Early Care and Education Capital Innovation Creating Sustainability  of Child Care Small Businesses  

In Mississippi, the average annual price tag for child care is $5,400, which is 10% of that state’s median $55,000 median household income. Even in comparatively wealthy Massachusetts, the annual cost of child care is grossly unaffordable to many residents, hovering around $21,000. The other 48 states and U.S. territories all fall somewhere in between. The lack of access to affordable child care hits America’s lower-income families the most, in communities urban to rural and everywhere in between. With a dearth of options, parents sometimes decide to not reenter the workforce, which flies in the face of creating a robust local and national economy. Families find themselves between a rock and a hard place trying to figure out which line items in their budget they can decrease to compensate for the ballooning costs of care for their children. The choices are stark, the options few. 

That’s where our capital innovation comes into play. We know that the scale of the solution must meet the scale of the problem, which is why we have set our sights on the lofty goal of transforming the entire national child care ecosystem. To date, we have secured eight government contracts. LIIF broadened the traditional financial system’s definition of capital from solely the disbursement of loans to also include our facilities fund management grant facilitation. Whether center- or home-based facilities, child care providers are on tight margins, with grants preferable to debt capital. Such catalytic grants can be for capacity building to add more children’s spaces or to improve the facility and the level of quality they offer. Now with 25+ years of solutions-oriented work under our belt, we are proud to report that our strategies have enabled us to invest $660 million to impact 430,000 children through an equal number of program spaces created, preserved or enhanced. Additionally, we’ve logged 40,000 hours of technical assistance (TA) to foster the long-term sustainability of these small businesses.  

At LIIF, we intentionally call child care “early care and education” (ECE for short), to specifically highlight that children age 5 and under must be well cared for while learning is taking place. Scientific research indicates that 90% of a child’s brain development occurs during that time; therefore, these years are critical for setting young ones up for success later in life. A child’s ZIP code should not be a factor. 

That’s why in FY25 LIIF closed funding gaps, expanded its footprint and worked from coast to coast in red and blue states, in urban as well as rural communities. While our approach tends to be statewide or regional (especially important in light of a federal pullback), we also advocate for national policy solutions and funding to support this local work.  

LIIF’s ECE business model comprises facilities fund management, capacity building and advisory and state services. We forge strategic private-public partnerships to push forward our ECE efforts. LIIF always keeps community front of mind. 

For example, we heard from licensed family child care providers (sometimes referred to as the “invisible workforce”) that they appreciated LIIF’s grant dollars to jumpstart renovations and needed additional resources to ensure the long-term sustainability of their small businesses, yet they needed more capital. LIIF strategized with them on a solution to help them take small-business loans and build credit, thereby avoiding taking on costly credit card debt or withdrawing from retirement accounts. 

So, we created the Family Child Care (FCC) Capital Access loan product by entering into a new partnership with two small-business loan CDFIs, Ascendus and Working Solutions. The Mastercard Center for Inclusive Growth, through the Mastercard Strive small business program, is providing philanthropic support for program design and the creation of a data-sharing plan to best measure impact in the sector. Our FCC Capital Access Initiative closes gaps for entrepreneurs who are looking to grow and maintain their small businesses via activities such as health-and-safety repairs, license upgrades, working capital and professional development. Capital will be offered as three- to five-year, fixed-rate loans of up to $100,000, with scores of loans already deployed to LIIF’s California pipeline of prospective recipients. This scalable model will later serve other U.S. geographies via similar strategic partnerships.  

LIIF works across the country, tailoring our work to the unique child care needs of each region. Our expert team can analyze and understand the current state of ECE in a community via facilities-needs assessments, financial-modeling tools and mapping software. Our team advises regional governments on policy and budgetary strategies to increase and sustain the supply of ECE. The team also provides guidance for housing developers on how to co-locate child care onsite and to design high-quality facilities, plus advocates on funding for child care facilities, conducting unique research to support increased access to ECE in LIIF’s core markets across the nation. 

That’s why in August 2022 LIIF launched a National Early Care and Education Practitioners Advisory Committee (NEPAC) as part of its policy efforts to center the voices of providers. The group comprises leaders in the ECE field who have successfully used region-specific LIIF grant funds in the past. Our NEPAC geographies initially included New York City, California and Washington, D.C; in FY25, NEPAC expanded to include providers in our newer ECE markets of Atlanta and Texas.   
 
LIIF recognizes the importance of policy advocacy to support the ECE sector in multiple regions and states. For instance, in FY25 we sponsored California AB 752 (Assembly Member Avila-Farias) which would allow child care facilities co-located with multifamily housing to be approved by-right or administratively. LIIF and Build Up California (a project of LIIF) gathered signatures in support of the bill, brought our expertise in co-location and local policy, and worked with developers and local government to ensure its passage. With just a single “no” vote in both houses, the bill has advanced to Governor Newsom’s desk for signature. This measure recognizes child care as an essential service that should be a part of how we plan our communities.

