How to Start a Nonprofit Daycare

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These days it is a lot more common to find situations where both parents in a household are working multiple jobs, or a single parent is working at least one job while also trying to raise their kid. Because of this, there is a demand for affordable and trustworthy childcare, and you can help with that problem by starting a nonprofit daycare yourself.

To start your own nonprofit daycare, you will want to be familiar with the following:

  • Filing the necessary paperwork for a nonprofit organization
  • Finding the right people for your nonprofit
  • Funding your nonprofit daycare
  • Advertising your daycare within your community

Starting a nonprofit daycare is a great way to give back to your community and seriously help parents that might be struggling to make ends meet while also starting a family. Starting your daycare with a mission to help those that need it the most is the first step in having a successful nonprofit.

Below we will layout out more details explaining each of the points above so that you can gather all of the information that you need to get started today.

Understanding the Paperwork.

Creating a Nonprofit

The very first step is going to be creating a nonprofit entity. In this case, you are creating a nonprofit corporation that will provide childcare services.

To do that you will need to file nonprofit articles of incorporation in your state. You can find the necessary forms and other information from your secretary of state.

Before filing any paperwork, become clear on why you are starting your daycare, who exactly it will serve, how the daycare will be run, and also know the name and address of your daycare.

Here is a tip: To learn more on how to start a nonprofit search: https://www.sba.gov/ Also under the business structure on the SBA.Gov website you can find the definition and benefits of a non-profit here:
https://www.sba.gov/business-guide/launch-your-business/choose-business-structure

Once you have all of that information laid out, you should be good to fill out all of the paperwork and officially start your nonprofit!

Tax Forms

Prepare yourself to demonstrate that your daycare center will operate for charitable purposes, and you will be able to obtain tax-exempt status by filing a Form 1023 or whatever paperwork is necessary for your location.

When presenting to the IRS or another Tax Office, you will want to show that your services are available to the general public. This will show that parents can continue to look for or maintain employment, and it also shows that your daycare does not discriminate against anyone in any way, which is forbidden by federal law.

Also, while presenting to the IRS or other relevant tax office, include your articles of incorporation and other information you have about the operations of your daycare. The more information you have, the better off you will be.

Miscellaneous Paperwork

There may be other miscellaneous forms and papers that you will want to have handy when starting or operating a nonprofit daycare. This can include statements like a statement of nondiscrimination, or perhaps other legal paperwork.

As a rule of thumb, the more that you can have in writing for your nonprofit the better. Having your policies, practices, etc. in writing shows that you have thoroughly thought everything through and that you are in fact planning to hold yourself and your organizations to what you have said.

Finding the Right People.

Starting a nonprofit daycare, or any nonprofit for that matter is not something that you are ever going to do alone. You are going to want to surround yourself with the right people when starting your daycare, and that means you need to elect a great board of directors and also hire amazing staff.

Your board of directors will represent the people that you serve with your organization. For a daycare, it is generally a good idea to have your board of directors is made up of parents that are in the community. Day to day operations will run much more smoothly when the people representing those that you serve legitimately have the same interests as the people you serve themselves.

The other people that you need to surround yourself with will be great staff members. You will want to find workers that are skilled or experienced in working with children, of course, and staff members that are empathetic and cooperative. Having high-quality staff members will play a major factor in attracting business down the line, so do not skimp on hiring that first round of employees.

Another important note to keep in mind is that the IRS requires that you do not have excessive rates of compensation for your staff. Make sure you determine how much you will pay your staff before hiring and that it will be okay for your nonprofit. This will prevent a lot of friction that can come from employees feeling underpaid later on, especially if there is a lack of communication.

Funding Your Nonprofit Daycare.

As with any other business, your nonprofit daycare is going to need funding. The income that you generate from the families you charge for services will help you pay some of the bills, but it is worthwhile to look into other sources of funding to help improve the quality of your daycare.

Finding grants and other funding for your nonprofit will ultimately come down to you researching what the opportunities are in your area. Start to inquire about grants and other funding opportunities from organizations like your local United Way or Community Foundation.

Receiving funding from any of these sources can be a major help in making improvements to your daycare facility, as well as improvements to your staff by hiring more people and training the staff that you already have.

Lastly, note that grants and other funding will be the best option for your nonprofit organization. Nonprofits can be a little tricky in the sense that they are, in fact, not for profit organizations.

You should be consistently and effectively communicating with the IRS and your Secretary of State to ensure that you keep your nonprofit status and that everything is running smoothly.

Interested in learning more about start up costs? Check out our article HERE!

Advertising Your Nonprofit Daycare.

After you have all of the initial pieces in place, it is time to start bringing in some actual business. Your marketing and advertising efforts maybe a little bit different for a nonprofit entity than they would be for an organization that is bringing you a profit, but remember that you started this entity for a reason. That reason is to help families in your area. You need to attract them to help them.

A big plus to an organization like this is that it is very community-oriented. You can start attracting families to your daycare just by posting flyers up around the community. Likewise, promoting your daycare in local publications or even local internet groups can really help to spread the word.

Think about who your target customer is with daycare and then think about where they are putting their attention. Odds are that your target customer is a parent that is working one or multiple jobs. How can you position your organization in front of them so that they know about it?

Maybe you can find one or two Facebook groups or pages that are popular among mothers in your area. On top of that, you could put up flyers at the local grocery store where most of these parents probably do their shopping. Think about where that would be.

The last bonus tip you could use is driving home the fact that your daycare is in fact a nonprofit organization. This adds a subtle hint that you are not operating your business out of greed but operating because you are actually looking to help parents in the community that could use the help.

Related Questions

Q: What are the differences between owning and operating a nonprofit daycare and a for-profit daycare?
A: Nonprofit and for-profit daycares have a day to day operations that are actually quite similar. The major differences are that nonprofits are eligible for grants and other funding, and they are exempt from state and federal taxes. Neither one is particularly better than the other.

Q: Should I start an in-home daycare, or am I better off starting a daycare center?
A: When it comes to which style of daycare you should start yourself; you should evaluate your own goals and your own situation. In-home daycares are usually more attractive for parents that want high levels of trust with the person or people caring for their children, while a daycare center is more attractive for the social environment it provides and, in some cases, they may appear more professional.

Q: How much should I be charging for daycare services?
A: The average cost for full-time daycare services for babies and toddlers is just under $1,000 per month. When coming up with your own pricing, keep in mind the expenses that you need to pay, what other funding you have available, and also who your customer is. Many parents that are utilizing a daycare need childcare to be affordable. Don’t set your prices so high that you will lose customers over it.

Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.

To learn more on how to start your own daycare checkout my startup course and documents here.