How to Start a Nonprofit Child Care Center

Make a list of hot buttons that get the attention of American families and the issue of child care will be at or near the top. Working families depend on safe day care to nurture youngsters while moms and dads attend to the responsibilities of their jobs. Private centers, with small child-to-caretaker ratios, are ideal havens if parents can afford the hefty fees. Happily, nonprofits can be just as effective – even if they don’t have every bell and whistle the better-funded facilities enjoy. If you’re looking to launch a nonprofit daycare center, you’re in for an arduous process that consists of two paths. The first establishes the nonprofit foundation that governs the center; the second covers logistics encompassing building or renovating a facility, then operating it. While an ambitious adventure, launching a nonprofit day care offers entrepreneurs the happiest of endings when they discover that they’re not just opening a business; they’re changing lives – one child at a time.

Establish a nonprofit foundation

Tackle the legalities. File for a government-sanctioned charitable designation. The IRS allows nonprofits to be established under its Section 501(c)3 tax code. Incorporate the business. Consult an attorney to handle this step or use legal software available on the Internet. Contact the IRS with questions pertaining to either process: 1-800-829-4933.

Write a mission statement describing the objectives and goals of your daycare center.

Receive state operation approvals and licenses. Visit your state website to obtain application forms required to establish you as a charitable entity under the auspices of the Secretary of State. Draft by-laws to establish the center’s rules and regulations.

Use your Federal Tax ID number so you can open bank accounts, establish credit and sign leases and contracts.

Choose a board of directors to handle oversight on all matters related to the center. Boards help run nonprofits as advisers, mentors, fundraising sources and more. They should spearhead fundraising efforts to generate money needed to pay expenses not covered by public or private underwriting.

Hire an executive director to handle day-to-day operations and give that person responsibility for hiring staff. Seek professionals with solid teaching experience and degrees for all open posts.

Recruit volunteers. All nonprofits rely upon volunteers. They make up in energy and enthusiasm for fund shortages that plague most charitable organizations.

Establish the daycare facility

Assess your target area’s childcare needs. Conduct a community survey to determine the feasibility of operating a center in the area you have chosen. Include estimates of the number of children to be served and the number of existing facilities already operational.

Ask the board to help draw up a business plan with projections that run at least three but no more than five years. The plan should cover budget-specific items that range from one-time building costs to projected operating budgets with monthly expense breakouts.

Provide community officials with drawings, schematics and blueprints describing modifications you’ll make to an existing structure or construction plans drawn up to build from the ground up. Include interior and exterior layouts that define everything from playground design to interior buildouts.

Order essential items that run the gamut from kitchen appliances to classroom equipment and supplies. Your tax ID number will help you save money on everything you buy, so always bring it with you when you shop. Don't turn down offers of donations in kind. Your board can help you solicit these types of gifts.

Develop a solid program, enrichment plan and schedules. If your funding is contingent upon adhering to specific child development-based standards, be certain you follow them rather than risk losing grants, endowments and other financial aid.

Be cautious about hiring staff. Avoid potential entanglements with the law that could put your center at risk. Ask for proof of U.S. citizenship or green cards when you staff up and conduct background checks on anyone coming into contact with children.

Prior to opening your doors, comply with inspections from the health department, fire department and other agencies. Post your occupancy license. You’ve done all you can to establish a viable business at this point, so spend a little time playing with the kids to celebrate.


  • As soon as your daycare center hits its stride, aim to obtain certification. Being a certified daycare center is a terrific selling tool when parents seek assurances that the business is adhering to stringent operational guidelines that call for annual renewal.


  • You might find that zoning laws prohibit certain types of businesses from being opened in the area you've selected for your center, so check this out early.

    Be prepared for surprise inspections and other visits required of agencies funded by state, federal and local entities.