Case Study: Shared Services Alliances

Many childcare providers are small businesses and have the same operating needs as other organizations. In addition to meeting quality standards for education and care, these businesses must focus their attention on recruiting and enrolling children, bookkeeping, building maintenance, human resources, and other business operations. But for reasons ranging from expense to expertise, it is often a struggle to find the resources to put toward these basic functions. These operating challenges don’t just impact childcare providers; they also impact children and families and reduce the ability of providers to offer high-quality care. This case study looks at the different ways businesses can contribute to Shared Services Alliances, taking the burden off these providers and enabling them to do what they do best—provide high-quality care. 

What Is a Shared Service Alliance?

Shared services came int being as a strategic solution to a complex problem. A Shared Services Alliance is a partnership of childcare providers working together to share costs and deliver services in a streamlined and efficient way. The concept allows both center and family childcare providers, especially in low-income communities, to share some portion of the financial burden of operating a high-quality program. Providers do this by pooling resources to support hiring centralized staff for operations and business support, accounting, and maintenance across multiple sites among other functions. By participating in a Shared Services Alliance, early care and education businesses become stronger, more accountable, more financially sound and efficient, and better equipped to offer affordable, high-quality services for children and their families.1  Often, these models are funded through philanthropic and corporate grants and partnerships.

Shared Services Lead to More Effective Small Businesses

Shared Services Alliances enable small businesses to focus on high-quality care by outsourcing their other business functions to experts. Services include:

  • IT
  • Billing
  • Program coordination
  • HR
  • Training
  • Accounting 
  • Enrollment services
  • Quality assessment

Richmond Area Service Alliance, Virginia

The financial and management challenges associated with operating childcare businesses in Richmond were causing closures in communities where the need for those services was highest. The Virginia Early Childhood Foundation (VECF), started in 2005, was established to advance school readiness. It is a trusted entity in Richmond, having made a name for itself as the public/private backbone for statewide efforts to create collaborative initiatives that increase efficiencies and outcomes. Because of its work, VECF was approached by the Robins Foundation, a local philanthropic organization that sought to improve the greater Richmond community and advise on guarding the stability of quality early childhood education and care programs in communities of concentrated poverty.  

The Robins Foundation and VECF wanted to expand existing community organizations that were, or could, provide high-quality early learning services in high-need communities. VCEF conducted fiscal mapping and analysis, resulting in recommendations to investors to front the cost of launching a Shared Services Alliance. Following the recommendations, the Robins Foundation and the Community Foundation serving Richmond and Central Virginia underwrote the launch of the Richmond Area Service Alliance (RASA). The goal of this collective is to address the financing challenges childcare businesses face without a robust revenue line of parent tuition to bolster budgets. 

VECF looked for a partner that could help consolidate business functions while not competing with the businesses that it was serving. Ultimately, VCEF selected Commonwealth Autism, an established organization with the business acumen to act as a centralized hub for operations and business functions. VECF launched its pilot program with three participating childcare businesses in 2016. The model started with private funding, as success continues, however, it will transition the model, requiring member groups to pay a fee for service after two full years in the program. 

While still early in the pilot phase, VECF has found initial results to be strong, showing shared services to be a strategic solution to a systemic and complex problem—one that investors have found to be a smart and forward looking (rather than reactive) investment. In fact, this approach, its outcomes, and potential are gaining momentum, and awareness is spreading across the country, increasing overall interest in Shared Services Alliances. 

San Francisco Early Leaning Alliance, California

For childcare providers in San Francisco, the high cost of living and real estate makes it difficult to deliver services to low-income families, forcing them to operate on very tight margins. In 2015, the Mimi and Peter Haas Fund worked with the Alliance for Early Childhood Finance to determine the best way to address the challenges faced by childcare providers in the region. The recommendation was to start a small Shared Services Alliance with three existing childcare providers, financially supported by the California Resource and Referral Network, and the Mimi and Peter Haas Fund, which also acted as the centralized location for alliance operations. 

