Covering Costs

Q. I’m a registered nurse who wants to start a home day-care service for mildly ill children. I believe there’s a need for this service, especially for low-income parents who often can’t afford to miss work when a child comes down with a minor illness. But I’m worried that the very people I want to serve won’t be able to afford the service, and I won’t be able to cover my costs. Should I consider getting nonprofit status in order to seek outside funding?

A.Before you worry about money or about whether to apply for nonprofit status, your first step should be to confirm that the need you believe exists really does exist, says Nicole La Bar, director of early childhood programs at Hale House Center, a nonprofit child-care organization in New York. She suggests asking questions, such as the approximate number of children who live in the area where the program will be located, the income levels of families there, and the fees charged by other programs in the area that may offer similar services, suggests Ms. La Bar.

Once you have determined that a need exists, she says, applying for nonprofit status is a good idea because it will make donors more willing to give to you. Government grants are available for start-up and operation costs, for example, but you need to be a nonprofit organization to apply. “There are also many foundations and corporations that are willing to donate funds to nonprofit child-care programs that can be allocated for scholarships or tuition assistance for low-income families,” she says. “Depending on the locale, there may also be opportunities to enter into a contract with a city or state agency that will cover most of your costs.”

Terry Jenkins, executive director of Cheerful Home, a nonprofit child-care center in Quincy, Ill., that serves mostly low-income families, also urges you to consult with the state agency that handles children and family services. To comply with state licensing standards, you will probably face some restrictions about how the children share common space and standards regarding how sick is too sick to receive service, he says.

Since demand for this type of service is likely to be inconsistent and unpredictable, Mr. Jenkins also suggests diversifying your revenue streams as much as possible. At Cheerful Home, for instance, the organization mostly relies on grants, gifts from individuals, and corporate donations, but it also charges parents fees. Another idea may be to propose your service to a corporation or factory with plenty of young workers. “If a company had a day-care alternative to offer employees,” he notes, ” it could reduce absenteeism because of sick children, and thus increase productivity and revenues.”

Got a question about job hunting, recruiting, or managing in the nonprofit world? Send it to us at hotline@philanthropy.com.