LIIF is proud of our ongoing ECE work in FY25, as we strengthen the child care ecosystem across the nation. 

Western Region 

San Francisco Nature Play Champions Program. LIIF’s ECE work began a little over 25 years ago via a partnership with the City and County of San Francisco. A quarter century in, that partnership has only strengthened. With 825,000 residents in a mere 49 square miles, San Francisco is one of the most densely populated cities in North America. That’s why LIIF partnered with the City government and San Francisco Recreation and Parks on the Nature Play Champions program, funded in part by the Mimi and Peter Haas Foundation, which builds deeper connections between children, their caregivers and nature. Scores of child care facility backyards have been transformed into mini-parks for kids.

San Francisco Family Child Care Homeownership. Our pilot Family Child Care (FCC) Facility Acquisition Grant program, made possible by our partnership with both San Francisco’s Department of Early Childhood and the Federal Home Loan Bank of San Francisco, fosters generational wealth-building via homeownership for in-home providers in one of the most expensive markets in the nation. This initiative offers up to $100,000 as a downpayment grant so these providers can purchase the home that they use both as their personal residence and their small business.

California Department of Social Services’ Infrastructure Grant Program. In FY25, LIIF continued acting as facilities fund manager for the California Department of Social Services’ massive $350.5 million Infrastructure Grant Program (IGP), with $86 million in grants deployed by our organization in just that one year. Additionally, our work transitioned from renovation/repair grants to hundreds of major construction projects. This program, the largest any state has ever put toward strengthening ECE facilities, has now supported over 4,000 center- and home-based child care providers, with everything from shade structures and kitchen upgrades to playgrounds and scaled classrooms now increasing capacity and offering quality care for California families in 56 of its 58 counties so far. 

LA RISE. LIIF’s work in Los Angeles responded to meet the moment by pivoting to disaster relief after the devastating Los Angeles County wildfires of January 2025. Communities lost an estimated 1,842 child care spaces in the Eaton Fire and 510 spaces in the Palisades Fire. We immediately reached out to our partners and funders, and several have already joined LIIF in providing $50,000 recoverable grants. Thanks to the support of Heising-Simons Foundation, California Community Foundation, Ballmer Group (via LA Partnership for Early Childhood Investment) and FireAid, LA RISE (Recovery and Investment in Service of ECE) has already supported dozens of the region’s providers, highlighting how our organization is uniquely positioned to quickly respond to meet the needs of ECE educators, even in times of crisis. 

Build Up Oregon. Heading up the coast, our ECE work has gained significant momentum, with efforts advancing in both the State of Oregon and Multnomah County (Portland region). The Build Up Oregon team, comprising a group of community development financial institutions (CDFIs) that includes LIIF, Craft3 and Network for Oregon Affordable Housing, supports this work through two complementary funding streams: the Oregon Housing and Community Services (OHCS) Co-Location Fund, which supports partnerships between developers and providers to create new ECE centers co-located with affordable housing across the state; and the Preschool for All (PFA) Facilities Fund, which supports family child care programs and ECE centers in Multnomah County participating in PFA. Together, these funds provide both grants and loans to preserve and expand the supply of safe, high-quality child care facilities. In Multnomah County, the partnership has awarded 41 grants totaling $13.9 million through the PFA Facilities Fund. At the state level, nine co-located projects are in the pipeline through the OHCS Co-Location Fund, with $7.38 million committed. Co-location is a particularly promising strategy, as it addresses two of the largest cost burdens for families — child care and housing — especially for lower-income households. 

New Mexico Advisory Work. Down in the Southwest, LIIF completed a yearlong New Mexico landscape analysis of child care. In 2020, Gov. Michelle Lujan Grisham launched the Early Childhood Education and Care Department (ECECD), making New Mexico among the first states to consolidate all early childhood programs and services under a single cabinet-level agency. In April 2025, Gov. Lujan Grisham signed landmark legislation that doubled New Mexico’s investment in ECE programs to $500 million, benefiting more than 85,000 children from birth to age 5 and further establishing the state as a national leader in ECE. Recently, the governor offered free universal child care to every New Mexico family, regardless of income, becoming the first state to do so; the LIIF Team played a role in identifying the spaces needed to meet that new announcement. LIIF’s comprehensive, data-rich trio of story maps examined supply and demand, plus the needs of child care providers and parents.   