In 2015, the San Francisco Early Learning Alliance (SFELA) was founded. SFELA sought to assist childcare businesses operating with public funding by offering solutions to provide high-quality and highly efficient back office services. Now entering its fourth year, SFELA has grown to include 12 sites representing both nonprofit and for-profit centers. Its suite of services includes enrollment management, attendance tracking, subsidy and grant management, accounting, financial reporting, audit and tax returns, and personnel and benefits management. 

For the providers who joined the Alliance, it is already paying dividends. Outsourcing functions has enabled centers to diversify their revenue streams so that they can accept families of varying socioeconomic status. Additionally, the savings that centers have made through the Alliance have enabled the Alliance to move toward a membership model based on sliding scale fee for service. To date, the Mimi and Peter Haas Fund is financing SFELA, which now has a staff of four. While it would like to break off and establish its own 501(c)(3), the cost of real estate in San Francisco is prohibitive. Also, SFELA now finds itself at a pivotal point in need of assistance with strategic business planning. 

The Chambliss Center for Children, Chattanooga, Tennessee

In Chattanooga, one of the longest-established examples of a Shared Services Alliance began almost by accident. The Chambliss Center for Children (previously known as the Chambliss Children’s Home and the Chambliss Shelter) provides administrative services to multiple nonprofits. Then called the Chambliss Children’s Home, it opened its doors in 1872, originally providing housing and care for orphaned boys and girls. In 1969, the home expanded and began to offer 24 hour child care in addition to its residential services, serving 200 children in this program. By 1983, the organization was serving 200 children in childcare in addition to its residential services. Therefore, when the government began looking for organizations to take over the Chambliss Shelter, the Chambliss Center’s reputation of being a well-managed enterprise made them an ideal candidate to take over responsibility for the shelter. 

Several years later, the success of this venture was not lost on the local United Way, which in 1986 called the Chambliss Center regarding a struggling early childhood program. A Shared Services Alliance was born, and the Chambliss Center took on all licensing and financial requirements, staff management, admissions, and board relations. It also acted as the executive director for these programs. 

The Chambliss Center has continued to expand and has recently been able to fill a need in its local school district, offering care for working parents in the education industry who would have otherwise left the workforce owning to a lack of access to childcare. Today, the Chambliss Center has 12 locations in public school buildings in addition to six off-site locations. 

The Chambliss Center’s most recent project encompasses the larger Chattanooga community. It is partnering with a local real estate developer to imbed childcare in the planning and urban design conversation. The Chambliss Center will operate multiple childcare locations that support a new community yet to be developed. Such forethought enables families in the community to reap the economic benefits of high-quality childcare, made possible by the Shared Services Alliance that the Chambliss Center created. Because of the Center’s continued community involvement, it’s now the largest childcare provider in Chattanooga outside of Head Start.

For all the nonprofits that have joined this Shared Services Alliance, their ability to remain autonomous as their own 501(c)(3) has enabled them to continue operating with the specific needs of their community top of mind. 

TAKE ACTION

It’s often easy to overlook childcare providers as part of the business community. Shared Services Alliances provide business leaders with a distinct opportunity to support childcare providers for the betterment of their communities. Here’s how to help:

  • Front the cost of shared services: Invest in creating and developing Shared Services Alliances.
  • Offer space to promote quality: Fund or offer your own space to centralize Alliance operations.
  • Champion better policy: Push for solutions to long-standing barriers around policy and offer a fresh approach to sustained solutions.
  • Donations: Provide time, office supplies, furniture, or services (e.g., bookkeeping, training, taxes, or auditing) to lessen financial burdens being carried by a Shared Services Alliance. 
  • Get involved with a collective: Pool contributions and reach out to your business allies and let them know about the importance of supporting childcare.

Download this case study as a PDF. This case study originally published, and is fully cited, in Leading the Way: A Guide for Business Engagement in Early Education.