financial projection templates

The Daycare Business Plan Blueprint (Examples + Template)

Child day care services business plan

April 14, 2022

Adam Hoeksema

Starting a daycare business can be a daunting task. There are so many things to think about and plan for. You need to find the perfect location, get the right licenses and permits, hire qualified staff, and, most importantly, create a daycare business plan. 

Creating a daycare business plan is one of the most important steps in starting your business. A well-thought-out business plan will help you get funding, attract investors, and operate your business effectively. 

The bad news is that there is a lot of advice out there on writing a business plan. With so much information and tons of daycare business plan examples to choose from, it can be overwhelming to know where to start. 

The good news is, we've got you covered. In this article, we'll give you a comprehensive guide on how to write a daycare business plan. We will also provide some examples and a free daycare business plan template to get you started. 

But First...Is a Daycare a Good Business to Start? 

Before we talk about how to create a daycare business plan, let's first answer the question: is starting a daycare a good business to get into? 

The answer is a resounding yes! The daycare industry is growing rapidly. It is one of the few businesses that are not only recession-proof but also thrives in uncertain economic times. 

According to the National Association of Child Care Resource & Referral Agencies (NACCRRA), the demand for child care services has increased by 26% over the last decade. This demand is only expected to grow in the coming years. 

When it comes to profitability, the daycare industry is very attractive. According to IBISWorld , the average profit margin for a daycare business is around 15%. That's higher than the average for most other industries! 

If you're thinking about starting a daycare business, know that you are getting into a very profitable and in-demand industry. Now let's talk about how to write a daycare business plan that will help you start and grow your business successfully.

How to Create a Daycare Business Plan 

A daycare business plan is as simple as a word document with the following sections:

Business Model

Executive Summary

This article will provide context of what to include in each section of your daycare business plan. As you work on writing your business plan, you will want to grab our daycare financial projection template as well in order to complete the financial plan section.

Your daycare business plan should be an elevator pitch in itself. It should be attractive to potential partners and investors. Basically, it should give them a clear idea of your business, where it is located, what services you offer, who your target market is, and how you plan to make money. 

Creating a daycare business plan doesn't have to be complicated. In fact, the cheapest and easiest approach is to simply start with a blank word document and work through each of the above sections, it can be pretty easy. Here is a step-by-step guide on how to create a daycare business plan: 

Create a Compelling Business Description

Your daycare business's unique selling point (USP) should be the first thing you include in your business plan. What is it that makes your daycare center different from all the others? 

This description should be the foundation of your marketing efforts as well.

There are a few questions you should answer in your company description. They include:

What's your Curriculum Based On?

Potential investors, partners, and even customers will be interested in knowing what your curriculum is based on. This will help them understand the environment children will be in a while under your care. 

When describing your curriculum, make sure to include:

For example, if your daycare is unique by offering a Montessori curriculum, you will want to highlight that.  In fact, you can learn more about how to start a Montessori program here . 

How Big is Your Facility? 

The size of your facility will say a lot about the type of operation you're running. Are you a small, home-based daycare or a large center with multiple classrooms? 

This section of your business plan may include: 

Who Is Your Target Market? 

You can't market to everyone, so you must identify your target market. This will help you focus your marketing efforts and ensure that you're reaching the right people. 

Below is a daycare business plan example that shows how your business description should be:

“ABC Daycare is a small, home-based daycare located in San Francisco, CA. We cater to children aged 0-12 years old and offer full-time, part-time, and drop-in care. 
Our curriculum is based on the Reggio Emilia approach, emphasizing hands-on learning and collaboration. Activities and programs include arts and crafts, music, and outdoor play. 
Our facility can accommodate up to 12 children at a time. We have a staff of four employees who are all CPR and First Aid certified. 
Our target market is working parents in the city who need quality child care but can't afford the rates of larger daycare centers.  We've created an affordable subscription-based pricing model for our target market to fulfill the demand. We generate revenue through monthly subscriptions and have low operating costs due to our small size. 
Our suppliers are local businesses that provide us with food, toys, and other supplies.” 

Do a Thorough Market Analysis

After writing a compelling description of your business, you need to do a thorough marketing analysis. This analysis will help you determine your target market, what type of advertising and promotion will work best, and how to price your services. 

You should also research the competition and see what they are doing right and wrong. This information will be invaluable as you create your daycare business plan.

Keep these things in mind when doing a market analysis:

The Size of Your Market

This is determined by the number of potential customers in your area who need or want your services. 

For example, if you live in a small town with only a few thousand people, there may not be enough demand to support a large daycare facility. 

On the other hand, if you live in a city with hundreds of thousands of people, there may be room for multiple daycare facilities. 

Your target market is the segment of the population that is most likely to use your services. This includes factors like age, income, education, and location. 

After you've identified your target market, you need to show how you plan on fulfilling the demand. This is where your business model comes in. 

Your business model is a detailed description of how your daycare will operate daily. It should include: 

Your business model should be detailed and easy to understand. It should also be realistic and achievable. 

Here is a daycare business plan example of a business model for a small daycare center: 

“The daycare will be open Monday through Friday from six in the morning to six at night. We will offer care for children ages six weeks to twelve years old. 
Our rates will be $50 per week for one child and $40 per week for each additional child from the same family. We will offer a discount of $20 per week for families who enroll their children for an entire year. 
We will generate revenue by charging weekly rates for our services. Our operating costs will include rent, utilities, supplies, and salaries for our employees. Also, we will acquire customers through online advertising and word-of-mouth.” 

As you can see, a business model is a detailed description of how your business will operate. It's essential to have one in place before promoting and selling your services. 

One thing you should not forget to include in your daycare business plan is the location of your business and your rental agreement. If you are renting a space, including the terms of your agreement and how long you have the space. If you are purchasing a property, include information on the property, such as square footage and any special features that will help your business stand out. 

This daycare business plan example shows you how to include this vital information: 

“The daycare will be located at 123 Main Street in a commercial space currently leased by the owner. The lease agreement is for three years with an option to renew for an additional three years. The monthly rent is $2000, and the security deposit is $3000. 
The daycare will have exclusive use of the main floor, including a large open play area, a small kitchen, two bathrooms, and four classrooms. The daycare will also have access to the outdoor playground.
80% of our space will be used for childcare, with the other 20% used for our administrative offices and staff lounge. 
We have chosen this location because it is close to several residential neighborhoods and has easy access to public transportation. The space is also large enough to accommodate our future growth.” 

There are many daycare business plan templates you can use to help you get started. This is a basic outline of what should be included.

Daycare Marketing Plan

Most daycare business plan templates will include a section for your marketing plan. Most people overlook the marketing aspect of their business, but it is one of the most important pieces of your puzzle. 

In your business plan, you need to outline your target market, your marketing strategies, and how you plan on executing those strategies. 

You also need to set aside a budget for your marketing efforts. Many people make the mistake of thinking that they don't need to spend money on marketing, but that couldn't be further from the truth. 

The following daycare business plan example shows you how you should describe your marketing efforts:

"Our target market is working for families with children between six weeks and five years old. We will reach our target market through online and offline marketing efforts. 
Some of the offline marketing strategies we will use include print advertising, flyers, and word-of-mouth referrals. We will use a mix of SEO, content marketing, and social media for online marketing. 
We have set aside a budget of $500 per month for our marketing efforts."

As you can see from the example above, your marketing plan should be clear, concise, and to the point. Don't forget to include a budget!

Daycare Financial Plan

Your business plan should include a financial plan section. This is where you'll lay out how much money you need to start or grow your business. Be specific and include dollar amounts. If you're seeking a loan, including information on how much you're requesting and how you'll use the funds.

You should also include a detailed budget in your business plan. Your budget should include all of your projected income and expenses for at least the first year of operation. Creating a budget will help you get a clear picture of what it will cost to start and operate your business.

This section should include projected costs for:

Startup costs are another vital item to include in your business plan. This is the money you need to purchase equipment, furniture, or any other items to get your business up and running.

If you plan to secure a loan, your lender will want to see a detailed business plan with information on how you plan to use the loan funds. Ensure you include this information in your business plan to increase your chances of securing funding.

If you're seeking funding from investors, you'll need to include information on how they will be compensated. This is typically done through equity, a percentage ownership stake in your business. 

For example, if you seek $100,000 in funding and offer a 20% equity stake, the investor will own 20% of your business. 

