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Improving the Child Care System through Impact Investments

Impact Investing Strategies to Repair America’s Broken Child Care System: Examples from the Annie E. Casey Foundation’s Portfolio

Annie E. Casey Foundation Uses Impact Investments to Transform Child Care System

The Annie E. Casey Foundation is on a mission to build a brighter future for America’s children, youth, families, and communities. One of the tools they are using to pursue this goal is impact investments. With the current child care system in America facing significant challenges, impact investments are seen as a way to address these issues and create positive change.

According to the 2023 KIDS COUNT® Data Book, America’s child care system is broken, leaving many children without nurturing care and parents struggling to make ends meet. Shift workers, single parents, student parents, and families of color are disproportionately affected by the system’s failings. Additionally, child care providers, who are mostly female and women of color, often do not receive adequate pay for their work.

To tackle these challenges, the Annie E. Casey Foundation has committed 3% of its $3.4 billion endowment to impact investments, totaling roughly $100 million. These investments are aimed at increasing the availability of quality, affordable child care through various strategies such as access to capital, public-private partnerships, and technological innovation.

One example of the foundation’s impact investments is the Care Access Real Estate (CARE) initiative launched by Mission Driven Finance. CARE is a real estate investment trust that acquires properties for child care centers and home-based care providers, renovates them to meet licensing requirements, and leases them to providers at affordable rates. This initiative is helping to address the shortage of child care slots in states like Nevada, where only one licensed slot is available for every three children.

Coastal Enterprises Inc. (CEI), a community development finance institution based in Maine, is another partner of the Annie E. Casey Foundation that is making a difference in the child care sector. CEI has supported over 175 child care businesses by providing financing, advice, and training through its Child Care Business Lab. This program has helped new providers establish successful child care businesses, creating nearly 600 new child care slots since 2020.

Impact America Fund, an early-stage venture capital firm, is also contributing to the transformation of the child care system through investments in innovative businesses like Winnie. Winnie is an online marketplace for child care that helps parents find and compare day care facilities and preschools near them, ultimately boosting enrollments for smaller providers who may not have the resources for traditional advertising.

The urgency of fixing the child care system is clear, with an estimated $122 billion in lost earnings, productivity, and tax revenue attributed to its failings each year. By leveraging impact investments, public and private partnerships, and innovative solutions, the Annie E. Casey Foundation is working towards a future where the child care sector works for families and the economy.

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