Northeast/Mid-Atlantic Regions 

Family Child Care Business Accelerator Cohort. LIIF continues to create a system of supports for in-home providers, one that has been sorely lacking for family child care homes that need it to not just survive, but to thrive. Such support of these small businesses falls into many buckets, with technical assistance toward the top of the list. That’s where the Family Child Care Small Business Accelerator comes into play, aimed at strengthening providers’ business skills. Initially, a cohort of selected New York State participants met virtually each month for 90 minutes to learn about best business practices. Topics ranged from fiscal management to marketing to being an employer. To complement these trainings, the LIIF ECE Team conducted 28 site visits across New York State. LIIF’s FCC Small Business Accelerator created its tailored curriculum and culturally responsive trainings based on the Business Administration Scale (BAS). As the only certified BAS assessors in New York state, our staff’s expertise proved invaluable.

PNC Grow Up Great Initiative. To scale our efforts, the PNC Grow Up Great initiative funded LIIF to expand the Family Child Care Business Accelerator Cohort model to the DMV. LIIF supports a cohort of family child care providers in Maryland, Northern Virginia and Washington, D.C. with site visits, individualized TA, peer learning and professional development. Each family child care facility receives a detailed report, complemented by 12 hours of professional development, to strengthen providers’ skills, with long-term sustainability of their small business being key. 

Southeast Region 

Promise All Atlanta Children Thrive Child Care Repair and Renovation Grant Program. Georgia remains one of the fastest-growing states in the nation. Attracted by a business-friendly environment and an appealing quality of life, the population grew more than 10% between 2010 and 2020. There is currently an annual 75,000 net population gain, with new families adding to the demand for access to affordable child care. In his 2022 “State of the City” address, Mayor Andre Dickens announced that the City of Atlanta would invest $5 million toward ECE. That government investment led to LIIF partnering with the City, the Georgia Early Education Alliance for Ready Students (GEEARS), Community Foundation for Greater Atlanta (CFGA) and peer CDFI Reinvestment Fund. LIIF serves as a partner for the Promise All Atlanta Children Thrive (PAACT) Child Care Repair and Renovation Grant Program, a citywide alliance of public-private partners collaborating to improve learning, health and well-being outcomes for Atlanta’s youngest children and their families. Eligible providers received up to $75,000 to renovate their ECE facilities. Funds went to 45 programs to make playground, kitchen and bathroom renovations, or flooring and HVAC replacement. Thirty-five projects completed renovations at the end of FY25.

Georgia Child Care Accelerator. LIIF is also offering solutions elsewhere in the “Peachtree State.” Recognizing that to build a strong statewide economy solutions were needed around the augmentation of ECE spaces, the Georgia Child Care Accelerator included the cities of Albany, Augusta, Columbus and Savannah, with the cohort dedicated to building the supply of child care in their communities. Convened by the Georgia Municipal Association, funded by the Annie E. Casey Foundation and led by LIIF, the group worked over the course of a year to understand their roles and develop plans to increase access to ECE. Each city’s plan reflected their unique circumstances and strengths. For example, Columbus built on its strong planning department to map transit stops and their proximity to child care. The city also took a page from Albany’s book and is creating a guide to city processes for ECE providers, like the one Albany created during its participation in the cohort. Meanwhile, Savannah has examined LIIF’s policy review and is proposing multiple regulatory changes to make it easier for child care providers to open and operate in that city. LIIF took the lead in structuring the sessions, supporting the cities to develop plans, and in synthesizing learnings and recognizing provider needs to develop comprehensive guides for cities and providers. 
 
Harris County, Texas Supportive, Healthy, Inspiring and Nurturing Environments Child Care Facilities Fund. Expanding to a new geography, LIIF’s child care work headed farther west to Harris County, Texas. The Supportive, Healthy, Inspiring and Nurturing Environments (SHINE) Child Care Facilities Fund, the first of its kind in this region, is a transformative initiative. In partnership with LIIF and Volunteers of America Texas, SHINE is dedicated to enhancing and preserving high-quality child care spaces in Harris County, which includes the country’s fifth-largest metropolitan region, Greater Houston. The fund provides financial support for renovations and repairs to center- and home-based ECE facilities, ensuring that every child has access to a safe and nurturing learning environment. Over 50 grant awards have been made, enhancing spaces for 5,780 children, with 900 hours of TA provided. The Harris County Department of Economic Equity and Opportunity was nationally recognized for the SHINE initiative when it received a National Association of Counties “2025 Achievement Award,” in the category of “Children and Youth.” 

When you are the nation’s leading CDFI strengthening the child care ecosystem, people look to you for solutions. We’re up for the task. 
 
LIIF continues to create strong partnerships, acting as a capital innovator best positioned to drive deep impact in historically underresourced communities. As we look toward the future, LIIF will continue to build strong economies by supporting centers, providers, families, children and communities, knowing that access to quality, affordable child care should be a right rather than a privilege.