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Nonprofit daycare centers are run similarly to daycare centers that operate for profit. The major difference is that nonprofit daycares are eligible for grants and other funding, and they are exempt from state and federal taxes. Nonprofit daycares are also required to be governed by a board of directors made up mostly of parents. All of the money collected from parents and other sources must be invested in the organization and the service it provides to children and families. Start a nonprofit daycare by obtaining funding and making sure you comply with all of the guidelines set forth by the Internal Revenue Service (IRS).
Steps
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Create a nonprofit corporate entity. In this case, you will create a corporation that provides childcare services. [1] X Research source
- File nonprofit articles of incorporation with the state in which you are establishing the daycare. You can get the appropriate forms and guidelines from the Secretary of State.
- Include the name and address of your nonprofit daycare in the articles of incorporation, as well as the purpose of starting it. Describe who you will serve and how the daycare will be run and governed.
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Elect a Board of Directors that represents the people you serve. Parents should make up most of your Board.Advertisement
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Obtain tax exempt status from the IRS by filing a Form 1023 other whatever is appropriate in your location outside of th US. [2] X Trustworthy Source Internal Revenue Service U.S. government agency in charge of managing the Federal Tax Code Go to source You will need to demonstrate that your daycare center will operate for charitable purposes.
- Show the IRS or other relevant Tax office that your services are available to the general public so that parents can look for or keep employment.
- Include your articles of incorporation, information on how much you charge for daycare services, the number of students you serve and your curriculum.
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Provide information on the racial makeup of your students and staff. Federal law forbids nonprofit daycares from discriminating based on race. You might also want to have a statement of nondiscrimination on file.
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Determine how much to pay your staff. The IRS will require that you not have excessive rates of compensation when you are a nonprofit daycare entity. [3] X Research source
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Look for grants and other funding. [4] X Research source While some of your daycare's income will come from what you charge the families who use your services, additional money can help you make improvements, hire more teachers and train staff.
- Obtain a list of grant opportunities from your local Childcare Resource and Referral Agency. Visit www.childcareaware.org and enter your zip code. You will get the contact information for your agency, and they can give you a list of grants available in your area.
- Inquire about grants and funding opportunities from your local United Way, Community Foundation and other organizations which give grants.
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Research your local businesses and find out if they make corporate grants.
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Attract business to your daycare. Advertise in schools and community centers, as well as in local publications and online.
- Promote your daycare center as a nonprofit organization. This might help you recruit parents who cannot afford private daycare.
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Work with your Board and staff to ensure all required paperwork and other filings are completed on time. You will need to communicate regularly with the IRS and Secretary of State to keep your nonprofit status.
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Community Q&A
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QuestionHow many members should the board have and can they be the same people who run the daycare?Community AnswerNo, it cannot be all of the same people who run the daycare. Some can be involved, but the entire board cannot be made up of them. There isn't a set number for a board, but consider having an odd number of people, so in the event of a vote, there isn't a chance of a tie.
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QuestionHow can I start a daycare out of my house?Community AnswerCheck with your local department of family and child services, or look up child care licensing and you should be directed to the appropriate website for your area. You will need to take a course and pass an examination, and become CPR certified.. Usually you will need at least one fire extinguisher, a carbon monoxide detector and a fire alarm in EACH room of the house, fire escape exits in every room, and appropriate child-proofing. You'll want to make sure your house has sufficient space to meet local requirements as well.
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QuestionCan I limit the number of kids in a nonprofit childcare to only 1-2?Community AnswerMany times you will need to have more children than that in order to be classified as a non-profit childcare center, but you will need to check about your individual state's requirements.
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Tips
- Work closely with an attorney and an accountant. These may be Board members or people you hire professionally. You will need to be transparent about all of the money your daycare earns, and how you spend it. There are reporting requirements and legal issues that will need your attention.Thanks
- Consider writing and posting a mission statement. Most nonprofit organizations use a mission statement to explain why they exist. Yours might focus on providing affordable childcare to all members of your community.Thanks
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Things You'll Need
- Articles of Incorporation
References
- ↑ https://bizfluent.com/how-4812417-start-nonprofit-child-care-center.html
- ↑ https://www.irs.gov/forms-pubs/about-form-1023
- ↑ https://www.councilofnonprofits.org/tools-resources/compensation-nonprofit-employees
- ↑ https://bizfluent.com/grants-nonprofit-daycares-5783.html
- https://www.childcareaware.org/
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Reader Success Stories
- "A very helpful step-by-step approach. It helped explain nonprofit centers and what they entail. It spoke in plain, simple language. I never heard of a nonprofit daycare center before this week. The idea of opening my own was always greeted with an emphatic "no," but this idea intrigued me. The easy-to-understand steps were quickly presented and then expounded upon. It made the idea of opening a nonprofit daycare center doable and eased some of my apprehension." ..." more
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"A very helpful step-by-step approach. It helped explain nonprofit centers and what they entail. It spoke in plain, simple language. I never heard of a nonprofit daycare center before this week. The idea of opening my own was always greeted with an emphatic "no," but this idea intrigued me. The easy-to-understand steps were quickly presented and then expounded upon. It made the idea of opening a nonprofit daycare center doable and eased some of my apprehension."
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"Very helpful for beginners. This is a good start. There is other state-specific information that could or should be added. Also, it might be good to add what profit margin to shoot for, like an average 26% yearly profit or whatever."
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"The article helped clarify some questions in regards to IRS filing status and grant opportunities."
"It answered many questions, and told me exactly what steps to follow. This article is great!"
"This gave me a clearer understanding of what to do and what to expect running a daycare."