Make sure you use a daycare business plan template that includes a section on funding to ensure you include all the necessary information. If you’re planning to get a loan or seek investment, you’re going to need full financial projections. Our daycare financial model will provide up to 5 years of projected income statements, cash flow and balance sheet forecasts.

Next I want to answer some key financial questions for you as you consider how to forecast your daycare financials. I am going to hit on:

Let’s dive into some key questions. 

How much does it cost to start a daycare? 

It costs between $10,000 and $50,000 to start an in-home daycare business according to Bizfluent . 

It costs between $59,000 and $3 million dollars to start a daycare facility according to Bizfluent . 

So obviously this is a huge range in startup costs.  The main thing that will determine your startup costs is your daycare facility.  Depending on how large your daycare is, whether you are buying, building, or leasing the space, and how much renovation needs to be done, your startup costs can vary drastically.  

Some tips to help you estimate a cost of a daycare facility:

How much revenue can a daycare business make?

A daycare facility can generate $17,680 in revenue per year per child according to Zippia .  

A daycare business with 100 children can generate over $1.75 million per year in annual revenue based on our average revenue per child of $17,680. 

How much does daycare cost?

The average cost of daycare is $17,680 per year, per child in the U.S. according to Zippia . 

This means that the average monthly cost of daycare in the U.S. is roughly $1,475.

What is the typical child to staff ratio for a daycare? 

The typical child to staff ratios for a daycare are:

Source -

These ratios will help you estimate how many staff members you will need.  Our financial projection template makes this easy.  Just enter in your ratios and the number of children you expect to have in each age group and the model will automatically calculate the number of staff required to maintain your ratios.  See the input daycare staffing table below:

Child day care services business plan

What are the typical operating costs for a daycare? 

Your largest operating expense for a daycare facility is likely to be your rent. 

It should cost between $20 and $30 per square foot to rent a daycare center space based on available spaces on Loopnet . 

Other operating costs for a daycare center include:

You can see how you can enter in your operating costs into our financial model below:

Child day care services business plan

How much profit can a daycare make? 

The average daycare profit margin is 6.5% according to Daycare Business Boss . 

Once you complete your projections you will want to take a look at our At a Glance tab to make sure that your projected profit margins aren’t way out of line with the industry norms.  You can find projected profit margins for your daycare below:

Child day care services business plan

This is an important aspect that you may not find in most daycare business plan templates, but it's still essential. An appendix includes any additional information to help you understand your business plan. This might include things like your:

This section adds credibility to your daycare business plan and shows that you've done your homework. Including all of the necessary details in your appendix will give investors peace of mind and show that you're serious about starting a daycare center.

An executive summary is a brief overview of your business plan and is often considered the most important section. It should be two pages long, with a clear description of your business, your goals, and why you will achieve them.

There are several key elements to include in your executive summary:

The executive summary is the most crucial section of your business plan because it gives investors and lenders a quick overview of your company and its prospects. Be sure to include all of the key elements listed above, and keep it under two pages in length.

What Are The Benefits of Creating a Daycare Business Plan?

Research shows that a business plan helps business owners make better decisions, turn abstract goals into tangible objectives, and track progress over time. But what does this mean for those who want to open a daycare? 

Creating a business plan forces you to think through every step of starting your company. It's a valuable exercise that can save you time and money in the long run. Even if you don't end up following your business plan to a tee, the process of writing it will help you better understand your business and what needs to be done to make it successful. 

There are many benefits to creating a daycare business plan, including: 

Gives You a Roadmap to Follow

As with any journey, it's always helpful to have a map. A business plan is that map for your daycare business. It will give you a clear idea of where you want to go and how you can get there. 

Helps You Secure Funding

A business plan is essential if you're looking for investors or loans. It will show potential lenders and investors that you've put thought into your business and have a solid strategy for making it successful. 

Ensures Your Daycare Business is Feasible

When you're starting a business, it's easy to get caught up in the excitement and overlook potential problems. A business plan forces you to take a step back and assess whether your business is truly viable. It also helps you identify any areas where additional research is needed. 

Final Thoughts

A daycare business plan is a valuable tool to help you make your business successful. 

It is worth noting that your business plan is not a one-time exercise but should be updated regularly as your business grows and changes. This document is meant to be a living document that evolves as your business does. 

If you're unsure where to start, there are plenty of resources available to help you, including daycare business plan examples online, books, and daycare business plan templates. 

You can also use our daycare projection template to get your financial plan ironed out and ready for your business plan.

The most important thing is just to get started. The sooner you create your business plan, the better prepared you will be for success.

You can get the Daycare Facility financial projection template here!

The template is simple to use and will save you loads of time while still producing professional looking daycare projections. ProjectionHub has helped more than 50,000 businesses create financial projections so you can be confident that you can do it too.

The daycare business projection template includes:

5 Year Daycare Facility Pro Forma Financial Statements

CPA Developed & Completely Customizable

Free Support & Projections Review

Compatible with Google Sheets

Free expert review of your completed projections

The template is easy to use and you do not need to be an excel wizard to fill it out. Editable cells are highlighted in blue, a video guide is included, and our team is available to answer any questions you have.

You can see the complete walkthrough and demonstration of the daycare business forecast template here:

Get the template today for just $79

Child day care services business plan

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About the Author

Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 40,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.

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Child Day Care Services Business Plan

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Kid's Community College

Financial plan investor-ready personnel plan .">.

  • Adequate start-up capital is assumed, along with an SBA 5-year guaranteed loan.

Important Assumptions

The Kid’s Community College® financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions.  The monthly assumptions are included in the appendices.  From the beginning, it is recognized that total enrollment is critical, which is a factor that must be influenced immediately.  Interest rates, tax rates, and personnel burden are based on conservative assumptions. 

The most important underlying assumption is that there is a strong need for the business in the Lake St. Charles community. 

Key Financial Indicators

The following benchmark chart indicates the key financial indicators for the first three years.  We foresee a gradual growth in sales (enrollment) and operating expenses into the second and third year.

It is projected that the raw gross margin will remain stable for the first three years since expenses are relatively indirect in the service based course work industry.  Operating expenses increase gradually as enrollment increases.

Enrollment is very important.  We must maintain an average weekly enrollment of 34 students for fixed cost coverage. 

Child day care services business plan, financial plan chart image

Break-even Analysis

For the break-even analysis, start-up monthly running costs assumptions are shown in the the table below, including a three person payroll, rent, utilities and an estimation of other running costs.  Payroll, at median market averages, was presented previously in the Personnel table. 

Based on these assumptions, the chart below shows the enrollment of students per month needed to break-even.  This represents about 46% of our allowable monthly enrollment based on state and county course work guidelines.

Child day care services business plan, financial plan chart image

Projected Profit and Loss

Our projected profit and loss is shown on the following table, with sales increasing from the first year to the third. 

In years two and three, we are projecting full enrollment regarding cost of sales and gross margin.  The investment return in these years supports the goal of opening another campus at the end of the second year and begin the franchise offering by the end of the third year.  Profit from the additional campuses and income from franchising are not included in this business plan. 

The detailed monthly projections are included in the appendices. 

Child day care services business plan, financial plan chart image

Projected Cash Flow

The following cash flow projections show the annual amounts only, significant for the first year mainly in the amounts projected in cash sales and payables. 

Cash flow projections are critical to the success of Kid’s Community College®.  The monthly cash flow is shown in the illustration, with one bar representing the cash flow per month and the other the monthly cash balance.  The annual cash flow figures are included here and the more important detailed monthly numbers are included in the appendices. 

Child day care services business plan, financial plan chart image

Projected Balance Sheet

The balance sheet in the following table shows managed but sufficient growth of net worth, and a gradually sufficient healthy financial position.  The monthly estimates are included in the appendices.

Business Ratios

The following table shows the projected businesses ratios for our industry: Child Day Care services, SIC code 8351. Kid’s Community College® expects to maintain healthy ratios for profitability, risk, and return.

