely that much. They often just pay what they can.” One of the children in her care has a single mom who only just gets by, and Enriquez allows that parent to pay whatever amount she can afford, when she can afford it, instead of her standard rate.

“I don’t see it as money lost,” Enriquez, age 38, says in Spanish through an interpreter. “I see it as a service provided for the benefit of the mom.”

Enriquez lives with her husband and children in a home owned by her husband’s parents that is virtually rent-free. As a result, she’s been able to use the direct cash payments to build out a modest emergency fund and to improve the experience children have in her program.

Recently, she took the kids to McDonald’s to play at the playground and eat Happy Meals (she clarifies that she does not make a habit of feeding them “junk food”).

“It’s a treat for them,” Enriquez says. “It’s a joy to treat them. In the winter here, you cannot take kids to the park. Without this money, taking five children to get Happy Meals adds up.”

She has also gone to the Dollar Tree to buy learning materials and new items for the kids to play with, which she views as an investment in her program. This summer, she is hoping to take all the children to a movie theater together.

“This is a blessing,” Enriquez shares. “I would never have thought in a million years that I would receive this money, and I am in awe.”

Learn more about EdSurge operations, ethics and policies here. Learn more about EdSurge supporters here.

More from EdSurge

Get our email newsletterSign me up
Keep up to date with our email newsletterSign me up