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$20 Million Partnership Aims to Co-Locate Child Care with Affordable Housing

Written by Low Income Investment Fund

Child care has been widely recognized as an essential public resource that can produce a triple halo effect across society: thriving small businesses, high-quality early education for children, and broader economic opportunity and support for working parents. Yet child care supply gaps across the country continue to limit this potential, with Black, Latino, Indigenous, and low income families often the most acutely affected by the high cost and limited supply of available care options.

Building new child care facilities and investing in facility upgrades and modifications can address supply constraints and help preserve existing program spaces for the long-term. However, the early care and education (ECE) providers who provide this essential public good often find themselves in an impossible situation. Limited resources and structural inequities make it incredibly challenging to build new child care facilities or expand and improve existing program spaces.

Over 92% of the ECE programs LIIF supports with grant funding are owned or operated by women of color. These small businesses often do not have access to the traditional financing that is necessary to build a quality space for children to learn and grow. To complicate matters, providers are often unable to access federal funds to acquire, construct or significantly renovate their program spaces.

Understanding these challenges, many ECE providers are identifying innovative approaches to create quality and affordable spaces that support working families, including co-locating child care programs with other community development projects. And leading investors have begun recognizing the importance of supporting these impactful projects.

As part of Goldman Sachs’ One Million Black Women initiative, the Urban Investment Group within Goldman Sachs Asset Management invested $20 million to support LIIF’s innovative new Brighter Futures Fund (the Fund). The Fund aims to create and preserve child care facilities co-located with affordable housing and other community resources. Goldman Sachs also provided LIIF with $1.6 million of additional funding for the program through a grant. This philanthropic support will allow LIIF to build the new program from the ground-up through grassroots outreach, hiring dedicated staff, and delivering specialized technical assistance to ECE operators, who often have to navigate complex financing structures and regulatory requirements.

Goldman Sachs’ investment follows more than 50 listening sessions held through its One Million Black Women initiative, which to-date, have convened nearly 20,000 Black women and girls across the country to discuss issues such as child care, education and opportunity. Additionally, Goldman Sachs published original research on the topic in its Black Womenomics report, which further highlighted how early childhood education and development can make a positive difference in reducing racial inequalities and also benefit disadvantaged children through stronger cognitive development, stronger conscientiousness, higher college completion, higher lifetime earnings, and better health.

The Brighter Futures Fund grew out of input directly from child care providers. Last year, LIIF interviewed four providers operating co-located ECE programs in three of the nation’s highest cost cities – San Francisco, New York City, and Washington, DC. Our work with providers and the insights from those interviews helped LIIF identify strategies and recommendations to increase the supply of co-located child care programs, including:

Enact Supportive Public Policies

  • Policies that require or incentivize child care to be co-located with other local developments can create opportunities for ECE providers to access program spaces at more affordable rent rates.
  • Integrating child care with other community resources can also advance additional local policy priorities, such as increasing family access to services and reducing costly barriers like transportation.

Prioritize Technical Assistance and Capacity Building

  • Technical assistance helps providers navigate contract negotiations, budgeting and operations planning, architect and classroom design, regulatory and zoning changes, etc.
  • Financial assistance such as loans and grant programs can help providers meet the high costs associated with acquisition, expansion or renovation.

Foster Cross-Sector Partnerships

  • Several actors, including ECE providers, city officials, developers and Community Development Financial Institutions (CDFIs) should be involved in the planning, development and operation of co-located child care facilities.
  • Intermediaries like CDFIs can help build a pipeline for co-located developments by connecting high capacity child care operators with developers and help government agencies reduce policy and land use barriers to co-location.

Now, LIIF aims to leverage these strategies in key markets across the country through the implementation of the $20 million Brighter Futures Fund.

  • In San Francisco, LIIF will build on the city’s successful Child Care Impact Fund by bringing additional funding and technical expertise to co-locate child care programs with affordable housing. The Equitable Child Care Fund aims to serve approximately 1,650 additional children in new co-located childcare programs throughout San Francisco.
  • In Washington, D.C., up to $5.5 million aims to provide over 900 Black children with access to co-located child care programs. This will build on Mayor Bowser’s Quality Child Care Initiative, which has already expanded the supply of infant and toddler seats by more than 1,200 slots.
  • In Atlanta, LIIF plans to deepen its partnership with Purpose Built Communities to expand the co-located supply of child care in key neighborhoods across the city. The Fund aims to serve over 1,200 children and increase employment opportunities for more than 20 Black women staff.
  • In New York City, LIIF will leverage its long history working with both local child care providers and affordable housing developers to build new cross-sector relationships that embed co-location as a local priority and serve over 600 additional Black children in high-quality early learning environments.

Ultimately, the Brighter Futures Fund seeks to create or preserve 10 child care programs, more than half co-located with affordable housing. The investments will have an emphasis on centers that are owned by Black women or serve Black mothers and families. In total, the lives of more than 7,000 Black women and girls are expected to be positively impacted as a result of this funding.