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Child Day Care Services Business Plan Kid's Community College


Executive Summary 1.0 Executive Summary Kid's Community College® aims to prepare its students to excel as young leaders of tomorrow by combining an exclusive collegiate-based curriculum tailored specifically for children with enhanced, first class child care services. Unlike our competitors, we offer advanced technology programs, after-school tutoring, and activities such as arts and crafts, dance, theatre and gymnastics, all in one location. Kid's Community College is a privately held corporation run by its owner, Timothy Bernard Kilpatrick, Sr. Mr. Kilpatrick has 17 years of Executive Management (VP) and Budgeting experience, and extensive experience with budgeting methodologies and strategic planning, including the Balanced Scorecard approach. His advanced degree (and interest) in computer science is the driving force behind our technology component. He will be supported in daily operations by an industry consultant, a campus director, and a VP of educational operations, all with extensive experience in child care fields. With inflation continuing to rise each year, the typical American family now requires dual or supplemental incomes. This trend has created a need for quality child care services. The population growth rate in the Riverview area of Hillsborough County is now over 14.6%, leading us to anticipate expanding market potential for this industry in our local area. Price, service, certification and reputation are critical success factors in the child care services industry. Kid's Community College® will compete well in our market by offering competitive prices, high-quality child care services, and leading-edge educational programs with certified, college-educated instructors, and by maintaining an excellent reputation with parents and the community we serve. Kid's Community College® will focus on two subdivisions: 'Lake St. Charles' and 'The Villages of Lake St. Charles,' which are new upscale community developments within a 2 square mile radius, boasting over 900 new homes. Our target customers are dual-income, middle-class families who value the quality of education and child care we provide for their children, ages 4 months to 12 years. We will open for business on January 1, 2003, starting with an initial enrollment of 13 students. We project healthy revenues by the end of the first year, and expect to nearly triple that by the end of 2005. Our biggest operating expenses will be compensation at industry standard rates for our highly-qualified personnel, and rent on our facilities, improved for our purposes during the start-up period. We would like to grow into four campuses, eventually, but growth is planned conservatively, to be financed from existing cash flow as we go. We anticipate a net profit beginning in our second year. To these ends, we are putting significant investment in the business, and are seeking a matching amount in the form of an SBA loan.

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Daycare Business Plan Template

Business Plan Outline

  • Daycare Business Plan Home
  • 1. Executive Summary
  • 2. Company Overview
  • 3. Industry Analysis
  • 4. Customer Analysis
  • 5. Competitive Analysis
  • 6. Marketing Plan
  • 7. Operations Plan
  • 8. Management Team
  • 9. Financial Plan

Daycare Business Plan

You’ve come to the right place to easily complete your daycare business plan.

We have helped over 100,000 entrepreneurs and business owners create business plans and many have used them to start or grow their daycares.

How To Write a Daycare Business Plan & Example

Below are links to each section of your daycare business plan template:

  • Executive Summary – This is a brief overview of your daycare business plan. The executive summary should be no more than 2 pages long, with brief summaries of other sections of the plan.
  • Company Overview – This is where you provide a business description, including your company history, business structure, and any pertinent information about the daycare center.
  • Industry Analysis – The industry analysis describes the daycare industry, including market size and trends.
  • Customer Analysis – This section of your daycare business plan describes your target market and potential customers. You will detail the demographics, needs, and wants of your target audience and how you plan to meet those needs.
  • Competitive Analysis – The competition in your local area will be described here, along with how your daycare business will compete in the market.
  • Marketing Plan – Your marketing plan will describe your daycare’s marketing strategy, including your advertising and promotion plans.
  • Operations Plan – This section of your business plan describes how your daycare will be operated on a day-to-day basis. It may also include your long-term plans for expansion and the milestones you want to achieve to get there.
  • Management Team – The management team section of your business plan should describe the experience and qualifications of your management team including the director, teachers, and support staff.
  • Financial Plan – The financial plan section of your daycare business plan should include your financial statements, such as your income statement, balance sheet, and cash flow statement.

Next Section: Executive Summary >

Daycare Business Plan FAQs

What is a daycare business plan.

A daycare business plan is a plan to start and/or grow your daycare business. Among other things, a good daycare business plan will outline your business concept, identify your target customers, present research about the child care industry, detail your marketing plan, and provide your financial plan.

You can  easily complete your daycare business plan using our Daycare Business Plan Template here .

What Are the Main Types of Daycare Businesses?

There are different types of daycare businesses that parents can choose from for their child's needs. A traditional daycare center is most sought after by working parents since it provides child care during regular work hours. There are also in-home daycare centers that are licensed to provide child care in a home setting with fewer children. Other child care centers provide hourly care services by trusted babysitters or nannies and are operating on an as-needed basis.

What Are the Main Sources of Revenues and Expenses for a Daycare Business?

The primary source of revenue for a daycare business is its child care services.

Some key expenses for a daycare business is rent, salaries for staff, utilities and snacks expenses for the children.

How Do You Get Funding for Your Day care Business Plan?

A daycare business is typically funded through small business loans, personal savings, credit card financing and/or angel investors. This is true for a business plan for daycare or a childcare business plan.

What are the Steps To Start a Daycare Business?

Starting a daycare business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Day care Business Plan - The first step in starting a business is to create a detailed daycare business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.  

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your daycare business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your daycare business is in compliance with local laws.

3. Register Your Daycare Business - Once you have chosen a legal structure, the next step is to register your daycare business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your daycare business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Daycare Equipment & Supplies - In order to start your daycare business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your daycare business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful daycare business:

Where Can I Get a Daycare Business Plan Example PDF?

You can download our daycare business plan  PDF template here . This is a business plan template you can use in PDF format.

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Daycare Business Plan

by Nicci Troiani | Dec 15, 2020 | uncategorized

Coworkers reviewing daycare business plans

How to Create a Daycare Business Plan

High-quality child care services are in high demand right now. Opening up a daycare is a great way to test your entrepreneurial skills and serve local families in the process. But just like any other venture, you need to have a solid business plan in place well before opening your doors to the public.

Thankfully, you don’t need an MBA to run a successful business—just some careful planning and a lot of patience. We’ve put together some tips on creating a daycare business plan that will help get your center off the ground.

Who Should Have a Child Care Business Plan?

Unless you’re planning on starting the next Amazon or Nike, your business plan can be relatively simple. Business plans are simply to help you solidify your goals, and to create a roadmap on how you’re going to achieve those goals for your new business.

Our business plan roadmap tips will be most helpful to those starting brand new daycares, but the topics we touch on can be helpful for other types of child care businesses. This includes daycare centers who have been operating for a while but need to rethink their business strategy, preschools, or people who want to invest in a daycare franchise.

Before we get down to business, let’s remember that your daycare business plan doesn’t have to be the most professional-looking document in the world. They are mainly for you to help wrap your head around everything you need to do before opening. As long as the business plan is helpful for you, it’s doing its job.

Woman running a daycare business

Business Description

The first part of your business plan should be to nail down the description of your business. Seems easy, but it takes a lot of introspection. This is where you will talk about your motivation for opening a daycare, a mission statement, and any goals you have for your new business. Is there a number of customers you want to hit your first year? What will motivate you to keep going when enrollments take a dive? Putting these things on paper will help make your business more tangible, and help guide your more granular business decisions going forward.

Daycare Licensing and Accreditation

Before getting too far into your research, you need to check what the daycare licensing and accreditation rules are in your state. This will set rules for your business such as the amount of children you’re legally allowed to care of, the required ratio of child-to-staff, and staff training requirements. Accreditations also show parents that your daycare meets certain quality, safety, and academic standards.

The National Association for the Education of Young Children (NAEYC) and the National Association for Family Child Care (NAFCC) are the most common accreditation organizations in the U.S. Once you have a better understanding of what standards are set for daycares in your state, you use that as a guide for other parts of your business plan like pricing, child care staff needs, and health and safety measures.

Market Analysis

The next part of your child care business plan is to do some research on the daycare market. You probably already know that starting a business is always hard, but what does the daycare industry as a whole look like? What is it projected to look like in the next few years? Right now in the middle of a global pandemic, child care centers are struggling to stay open—but they’re still an absolute necessity for many families. What does that mean for opening a daycare center right now? The market research guide from the U.S. Small Business Administration is a great place to start. You’ll want to look at factors like:

Pricing. What enrollment rates and pricing models are common for daycares in your area? Location. Will you be competing with a lot of other child care centers in your preferred neighborhood? Demand. Are there lots of young families in your area? Or are you living in a child care desert? Economic Indicators. What does the average income and employment rate look like in the community?

