Kelly, the President of Civitas Strategies, has been driving scalable solutions for microbusinesses, as demonstrated by a recent $219 million funding initiative. This initiative is part of a larger $39 billion investment in childcare through the American Rescue Plan Act (ARPA), which was a much-needed lifeline for an industry that was already underfunded and facing significant challenges. As the impact of this funding begins to be felt, important lessons have emerged that can inform future efforts to support the childcare industry.
One key takeaway from the distribution of over $6 billion in relief funding is that too many constraints can hinder the successful use of funds. Programs that had fewer constraints showed greater efficacy in helping childcare business owners allocate funds to their greatest needs. In contrast, funds with strict restrictions, such as those earmarked only for specific purposes like equipment upgrades or building repairs, limited the ability of business owners to use the money effectively. Future investments in childcare should aim to have as few constraints as possible to allow for strategic fund allocation.
Another lesson learned is the importance of clear communication of rules upfront. ARPA funds come with important rules on how to spend the funds, tax implications, and monitoring requirements. Clear communication upfront allows applicants to plan accordingly and avoid any unexpected costs or penalties. Transparent guidelines from the outset can help businesses navigate the funding process successfully and avoid any pitfalls.
Integrated support and coaching have also been shown to promote equitable access to funding. Programs that offered coaching support throughout the application and monitoring phases saw greater and more equitable access to funds. For example, in Texas’s Child Care Provider Expansion Initiative, coaching was provided, resulting in a diverse group of approved applicants, including many people of color and family care businesses.
Streamlined and simplified applications are crucial for fostering accessibility to funding, especially for businesses with limited time and resources. Finding the right balance between providing comprehensive information and accommodating the constraints of childcare business owners is essential. For example, the Texas Child Care Provider Expansion Initiative used a format that divided the business plan into distinct questions that were easy to answer, making it more accessible for applicants.
In conclusion, funding opportunities for small businesses, particularly in the childcare industry, often favor those with higher levels of business acumen or access to support. However, there is a need to ensure that funding initiatives reach businesses with lower business acumen or fewer resources, such as home-based child care businesses and smaller centers. By being intentional about developing funding opportunities that include supports like coaching, clear communication, and streamlined applications, business leaders can help maximize the impact of funding and ensure it is distributed equitably. Partnering with organizations offering funding initiatives can also help small businesses successfully utilize funds and drive positive sustainability outcomes.
