Chapter 6 Funding the Program ©2013 Cengage Learning. All Rights Reserved

Chapter 6

Funding the ProgramFunding the Program

©2013 Cengage Learning.All Rights Reserved.

Chapter Objectives

• Describe the director’s role in obtaining funding for a center.

• List several resources potentially available for child care financing.

• Explain how tuition rates may be determined.

• Describe several types of financial reports that funders may require.


Funding a New Center

• Start-up capital• Community support• Grants• Bank loans• Tuition • Community resources • Government funding • Foundations • Fund-raising


Start-up Funding

• Sources:– personal capital– business loans – investor– foundation– community support


Discussion Questions

1. What role does the director play in obtaining funding for a new center?

2. When approaching a bank for a loan, what documents or information do you think they will require?


Reporting to Funders

• Directors report to funders to give them information on how the business is doing

• Funders could be…..– Stockholders investing for profit– School board members– Members of a parent co-op– Organizations providing support (i.e., United

Way, employer sponsored centers)– Individuals who own the center


Reporting to Funders

• Accurate, timely, and understandable reports are necessary– Center Enrollment Report– Accounts Receivable Report– Budget Comparison Report– Statement of Financial Position– Income Statement– Annual Report


Center Enrollment Report

• Report includes:– Number of children enrolled– Number of children in each age group that

center serves– Projection of children who are expected to

move up to next age group on a month-by-month basis


Accounts Receivable Report

• Indicates the amount of tuition that is owed – Should be generated on a weekly basis


Budget Comparison Report• Indicates what was spent the proceeding month in

each category compared to the budgeted amount in each category– Should include actual and budgeted spending for

proceeding month AND year-to-date• Report used to:

– Spot cash flow problems– Analyze expenditures– Project remaining expenses– Revise budget (if necessary)


Statement of Financial Position

• Report indicates:– Assets (what center owns)– Liabilities (what center owes)

• Should be generated on monthly basis


Income Statement

• Statement reflects:– Total revenues earned in fiscal year– Total expenses incurred in fiscal year

• Net income– If income is greater than expenses

• Net loss– If expenses are greater than revenue


Annual Report

• Final report– Shows amount budgeted in each category

and amount spent– Up-to-date cash flow statement


Managing Funds

• It is the director’s responsibility to manage available resources – Create policies and procedures – Implement and follow these policies and

procedures


Interim Chapter Summary

• A quality center requires funding from:– tuition– government support– private support– sponsoring agencies


Discussion Questions

1. Why is it important to implement financial policies and procedures?

2. What do you think would happen if a director was lax in collecting tuitions from parents?


Managing Funds

• Results of lax financial policies and procedures results in:– Reduced financial resources – Reduced salaries– Staff reduction– Limited money for supplies and equipment– Lowered program quality– Possible center closure


Managing Funds

• Three ways funds can diminish

1. Collections

2. Fraud

3. Lawsuits against center


Collections

• Outline financial procedures in parent handbook– Timing (when tuition is due)– Method (check, credit card, cash, voucher)– Number of overdue reminders– Penalty for late payment– At what point will the child not be able to attend

program because of past due payment – Under what conditions can child re-enter program

(if space is not filled, if parent pays in cash)©2013 Cengage Learning.

All Rights Reserved.

Fraud

• Fraud is embezzling money– Theft of cash– Charging for more hours than actually worked– Keeping person on payroll for a period after they

leave and writing extra checks to themselves– Charging personal expenses to the business


Fraud

• To prevent fraud:– Be aware of financial records (cross-check time

cards, payroll)– Do not accept cash– Have enforceable and enforced financial policies


Lawsuits

• Lawsuits can be deterred– Establish policies that will reduce likelihood of

being sued– Training staff and appropriate documentation– Appropriate supervision– Maintenance of equipment, building, grounds


Lawsuits

• Lawsuits can be deterred– Policies about who has access to premises

and who may take the children– Review policies on hand washing, food

storage, and food serving– Maintaining positive relationships with families– Policies to maintain a financially stable center


Chapter Summary

• Operating a quality center requires significant amount of funding

• It is director’s responsibility – Have a knowledge of funding sources– To operate within a balanced budget of

appropriate revenues and expenses– To establish and maintain financial policies

and procedures to protect against collection issues, fraud, and lawsuits


Documents

Chapter 6 Funding the Program ©2013 Cengage Learning. All Rights Reserved