Child day care services business plan

Competitor Analysis

Part of your market analysis will be to do some research on your competition. Daycare services across the country are in high demand, but does your preferred neighborhood already have a successful center you’ll have to compete with? Do some research on the other child care centers in your preferred area of operation (and maybe a little further) to see who you’ll be up against.

You’ll want to look at their pricing model, the services they offer, and anything else that makes them stand out. Maybe you’ll find a service they’re not offering that you can use to your advantage in your own center. You’ll also want to look at the demographics in your preferred area of operation. What’s the median income bracket? Are there a lot of young families close by? Are your competitors offering services you can’t yet compete with yet?

You have two main options for where to set up your daycare center: inside your home or renting out a space. Which one you decide to do will depend mainly on your business goals, but here are some other factors to consider:

Cost. Renting out a daycare facility will cost more than simply setting up shop at home. Commute. You’ll save time and money from not having to commute to work every day. Home life. It’s difficult for home-run daycares to separate home life and work life. It can also be a strain on other members of your family. Size. Home daycares limit how many kids you are legally allowed to care for, which limits your revenue. Taxes. You may receive more tax benefits from combining your workplace with your home.

Now is the time when you need to be brutally honest with yourself about your finances. Your child care business plan needs to include a section about how it will be financially run:

Are you expecting to receive or apply for any outside funding like grants, community assistance, or donations? What types of insurance will you need as a small business and employer? What taxes will you need to pay as a small business? What tax benefits can you receive? What one-time startup costs do you have to cover before opening?

After you figure out your one-time and recurring expenses, you’ll start to get a better picture of what your pricing structure should look like.

Pricing Structure

Part of your financial analysis should include your daycare’s pricing structure for customers. How much you charge for your services will depend on a number of factors. You’ll need to take into account the cost of operating and maintaining your business, the pricing of other daycare services in the area, and what the market can reasonably afford. You can get more information about the average annual and monthly cost of child care in your state at the Economic Policy Institute.

Included in your pricing structure strategy should be how often you’ll be billing customers. Make sure you keep a regular schedule with an automatic billing system to help your own bookkeeping and to make it easy for families to pay you on time.

Don’t forget to look into the tax benefits you can receive for running your own business. Especially if you’re operating your daycare from your own home, you can often write-off business expenses like food, internet, and even portions of your mortgage. You’ll want to keep a detailed log of all personal and business expenses, and maybe even talk to a tax professional to make sure you’re safe from a legal perspective, and getting the most out of your tax benefits.

If you’re planning on opening a daycare inside your own home with just a handful of children to care for, you probably don’t need to hire a staff. But if you are opening a full daycare facility, you’ll need reinforcements . Hiring qualified a childcare team takes a lot of time. You want to make sure they’re (of course) good with kids, have the proper child care certifications, and have a child care philosophy that aligns with you and your center. Along with their base salary, you need to figure out how often you’ll pay staff, any benefits you’ll offer, and how to decide work schedules.

You can’t expect people to automatically start enrolling as soon as you open your doors. In order for parents around the community to hear about you and want to sign up, you need a solid marketing plan . At the very least, part of your business plan needs to touch on how you’re going to approach these parts of marketing your daycare:

Social media. Instagram and Facebook will be your best bets for connecting with young families. Make sure to allot some time every week (or every day if you can swing it) to promote your center on social media. Networking. Connecting face-to-face with parents is crucial for daycares. See what events are happening in your local community and be there to get the word out. Online ads. You’ll want to set aside part of your marketing budget on social media ads and Google ads. This will bring more people to your business and (hopefully) sign up. Website. Every business today needs a professional website. You’ll most likely need to hire a web designer/developer to create your site. Take a look at other daycare websites to see what you want yours to look like.

Child day care services business plan

The Bottom Line

Putting together your daycare business plan before you start buying toys in bulk and stocking up on Clorox wipes will make your day-to-day work run smoother. That way, you’ll be able to focus more of your time on the children—and isn’t that why you want to open a daycare in the first place?

Once you have your child care business plan fleshed out, you want to make sure the everyday operations will run smoothly for you, your staff, and your customers. Smartcare’s child care administration software makes running a daycare simple. Learn more about our services by scheduling a demo or calling our customer service team today.

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Child day care services business plan

So you have this idea to start a daycare business . You love working with kids and are good at it. Plus, what could be more fulfilling than raising up the next generation of world changers? It sounds like a dream job!

But building a successful daycare business takes more than passion. You’ll also need a business plan. 

Let’s take a look at five steps you can take to create a daycare business plan. 

Why You Need a Daycare Business Plan

Nobody is going to force you to create a daycare business plan. Yet we highly recommend creating one. 

There are two main reasons::

Write Your Daycare Business Plan in 5 Steps

The phrase “business plan” can be kind of intimidating. But crafting one for your child care center doesn’t have to be scary. Just follow the five steps below:

1. Executive Summary

Daycare business plans contain a lot of information. To make things easier on your business partners, future employees and potential lenders, start your plan with an executive summary.

The executive summary section of your business plan is exactly what it sounds like: a quick summation of all the information to follow. For example, your summary should include basic things such as your business name and contact details. It should also include a glimpse into your vision, such as how you’ll run your business and who your target customers are.

Basically, if it’s important, you should quickly mention it in your executive summary.

Write your executive summary after you’ve written the rest of your daycare business plan. This will make the process much easier. Just remember to put your summary at the beginning once it’s done.

2. Business Information

The next section of your daycare business plan should cover business information.

Why are you starting a daycare business and what’s your mission statement? Do you have specific goals you hope to achieve? Will your company be structured as a corporation, LLC, partnership or sole proprietorship? And what child care services will you provide? 

You also should share your child care center’s physical location. Are you planning to start an in-home business or will you rent a commercial space? In-home operations often are cheaper to establish and maintain, but don’t have the same income potential as full centers.

Additionally, list information regarding your competitors. How many other daycares are there in your area? Do any of them provide similar services? If so, are there enough families to support all of you? Include any information you can glean about their operations.

3. Operational Plan

How do you plan to run your child care business? Will you hire employees ? If so, what will their responsibilities be? This is all important information to include in your daycare business plan.

Don’t get overwhelmed, though. If you’re still in the early planning stages, you don’t have to have every detail ironed out yet. You can always update your business plan in the future. In fact, your plan should be a living document that grows with your business.

For now, just include as many operational details as you can. For example, if you’ve created policies and procedures for specific scenarios, or a handbook detailing your daycare’s approach to child care, add them to this section of your business plan.

4. Financial Details

Child day care services business plan

Your daycare business plan definitely should include financial details, especially if you plan to approach lenders for a loan. They will absolutely require these details.

You’ll need to include information regarding start-up expenses , such as the cost to renovate your building and purchase equipment/necessities like toys, cribs and curriculum. You’ll also need to estimate ongoing expenses like the cost of utilities, food and your marketing efforts.

Next, estimate the money your business will bring in. What will you charge for your child care services? How many kids can you watch at one time? How much will you pay your employees? Use this information to develop an approximate monthly income.

Finally, include information regarding your current financial situation and any grants and donations you’ve received. 

If it has to do with money, put it in this section.

5. Marketing Strategies

Lastly, your daycare business plan should include your marketing strategy. How will you attract parents to your company and entice them to pay for your services? 

Start this section by outlining your target audience. Include demographic information like their approximate age, where they live and their household income level. If you plan to target a specific niche — kids with special needs, for example — add this information as well.

Once your ideal customer is defined, explain how you plan to reach them. We suggest a mix of online and offline marketing strategies. For instance, you could pass out flyers at local events and set up sandwich boards around your location. You could also invest in social media marketing and SEO campaigns to drive online traffic to your website .

There are plenty of ways to market your new business. Over time you’ll discover which are most effective. But for now, include every strategy you want to try.

Your Turn: Prep Your Daycare Business Plan

Child day care services business plan

As long as your business plan has the information outlined in this article and is structured in an easy-to-understand way, your plan will do what it’s supposed to: keep you organized and help you secure funding.

So don’t be intimidated. Dive in and create a business plan that you can be proud of. Your child care business will be stronger because of it.

Once your daycare is up and running, Procare Solutions can help you fulfill the goals laid out in your plan.

Procare’s software helps you manage every part of your child care business, from tracking attendance to accepting payments to engaging with parents. All of our tools are designed to streamline tedious tasks so you can focus on what you do best: caring for kids.

