FROM DANA HUBER, NEW YORK WOMEN’S FOUNDATION
NOVEMBER 2025

AFN Short Take is a blog series highlighting insights and perspectives from recent AFN programming events.

Child care isn’t just a family concern—it’s an economic one.

Across the United States, more than half of families live in child care deserts, and states lose billions in economic activity each year because parents cannot access affordable, reliable care. The paradox is striking: child care generates over $152 billion in annual economic activity, yet the workers who provide that care—predominantly women operating small, home-based programs that serve six million children under age five—often run their businesses on razor-thin margins.

For funders, this is an asset-building issue as much as a care issue. The same barriers that limit a provider’s ability to sustain her business—lack of affordable housing, access to capital, or supportive policy—also constrain families’ ability to work, save, and build wealth. Whether focused on small business development, housing, financial health, or women’s economic security, investing in home-based child care strengthens the foundation of inclusive prosperity.

On November 3, the Asset Funders Network (AFN) convened its network to debut a new brief,
Supporting the Homes that Support the Economy, exploring how philanthropy can help close the child care gap by strengthening the financial and physical infrastructure behind home-based child care.

As Lawrence Bowdish of Wells Fargo noted at the webinar’s outset, “While the challenge is significant across the country, there are specific things we can do—across government, nonprofits, and private sector institutions—to help correct this everywhere.”

Housing as a Platform for Enterprise

For home-based child care providers, the house itself is the business. Yet suitable, affordable housing is often the hardest asset to secure.

“Families are seeking care that’s convenient, trusted, and affordable. And providers are seeking housing options that meet safety and regulatory standards without breaking their business model. These two realities are intertwined.Fran Rosebush Baylor, AFN Program Officer and author of the new brief

In listening sessions across Arizona, Bevin Parker-Cerkez, National Program Director for Child Care and Early Learning at LISC, found that housing stability is nearly synonymous with business stability. “Providers talked about stability not just as homeownership, but as having a safe, consistent, and welcoming place to live and operate,” she said. “They need trusted guidance—business coaching, income and wealth building, and help navigating housing and lending systems that weren’t designed with them in mind.”

AFN’s brief highlights fundable models addressing these overlapping needs:

  • In Austin, city grants offset property tax burdens for home-based programs.
  • In Nevada, Mission Driven Finance, together with the state, buys and renovates homes for providers, leasing them through rent-to-own agreements.
  • In Colorado, Rural Homes works with housing developers to include child care units in affordable housing developments.
  • In Phoenix, a LISC Financial Opportunity Center pilot offers business coaching and housing counseling tailored for providers.

Each initiative treats housing as both a personal and commercial asset, stabilizing small businesses, preserving community-based care, and helping women entrepreneurs build wealth.

Capital Access: Fuel for Women Entrepreneurs

With stable housing in place, providers also need affordable capital to sustain and expand their businesses. This is where CDFIs and community lenders are stepping in, designing flexible products and partnerships tailored to small, home-based enterprises.

Raquel Valdez-Sanchez, President and CEO of Business & Community Lenders of Texas (BCL), recalled her first client, Martha Flores, a grandmother operating a small program in a rural town. “Her bank didn’t see her as a fit,” she said. “So we partnered with that bank, and we helped reduce their risk. The financing gave her working capital and a vehicle to serve families, and with our ongoing coaching and support, she later transitioned to traditional lending and secured an SBA 504 loan for a commercial child care center.”

Other innovations are emerging nationwide. New York State created publicly backed CDFI loan pools to expand financing for women entrepreneurs, and in Austin, University Federal Credit Union partnered with Just Community Financial on a mortgage product designed for entrepreneurs.

In San Francisco, Dr. Shelly Masur, Vice President of Advisory and State Policy at the Low Income Investment Fund (LIIF), described how LIIF partnered with the city of San Francisco to offer a $100,000 down-payment-assistance program for family child care providers. “We pair capital with coaching,” Masur explained. “Our team helps with budgeting, lender navigation, even fire code compliance because buying the home you also work in adds a whole new layer.”

The first participant, Norma Zavaleta, had rented for 20 years before purchasing a home through the program. She expanded her enrollment, hired staff, and finally separated her living area from her business space. Beyond home ownership, even micro-grants can transform lives: one provider in another community used a part of her California Infrastructure Grant Program grant to buy a washer and dryer, saving nightly trips to the laundromat and reclaiming family time.

Policy and Systems: The Hidden Infrastructure

Strong programs can still falter under weak policy. Zoning codes, business license fees, and reimbursement rates vary widely, often creating barriers instead of support.

“We need capital and innovation,” said Natalie Renew, Executive Director of Home Grown, “but we also need policy coherence across local, state, and federal systems. Capital can only go so far if licensing, fire codes, or HOA rules make it impossible to operate.”

Child care advocates have helped pass laws in California, Oregon, Oklahoma, and Connecticut banning landlord discrimination and restrictive zoning for home-based providers. Still, Renew noted, reimbursement rates lag behind costs, and regulatory mismatches discourage new entrants.

In California, Benu Chhabra, a long-time family child care provider and statewide advocate, has seen the power of persistence. After years of organizing peers, she helped pass SB 234—the Keeping Kids Close to Home Act, which ended local zoning fees and restrictions on family child care homes. “We are more than caregivers,” she said. “We’re problem solvers and designers of solutions.”

Her advocacy extends beyond city halls. During the National Day Without Child Care, Chhabra and colleagues rallied in San Jose, urging policymakers to treat child care as essential infrastructure. “Strength shows in numbers,” she said. “When we educate ourselves and show up together, we win. But funders can help by supporting networks that lift our voices.”

Where Philanthropy Can Lead

Across the examples shared, one message is clear: child care and housing are interdependent systems that shape the nation’s economic stability. Strengthening one requires investing in the other.

“Given that staffing and location are the two major drivers of expense for childcare providers, helping address the costs by focusing on housing makes a great deal of sense. The Hersh Foundation is proud to support the innovation that is happening to address the interrelation between childcare and housing.Regen Horchow, The Hersch Foundation

Philanthropy is uniquely positioned to bring these connections to light—to test new partnerships, seed flexible capital, and support the policy alignment that allows innovation to scale.

Dive into AFN’s new brief, Supporting the Homes that Support the Economy, to explore clear pathways for funders to act—from investing in homeownership programs and CDFI partnerships to backing advocacy and network building among providers.