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University of Wisconsin Center for Cooperatives
Research on the Economic Impact of Cooperatives
The demand for quality child care has grown significantly, as increasing numbers of women have joined the workforce over the past 25 years. By 2007, >57% of women in families with children under age 6 were employed (U.S. Department of Labor, 2008). Considerations of quality, availability and cost all drive a family’s child care decisions, and many families use multiple providers to meet their needs.
Demand for childcare may also exist independent of the need to support a family’s work schedule. The growing recognition of the benefits of early childhood education, which can foster social, emotional, intellectual and physical development, also drives the demand for quality child care programs.
Child care cooperatives are one alternative in the child care mix. Organized around structured activities and supervised play for toddlers through preschool-aged children, the cooperative typically depends on parent assistance in the classroom. Parental participation in the classroom experience can be a strong incentive for cooperative membership, since it provides parents a chance to more directly observe and contribute to the quality of their child’s care and early learning experiences outside the home. It is also viewed as a learning opportunity for parents, either informally or through more structured training that may be available to parent members.
Membership in the cooperative is open to parents or guardians of children who attend the cooperative. Some level of volunteer activity to support the cooperative’s operations is also expected of the parents, which reduces the cost of the programs. Some child care cooperatives offer full-time child care services, but others are organized to provide part-time programs. While organized groups of families trading childcare hours are also called childcare cooperatives, they are not included in this survey because of their more informal, impermanent, barter-type arrangements.
Most families with preschool children and working mothers use child care services. Almost 25% of these families use an organized child care facility as the primary care arrangement; a greater percentage of families likely use child care centers to supplement other primary care arrangements, such as a family daycare provider (U.S. Congress, 2004). Approximately 80,000 center-based early education and child care programs were providing services in the U.S., according to the most recent comprehensive study that included licensed centers, early education programs, center-based programs exempt from state or local licensing (such as programs sponsored by religious organizations or schools), and licensed family day care. A more narrowly focused study a few years later reported >113,000 regulated child care centers (U.S. Congress, 2004).
Child care cooperatives are a subset of these center-based early education and child care programs. Many are overtly founded on the principle that the best educational experiences for young children results from a partnership between parents and teachers, and work to maintain a high adult-to-child ratio. All recognize the contributions of parent volunteer activities to maintain the child care organization.
While parents value quality child care, they often face difficulties in evaluating the care a program provides. Child care cooperatives offer a greater degree of transparency for parents and caregivers, given a cooperative structure based on parental involvement.
Childcare cooperatives are typically incorporated as nonprofit organizations, since they provide educational services. As educational entities, they are eligible for a 501(c)(3) Federal tax-exempt designation, which also allows them to apply for public and private grants, and to accept tax-deductible donations.
Child care cooperatives differ from other nonprofit educational organizations by the control exercised by the parents who use the cooperative’s child care services. Parents democratically elect representatives to a board of directors that operates the cooperative. Frequently staff and teachers also may be represented on the board, but do not typically have voting rights. Depending on the size of the school, there may be a director who provides continuity in the overall management of the cooperative’s business.
In addition to tuition or fees for the child care services, volunteer involvement by parents in the affairs of the cooperative is highly encouraged, if not required. Some cooperatives require a commitment to a certain number of hours of volunteer time, or participation on a committee. Parental participation in the classroom supports the ability of the cooperative to provide a high adult-to-child ratio, and volunteer labor for housekeeping and administrative duties aids in reducing operating costs. Frequently, parents are also expected to engage in some type of fundraising activity for the cooperative.
Child care cooperatives are examples of 501(c)(3) nonprofit organizations that operate as cooperatives in terms of patron control, but are prohibited from making distributions to members. As with many nonprofit cooperatives, the child care services may be considered the benefits that accrue based on patronage. The degree of actual degree member control varies widely among these cooperatives. In some cases, parents may be required to volunteer in the classroom or perform other tasks to support the operation of the cooperative, but they are not expected to take an active role in the control and governance of the organization.
The data on childcare cooperatives comes from primary research conducted by the UWCC. All economic data comes from survey work undertaken by the UWCC and Guidestar. The survey response rate for childcare cooperatives is 43% and all reporting cooperatives provided us with 2005-2006 fiscal year-end data. The data collection and survey methodology is discussed in detail in the Data Collection section in the Appendix.
As Table 4.3 shows, we have data for 563 child-care cooperatives and collectively these firms account for >$45M in assets, nearly $86M in sales revenue, and pay nearly $1M in wages. There are approximately 8,000 employees; we did not collect membership information for childcare cooperatives. As Table 4-3.2 shows, by extrapolating to the entire population (1,096 firms) and adding indirect and induced impacts to this activity, child-care cooperatives account for >$420M in revenue, nearly 6,000 jobs, $141M in wages paid, and >$200M in valued-added income.