Request a Demo

Request a demo and talk with one of our friendly Procare experts to get a tailored child care solution for the unique needs of your business.

We know the business of child care. For more than 30 years we’ve been guiding child care professionals just like you to help stay connected and in control.

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Trend report 2023: how software helps child care centers track waitlists, 5 questions parents should ask about a child care center’s curriculum, trend report 2023: how child care staff management can boost enrollment.

How to Start a Daycare Business


Do you love caring for children? Does spending your day finger painting, reading Dr. Seuss, and playing ring-around-the-rosie sound like something you’d enjoy doing? Then opening a daycare might be just the thing for you, and this guide can show you how.

To get a sense of how to start a daycare business, we talked with Lindsey Roemen, owner of Lindsey’s Family Daycare in Larchwood, Iowa, and Shalonda Owens, owner of Fruitful Trees Learning Center in Columbus, Ohio, about their experiences as daycare owners.

Lindsey says working from home and being able to stay home with your children are great perks to daycare ownership, but it also takes a special person. “You can’t go into daycare just to stay home with your kids,” she says. “You have to be a kind, patient person.”

The outlook for daycare businesses

According to the U.S. Bureau of Labor Statistics, daycare businesses will see some of the fastest employment growth out of all industries through 2020.

This means now is an excellent time for opening a daycare. An in-home daycare offers the obvious perks of working from home and spending time with your children, but even if you don’t have any little ones of your own, an in-home daycare can be a fun business for anyone who loves kids. Working parents will always need someone to look after their children, meaning a daycare business will never become obsolete. See Also:  Day Care Sample Business Plan

Should you franchise?

You can skip a lot of steps of starting a daycare by purchasing a daycare franchise. But for most people, this option is cost prohibitive: The cheapest franchises start at $59,000 and can cost up to $3 million.

This guide will focus primarily on how to start a daycare center in your own home, which has many benefits: fewer expenses, more flexible hours, and convenience. Read on to learn the ins and outs of how to open a daycare.


Step 1: Learn about licensing

The first step to starting a daycare is to contact your state Daycare Licensing Agency. “You have to call your state and see what is required of you,” says Lindsey Roemen. “Every state is different and has different guidelines. You have to weigh pros and cons and see if you can make it work in your home.”

Not all states require licenses, but you almost always need to complete a registration, depending on how many children you will be caring for.  gives a comprehensive overview of each state’s licensing requirements, so one of your first tasks will be determining what kind of licensing your state requires, and how many children you plan to care for at once. Many states only require licensing if you’re caring for five or more children, so perhaps you’ll choose to avoid the licensing process and keep your enrollment low.

“There are a lot of people who quit daycare or dropped their numbers down because they didn’t want to be registered,” Lindsey says. When you have a better idea of what your state requires, it will help you identify your own business plan.

Another consideration is your Home Owner’s Association, if you belong to one. The enrollment numbers at Shalonda Owens’ daycare, Fruitful Trees Learning Center, were limited by her HOA. “Where I live, my HOA will not allow me to have over six kids at one time,” she says.

Here are some examples of possible licensing requirements:

Once you have read the licensing requirements carefully, you might want to make an appointment with licensing specialists to ask questions and review the procedure for obtaining your license (if you need one). It might be helpful for them to visit your home, as well.

Step 2: Identify existing services

Now that you have reviewed the licensing regulations in your state and determined if starting a daycare is a feasible option for you, it’s time to look at other daycares in your area. This will be your competition and colleagues.

Compile a list of daycares in your area with the following information:

This information will make it easier for you to decide these things when opening your home daycare.

Ask yourself: Where is the gap between community need and existing services? What needs aren’t being met? If there is a saturation in your area of facilities offering full-time care for two-to-five-year-olds during traditional, weekday hours, then maybe your home daycare could offer very early morning, overnight, weekend, or evening care, or specifically care for infants up to two years old. By identifying the existing daycares in your area, you can determine what your community needs and what will make your business successful.

Where is the gap between community need and existing services? What needs aren’t being met? If there is a saturation in your area of facilities offering full-time care for two-to-five-year-olds during traditional, weekday hours, then maybe your home daycare could offer very early morning, overnight, weekend, or evening care, or specifically care for infants up to two years old. By identifying the existing daycares in your area, you can determine what your community needs, and what will make your business successful.

In addition to knowing the competition, there are other benefits to knowing the other daycare providers in your area. In Larchwood, Iowa, there are six home daycare providers including Lindsey’s, as well as a daycare center. When Lindsey had surgery, all the home providers pitched in to cover for her and take her children while she recovered. “We back up for each other,” Lindsey says. “We get together once every other week and talk about what we’re doing.”

To obtain information about other centers in your area, you can contact your county licensing office, spend some time searching online, or even just browse through the Yellow Pages.

Step 3: Create a business plan

You have a business idea and now it’s time to to turn that idea into a plan. This requires some specific decision making and research to nail down the details of your daycare.

1. Work out the logistics

Here are some logistical questions to get you started:

How many children will you care for? Many states have strict rules about the maximum number of children of certain ages allowed in a home daycare. “Start out small,” Lindsey says. “I think it’s important to get yourself used to it. If you start out smaller, you’ll be more successful.”

What is the minimum and maximum age for enrollment at your daycare? At Lindsey’s Family Daycare, the youngest child is eight weeks and the oldest is nine years. “It just seems like parents typically around 10 years old start giving them more responsibility and letting them stay home,” Lindsey says.

What time will you open your doors and what time do children need to be picked up? There are a lot of options around timing, and it’s a good idea to check out your competition before making this decision. Some non-traditional options include after-school care (this also opens up the ages of children you can accommodate to include school-age kids), drop-in or demand care, or part-time care.

Will you provide food or do children need to bring snacks and lunches? If you will provide food, check out the Child and Adult Care Food Program (CACFP),  a food cost reimbursement program available to home daycares.

Will you be hiring more staff? What about an accountant or bookkeeper? Shalonda encourages outsourcing for daycare owners when possible. “You need strong administrative skills,” she says. “I’m the type that I hire my weakness. I have a friend that helps me with newsletters and things like that.”

A lot of these answers will be provided for you by your regulations, but some of them will be entirely up to your personal preference and the limitations of your space.

2. Come up with your name and philosophy

The name of your daycare will become your brand. You may want to include your personal name, as Lindsey did with “Lindsey’s Family Daycare,” or you may want to choose something completely different, like Shalonda Owens’ “Fruitful Trees Learning Center.”

Choosing an educational philosophy might help you create a name for your daycare. There are plenty of philosophies to choose from—Montessori, Waldorf, and Reggio Emilia, to name a few. If you don’t already have experience with these, research online to find out what resonates with you. Lindsey uses a play-based philosophy at Lindsey’s Family Daycare. “I’m structured as far as when we have breakfast, lunch, snack,” she says. “But I’m a strong believer in the free childcare and letting them be themselves through free play.”

Once you have identified a philosophy and name, organize a program: times for meals, outdoor play, and naps, as well as prepared activities and lessons based on your curriculum.

3. Establish a health and safety plan

You will need to have plans for emergency evacuation, sickness prevention, and accident procedures. Many licensing departments require you to do fire and/or tornado drills regularly.

4. Draw up a contract

Create a contract for parents to review and sign when they enroll their child.

This will have information for them about payment, any additional fees for supplies or late pickup, and a sickness and inclement weather policy.

It will also request information from them, such as a child’s allergies or medical conditions, emergency contact numbers, immunization records, and a list of people who can pick them up.

This 211 Childcare website provides guidance on forming a contract and also offers a sample PDF.

5. Create a budget

A major part of any business plan is an organized, well-considered budget. “You have to be able to budget yourself,” Lindsey says. “It can get away from you. You have to be willing to treat it like a job.”

Startup costs

When starting a daycare, it is important to begin with enough money to cover your startup costs and the operational costs for at least the first 90 days. Remember, it is unlikely your daycare will start off with full enrollment, so don’t rely on enrollment fees for children unless they are already registered.

“You need to have a startup budget, but you can start up with the bare minimum,” Lindsey says.

Here are some examples of startup costs when opening a daycare:

6. Set your tuition

Another consideration in your budget is how much you will charge your clients.

One way to get an idea of how much you will charge is by referring to the information you collected on daycares in your area. Your rates will depend largely on your location; in Iowa, Lindsey Roemen charges a flat rate of $25 per child, per day, with a discounted rate of $17 per day for siblings. She and her fellow in-home daycare providers in the area try to keep their rates the same.

Shalonda Owens has a more complicated system for fees at her in-home daycare in Ohio. Her weekly rates are $160 for infants (six weeks to 12 months), $150 for “early toddlers” (13 months to 23 months), $145 for two-year-olds, and $135 for preschoolers (three to five years old). Before and after school care is $7/hour.

Another factor to consider is how and when you will accept payment. You’ll also need to establish a deadline for payment and penalties for late payments. Lindsey’s clients write her a check every Thursday at pickup, and Owen’s clients pay every Monday at drop off. In addition to tuition, many daycares charge a one-time enrollment fee to cover the extra time and paperwork you will need for each new child.

Include anticipated tuition in your projected income for your budget, but don’t rely heavily on it. “You have to be wise in your spending,” says Shalonda. “There are times where your enrollment may decrease and you have to be able to manage things for a long period a time.”

7. Determine where you’ll get your funding

Luckily, for an in-home daycare, it is likely that your startup costs will be low. But should you find yourself needing some startup cash, here are your options:

Private: Ideally, your startup costs can be covered by your own funds or that of a friend or family member. This reduces the time you will spend looking for additional funding and there are no finance charges.

Commercial: Commercial banks offer short-term and long-term business loans at prevailing interest rates.

Government agencies: Contact your Small Business Administration office for information on federal loan programs or your state’s economic development office for information on state loans and grant programs.

Tax credits: There are several home business tax write-offs that can offset your expenses when you are running a daycare from your home. This includes 100 percent deductible expenses like food, toys, and equipment, as well as partially deductible expenses like home insurance and utilities. The IRS has a guide for figuring and claiming the tax deduction for business use of your home. See Also:  Child Care Business Sample Business Plan

Step 4: Get set up

Now that you have a plan, it’s time to set the wheels in motion.

Choose your location

Picking the location for your daycare may be necessary if you don’t plan to run it out of your home. For more information on picking your business location, check out our article, How to Choose Your Business Location.

Purchase equipment

Purchase any equipment needed for your daycare. In addition to toys, you may need sheets, mats, blankets, child-sized utensils, plates and cups, high chairs, step stools and booster seats. has an exhaustive list of child care equipment and materials that you can consult.

Purchase insurance

Insurance is vitally important when starting a daycare. You need property insurance to cover your business equipment and liability coverage in case you are sued. For help finding an agent and purchasing insurance, contact your State Insurance Department.

Step 5: Market your daycare

For both Lindsey Roemen and Shalonda Owens, marketing was never a part of the process of opening a daycare. Word of mouth filled up their enrollment numbers and waitlist so quickly that they never had to market. The same might be true for you, but if not, marketing is an important step for ensuring your home daycare thrives.

Here are some questions that can help you identify your client base and how to reach them:

You gathered a lot of this information earlier when first formatting your business plan; now, you can use it to help you target your marketing. Put up fliers in your community, create social media pages (Twitter, Facebook, LinkedIn) and be sure to include testimonials from previous clients whose children you have cared for. Recommendations inspire trust in potential clients.

Once your daycare is operational, continue to seek out accreditations like the National Association for the Education of Young Children (NAEYC) or National Association for Family Childcare and other professional development opportunities to improve your knowledge base and your reputation as a child care provider.

Be sure to continue collecting feedback from your clients. Use the positive reactions in your marketing and handle any criticisms swiftly and professionally. With the proper foundation for your home daycare, you are sure to have more positive feedback than negative.

AvatarEmma Castleberry

Emma Castleberry

Emma is a freelance writer and media specialist with a passion for crafting in-depth, human interest articles. She likes spending all of her money on travel, eating cheeseburgers and ice cream, and dancing with abandon.

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Millions of Dollars, Thousands of Robocalls and 1 Legal Loophole

A new york times analysis highlights a flaw in the regulation of political nonprofit groups..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

Before we get started today, I wanted to share two pieces of exciting news. The first is that we here at New York Times audio have just released an app. For fans of “New York Times” podcasts like you, it does something very helpful. It takes all kinds of shows, like “Serial,” “The Run Up,” “This American Life,” “The Daily,” and gathers them into one place. And it helps you discover the new shows that we’re making that you might not know about.

And that brings me to the second piece of exciting news, which is that “New York Times Audio” is launching a new news show. It’s called “The Headlines.” As a daily listener, you know that what we do every day is we bring you one story in depth. But of course, our newsroom is covering dozens and dozens of stories every single day. And that’s what “The Headlines” is for. It’s a short show that brings you the top stories of the day straight from the reporters covering them. This week, we’re sending the show right down our feed for you to listen to. And after that, you can find it on our app. Search “NYT audio” in the App Store. Or go to Everything in there is available to all “New York Times” subscribers. We hope you’ll check it out. OK, now here’s today’s show. From “The New York Times,” I’m Sabrina Tavernise, and this is “The Daily.”

A “Times” investigation has found that a group of Republican political operatives used robocalls to raise $89 million on behalf of police officers, veterans, and firefighters. Today, investigative reporter David Fahrenthold on how they actually spent the money and on the legal loophole that allowed them to do it.


It’s Thursday, May 25.

So, David, you are an investigative journalist, and you cover nonprofits and financial abuse in that world. And you just published a big investigation into this one group of nonprofits. Tell me what you found. What’s the story?

This story really starts more than a year ago with a tip that I got from a source who said, look, there’s a ring of these nonprofits, not traditional charities, but political nonprofits. In the paperwork, it doesn’t even look like these groups are connected, but they are. They’re all linked together. And what they do together is take huge amounts of monies in donations from regular people — small donations from lots of regular people — and when they get that money, they don’t use it at all in the way that they say they will. Now, this piqued my interest for a couple of reasons. First, the amount of money potentially involved, according to the tip, was pretty huge — tens of millions of dollars was the initial direction we got. The second was the kind of nonprofits involved, a political kind of nonprofit called a 527.

So we have to get a little into the tax code. I promise this is maybe the only time we’ll have to go into it.

527 is an area of the tax code that creates a kind of nonprofit whose purpose is politics. You can give money to them. You don’t get a charitable tax deduction. It’s not a charity. But their purpose is to raise money for politics and then to spend it helping politicians get elected.

So I was curious about these groups. And another reason this all piqued my interest was the way that they raised money, which was through robocalls, the humble robocalls. How many times have you and I picked up the phone, realized it was a robo call, and hung up within a tenth of a second?

In this case, these guys had raised tens of millions of from thousands and thousands of donations with a robocall. How did that work? So the first thing I really had to do in this story was find the robocalls. What did these robocalls sound like? What made them so effective? And the answer, it turns out to be really interesting. [MUSIC PLAYING]

You think of a robocall, what tells you it’s a robocall? You hear either really a robot’s voice, or maybe you hear a voice with a foreign accent. None of that is on these calls.

Hello, this is David. How are you today?

When you pick up, it sounds like you’re talking to a kind of weary Midwestern cop who’s just had a bad experience with the last caller.

Oh, there you are. I was beginning to think everyone was ignoring me like my wife and kids do. [LAUGHS]

They’re amazingly lifelike because they are recordings.

Hello, is Margaret there?

It typically begins with your name.

Carla? Antonia?

If you have a common name, like I do, they have recorded your name.

Usually, there’s a joke at the beginning.

Good to hear a kind voice. That last call was tougher on me than my mother in law’s meatloaf. [LAUGHS]

Or one of them is like, you’re harder to get a hold of than a rabbit on roller skates.

Putting aside that actually would not be that hard to get a hold of a rabbit on roller skates. But the idea being like, I’ve been calling you, and you haven’t picked up.

You’re the first person I’ve reached in 15 minutes, and I’m pretty tall.

So it really sounds like a person, but actually, it’s just a computer.

It’s a guy behind a computer pushing buttons to play the solicitation spiel and then with enough preloaded responses that you get those answers plus things like uh-huhs and chuckles and everything about a conversation, but it’s just a person pushing buttons on a computer.

OK, so after the kind of folksy dad joke, then what?

Well, then they get into the meat of the call.

So, I’m calling for the American Police Officers Alliance.

They introduce the reason why they’re calling.

Hi, this is Richard calling for the Firefighter Support Alliance.

And these groups are always talking about one of three causes.

Calling on behalf of the American Veterans Honor Fund.

Helping police, firefighters, or veterans.

Help effect real change for our veterans.

And then, they hit you with the ask.

You know, tragically, 17 U.S veterans commit suicide every day. And I don’t know if you knew, but every night, there are over 50,000 homeless veterans that are struggling on our streets. The goal is to elect officials who are working to make our communities safer.

They say that the donations go to helping elect legislators who were sympathetic to these groups — police, firefighters, veterans.

As well as support assistance to the families of first responders killed in the line of duty.

In some cases, they say that giving to them will actually mean supporting the families of fallen police officers.

So all we ask is that you just help out with whatever you think is right. Really, anything that you can send back is greatly appreciated. Just help out with whatever you think is fair for our heroes, OK?

OK, and if you’re still on the line by the end of the pitch, then what happens?

They start talking numbers, and they will often suggest some pretty small amounts.

Our top donation levels are $50 and $35, so how much would you like to donate?

They’ll say the big pledge is $50. The small one is $30. They want you to commit to a number, and they don’t push very hard to get a very high number. They’re happy for you to give $35 or $50.

Can we count on your support with a very important contribution for the drive?

OK, so $35, $50, pretty small donations.

Yeah, very small. But, when we looked at these groups finances and added up all the money that they’d brought in over their nine years of operations, they brought in $89 million.

From robocalls?

That’s right. More than 18,000 donations came to these groups, most of them for less than $200. A lot of the donors you can see in the forms are in their 70s, 80s, ‘90s. They’re retired. So it worked again and again and again on a whole lot of people around the country. We talked to a woman named Louise Mcconchie, who lives in Puyallup, Washington, outside Seattle. She’d given 35 different times to the five groups we looked at totaling $3,650. And what she didn’t know was that all this money that she and so many other people were giving — almost none of it went where it was promised to go. The tipster was exactly right about that.

After I talked to Ms. McConkey, we did a huge amount of reporting. We looked at 15,000 pages of transactions. We did all this research to try to figure out what became of the money that Louise McConkey and thousands of people like her gave and found out that only about 1 percent of their donations was used for anything like what they thought they were supporting. 1 percent went to helping politicians win elections.

So what happened to the rest of the money?

That was not easy to figure out. What we had to do was go find the public filings these nonprofits had made explaining what they did with the money. When we found them, we realized they had reported 15,000 pages of documents. And in some cases, they seem to have gone to extra lengths to make their findings as hard as possible to understand. For instance, they would sometimes take $6 million worth of spending over a year or half a year and report it $1 at a time.

We paid $1 on this day to this company and $1 the next day to this company.

Why are they filing in these tiny increments?

Well, one possible reason is it makes my job really hard. It makes it really hard for anybody like me to try to add up all these tiny little expenditures and get any real sense of what these groups are up to.

Interesting. OK.

And we found after adding a lot of them up, that a lot of their vendors were these shell companies. It was really hard to figure out who the actual humans were behind those companies. So after, we then sort of went through corporate records to figure out, OK, who are the people behind these companies they’re paying. That took a while, but what it showed was that about 90 percent of these groups’ spending just went to pay for more fundraising. They just spend it on more robocalls.

Wait, so they spent the money they raised from robocalls to make more robocalls?

Yeah. One of the analysts we talked to described it as an elaborate self-licking ice cream cone. It was just fundraising that paid for more fundraising.

That is some intense overhead. If we’re to take them at face value, it’s like, whoa.

Yeah, this is not normal. Most charitable nonprofits, most political campaigns, anybody else you could think of who might be a peer for these groups sort of has an opposite relationship to their fundraiser. They pay a fundraiser to raise money so they can go do something in the world with it. Either if you’re a charity, to go help the world. If you’re a political campaign, to support a candidate.

This was like a fundraiser that has a nonprofit. So much of the money that they raised was just consumed by fundraising that they were left with almost nothing for their theoretical purpose.

Right, like a huge red flag.

Yeah, when we looked at other groups like this, other political nonprofits, most of them didn’t even exceed a third of their spending on fundraising.

At that point, your question becomes, well, who’s running these things. Who would set up an operation like this? And the answer to that question was also in the spending records. Turns out, it all goes back to three guys, who got their start in campus Republican politics in Wisconsin about 2008. And the leader appears to be a guy named John Connors. He was a minor figure in the political empire of Scott Walker, the former Wisconsin governor. He graduated college in 2008 in Wisconsin and took a few jobs working for Walker then set out and started his own consulting firm. He was a big deal in Wisconsin politics but did not have much of a national presence.

The other two guys, Kyle Maichle and Simon Lewis, were his employees. So Connors employed Lewis as a director of operations, employed Maichle as a researcher. So those three folks had this connection. They sort of came up together in Wisconsin campus Republican politics and then had been minor players on their own in Wisconsin politics before this.

So how did these three go about starting this operation that you’re describing? Was it shady from the start?

Well, it starts with a group called Veterans Action Network. This is a 527 group that turns up in Wisconsin in 2014 and becomes a client. It starts paying John Connors’ firm for political consulting. Now, when you look at Veterans Action Network, it makes almost no sense — when you look at its filings. It claims to be a group that was started to help veterans make a difference in politics. When you look at what it actually did with its money, it didn’t do that. It spent almost all of its money on fundraising. It spent several hundred thousand dollars with Connors’ company. It did nothing to help any candidate anywhere, anytime. As a political operation, it was a failure from beginning to end. So you ask, well, what was the point of it? Why did it exist? And one clue you get is from an email that Connors sent to somebody back in 2016 when he says that his company created Veterans Action Network — basically, that they created a company that then became their client. They created their own client and started charging it. For them, Veterans Action Network was a success. It didn’t make any difference in politics at all, but it paid several hundred thousand dollars to Connors’ company.

And what you see then is that operation is mimicked on a much larger scale by four new organizations that are started in 2017, all by people close to Connors. They’re all 527 nonprofits that like Veterans Action Network, they play on these conservative causes — police, firemen, veterans. They raise huge amounts of money, make almost no political difference, and pay a lot of money to Connors and these two other guys, Lewis and Maichle, his associates. At the end of it all, we realize that these groups, which again, made no difference to anybody in the world of politics, have made a huge difference to those three. Their companies got more than $2.8 million from these five groups combined.

So what you’ve uncovered here — these 527 groups raising money from regular citizens, promising to spend their donations on something they care about like police or veterans, but not spending that money on the things that they care about — that amounts to a kind of double crossing of the citizens — not doing the thing that they said they were going to do. Surely, that’s illegal, right?

I feel like I asked that question of so many people in the reporting of this story. And the answer is it might not be illegal.

We’ll be right back.

So, David, this sounds like a pretty clear scam. How is this not illegal?

Well, listen, if this was a 501(c)(3) charity, a traditional charity, it might be. There are a lot of state attorneys general and others who think their job is to stand up for donors in that situation. If a donor is being ripped off, they can step in, sue you, take some sort of legal action. But in the political context for political nonprofits, there’s really not a watchdog to play that role. These groups sort of exist in a blind spot within the campaign finance system, seemingly on purpose.

They have found a way to be regulated by the least funded, the least interested, the most distracted regulator in the game, which is the IRS. And the only enforcement mechanism that might come down to them is if the IRS said, hey, listen, you’re supposed to operate primarily for the purpose of helping candidates. You’re not. These groups, in fact, say that they just got audited by the IRS, and the IRS told them they were doing quote, unquote a perfect job.

We can’t check that. The IRS won’t tell us what they do with any individual taxpayer. But these groups say, look, we’ve talked to the regulator. We just got out of an examination with the toughest watchdog that exists in our little world, and we did fine.

OK, so the IRS is saying they’re doing a perfect job. But why does this blind spot exist?

Basically, the idea of regulating campaign finance is that if you’re going to raise money for politics, there’s an assumption that you want to use it to influence politics. And so all the policing and all the limitations and all the transparency is focused on giving money to politicians — who uses their money to help which politician to guard against the quid pro quo. The idea that you would raise money and then not spend it on politics — that you would give it to yourself or you’d give it to your fundraiser, suck it out of politics — there’s really not a system built up to police that. And it just wasn’t anything someone imagined would be a problem when they set this system up. And so it becomes very easy to do it now because nobody really intended to guard against it.

So basically, when they imagined this class of nonprofit, they didn’t conceive of the possibility of using that money for something else entirely?

That’s right. And these groups are very deliberate about that. So in the law, there’s a tripwire that says if you spend more than $1,000 helping any federal candidate, you have to report to the FEC, which has its problems, but is a more aggressive and transparent agency. If you spend over a certain amount in various states, you have to start reporting to those state campaign finance watchdogs. These groups were very careful not to do any of that — to just keep their money or spend it on things that had nothing to do with politics. And for that reason, the only real rule they had to follow was this rule in tax law, which is that they had to be operated primarily — those are the two important words — operated primarily for the purpose of influencing the election of candidates or the selection of unelected people, like Supreme Court justices.

But do these groups even pass that test?

Well, we talked to a lot of campaign finance experts who said no — that any reasonable expectation would say that if you raised $89 million and only spent 1 percent on actual politics, that you’re not operated primarily for the purpose of influencing elections. But what these groups say is that, look, you’re just not thinking creatively enough. You’re just not drawing the circle of behavior wide enough. They say, look, everything we do, even when we ask you for money — when we call you up and say, hey, the police are under attack, give us money — that in its own way is political activism. Yeah, we don’t say the name of a candidate. We don’t tell you who to vote for, but we’re raising an issue with you that you might think of later on, and that would change your vote. So what they say is just if you define politics broadly enough and indirectly enough, that really, everything they do fits that definition.

So they’re saying basically, that the calls themselves are political, even though explicitly in the calls, they’re promising to spend money on actual candidates, and they don’t.

It’s a weird sort of circular logic where if you’ve given money for the service, you’ve already gotten the service. The calls are both the funding and the thing itself.

Self-licking ice cream cone.

Self-licking ice cream cone, exactly.

So that is an unbelievably huge loophole that just doesn’t seem to protect us at all.

No, there’s nothing in this system to protect the donors.

So what do the three guys you told us about have to say about all of this? I mean, once you uncovered that connection between their companies and these 527 groups.

Basically, that they were providing a service. They were paid well, and deservedly so, for services they provided to these nonprofits that were out there trying to change the world. I want to read you the quote from John Connors who wrote to say, “yes, I am paid for what I do. Everybody is,” he says. “But my real compensation is the satisfaction of Americans getting involved in the system.”

How much money did he get again?

Groups that he owns got more than $1 million.

So satisfaction of Americans plus $1 million.

Right. You know, I kept being surprised in this reporting. I kept thinking we would find something more concrete, some real impact that these groups had used with all their money and kept being surprised that I was wrong.

In theory here, the person who stands up for the donor is the donor themselves. There’s transparency theoretically in this system. These groups have to file their expenses with the IRS so that a donor doesn’t need somebody to come in and stand up for them. They can go search their filings and say, OK, is this a group I want to support or not. But what we found shows kind of the folly of that expectation. If you were a donor, and you decided, hey, I’m interested in knowing is the American Police Officers Alliance a good use of my money. First, you have to go to a Byzantine IRS site that doesn’t really tell you anything about what you’re looking for.

And then if you manage to find one of their expenditure reports, you have to read 900 pages of expenditures $1 at a time. It took us full time with powerful computers weeks to try to get a real picture of how these groups spent their money. It’s ludicrous to think that an individual donor could get anything like a reasonable understanding of the way their money was going to be spent in a day, in a week, and even a month. So if the transparency is supposed to be sort of the cure in this system, that part is not working also.

The element of transparency is just absolutely absent from the rules.

Yeah, you can see all the trees, but there’s no way in heck you’re going to see the forest.

So stepping back here, our country really has allowed for nearly unlimited money in politics through these 527s and super PACs and all the rest of it. And the fear among critics was that there would be too much money in politics, that unlimited money would corrupt our Democratic system and disenfranchise voters. And that’s still a concern, of course. But what you found is that we have a situation where the system in a very direct way is simply dispensing with the politics altogether, is kind of double crossing voters, taking their money and pocketing it. Politics is just the cover.

Right. Yeah, the whole system is built around the idea of stopping a quid pro quo or at least illuminating if there was a chance for a quid pro quo. It’s not ready for the quid pro nothing, the quid pro nil, which is what’s happening here. You’re giving money to somebody who just takes it out of the system entirely and doesn’t do the thing that they told you they were going to do with it. There’s not really a setup here.

What’s ironic about this is that there’s two sets of victims here. There’s the donors, who’s money is being siphoned out of the system. But the other victim you could argue is Republican politicians, some of the folks who’ve pushed the hardest to deregulate money in politics. A lot of these causes that these groups are raising money for are traditionally conservative causes. A lot of the folks they raise money from are traditionally conservative voters. And so these are people who might have given to Republican candidates and maybe thought they were giving to Republican candidates. But instead, had their money sort of sucked out of the system. So it’s kind of an ironic outcome of this deregulation of politics that they’ve also allowed people to use politics as a shield, use it as a lure but then take all the money out of the system and not give it to politicians at all.

One instance really stuck with me here. In 2020 — obviously, a year when policing and standing up for the police were a huge cause and a huge subject of political controversy in America — these groups raised $20 million, obviously, drawing on the anger and the emotion that came out of watching the Black Lives Matter and George Floyd protests, the people who felt like the police were being criticized too much. They spent literally nothing. Those two groups spent literally zero on politics that year. So if you gave money to those groups and thought, OK, I’ve done my part to support police in America, you didn’t.

Wow. I mean, it’s unbelievably cynical, right, brilliant but also craven?


Do you think that this loophole, now that you’ve exposed it in a big way, will be closed? Or do you think that actually closing the loophole is in some ways antithetical to the spirit of the law, which was to allow all kinds of money to be spent in a pretty unregulated way, as you pointed out? Does anyone actually want to close this loophole?

I hate to be cynical, but I don’t think it’s going to be closed. And to me, that’s a sign of how little interest or possibility there is for any sort of meaningful campaign finance reform in this country. Because if there’s a low-hanging fruit here, this is it. This is something where people’s money is being used in a way that’s opposite of what they think and where politicians themselves, people who’d be making the changes in the law, are directly hurt by it.

And there’s no sign that’s going to change any time soon?

No, not that I’ve seen.

David, thank you.

Thanks for having me on. [MUSIC PLAYING]

Here’s what else you should know today. On Wednesday, “The Times” reported that the drone attack on the Kremlin this month was most likely orchestrated by one of Ukraine’s special military units. American spy agencies reached that conclusion in part through intercepted communications from both Ukrainian and Russian officials. The May 3 attack unsettled the Biden administration, which is worried that strikes inside Russia could cause Moscow to retaliate beyond Ukraine.

And American intelligence agencies and Microsoft said that they detected a mysterious computer code that they said had been installed by a Chinese government hacking group in telecommunications systems in Guam. The discovery raised alarms because Guam, with its specific ports and vast American air base, would be a centerpiece of any American military response to an invasion of Taiwan by China.

Today’s episode was produced by Mary Wilson and Carlos Prieto. It was edited by Paige Cowett and Devon Taylor, contains original music by Brad Fisher, Dan Powell, and Elisheba Ittoop and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly. Special thanks to Charlie Smart. That’s it for “The Daily.” And just a reminder, all this week, you’re going to see our new show, “The Headlines” right here in “The Daily” feed. We made it for you. Hope you like it. To find it, go to


I’m Sabrina Tavernise. See you tomorrow.

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A New York Times investigation has found that a group of Republican operatives used robocalls to raise $89 million on behalf of veterans, police officers and firefighters.

David A. Fahrenthold, an investigative reporter for The Times, explains how they actually spent the money and the legal loophole that allowed them to do that.

On today’s episode

David A. Fahrenthold , an investigative reporter for The New York Times.

A graphic of a yellow square representing the $89 million raised for campaigns. A smaller blue square in the bottom right corner shows the actual $826,904 actually spent on campaigns.

Background reading

A group of conservative operatives using sophisticated robocalls raised millions of dollars from donors. Instead of using the money to promote issues and candidates, nearly all of it went to pay the firms making the calls and the operatives themselves.

How “scam PAC” fund-raisers skirt election rules and deceive donors .

There are a lot of ways to listen to The Daily. Here’s how.

We aim to make transcripts available the next workday after an episode’s publication. You can find them at the top of the page.

David A. Fahrenthold contributed reporting.

Special thanks to Charlie Smart .

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