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Costs and Financing
SECTION 7 OUTLINE
COSTS AND FINANCING
What is involved in estimating the costs of an early childhood program? How do you know what is reasonable for an early childhood project to cost? How will you determine if you are getting the most for your investment? Where are you likely to find the necessary resources to cover project costs, now and for the future? In this Section we present a summary of some of the issues related to costing early childhood projects and programs, provide a framework for creating a project budget, and provide information on the various ways that these are financed.
Estimating ECCD Project Costs
There are at least three closely related reasons for wanting to estimate what the costs of a particular early childhood project will be. Knowing why we want to make cost estimates, however, is only the beginning. The much more difficult task is getting cost estimates that will help you make appropriate programming decisions.
Variation in ECCD Project/Program Approaches
Variation in the Way Costs are Calculated
• Some cost estimates are based on budgets rather than on actual expenditures.
• Some planners treat investment (start-up/nonrecurrent) costs and operational (recurrent) costs as totally separate and do not include any of the investment costs in the per-beneficiary calculations.
• Some planners include prorated administrative costs of the larger system in which a particular project is situated, and others do not.
• Planners apply different criteria in defining beneficiaries.
• Some planners include estimates for in-kind contributions and others do not.
·LIBRARY LINK: R. G. Myers. 1992. Towards an Analysis of the Costs and Effectiveness of Community-based Early Childhood Education in Kenya: The Kilifi District.
·LIBRARY LINK: W. S. Barnett. 1997. Costs and Financing of Early Childhood Development Programs.
Creating a Project Budget
What is Included in a Budget?
Creating a Budget
WHAT IS THE PROJECT TIME-LINE? WHEN WILL THE PROJECT START?
WHAT ARE SOME OF THE ANTICIPATED CHANGES THAT ARE LIKELY TO AFFECT THE BUDGET DURING THE LIFE OF THE PROJECT?
WHAT ARE SOME POSSIBLE UNANTICIPATED CHANGES THAT MAY INFLUENCE THE BUDGET?
Investment/Start-Up Costs
PROJECT DEVELOPMENT: CREATING/TESTING MODELS, TECHNOLOGIES,
AND MATERIALS
CONSTRUCTING OR UPGRADING FACILITIES
EQUIPMENT
MATERIALS
INITIAL TRAINING
CONSULTANTS
LOAN SCHEMES/MICRO-ENTERPRISE PROJECTS
Operating/Recurrent Costs
SALARIES AND BENEFITS
FOOD COSTS
·SITE VISIT LINK: Home-based Community Day Care and Children’s Rights: The Colombian Case.
·SITE VISIT LINK: Colombia’s Bienestar Programme.
·SITE VISIT LINK: Colombia—Homes of Wellbeing.
·LIBRARY LINK: P. Engle and L. Lhotska. 1997. The Care Initiative: Assessment, Analysis and Action to Improve Care for Nutrition. New York: UNICEF Nutrition Section.
HEALTH CARE COSTS
ADMINISTRATION COSTS
TRAINING COSTS
COMMUNICATION COSTS
SUPPLIES
TRANSPORTATION COSTS
PER DIEMS
FACILITY MAINTENANCE COSTS
EVALUATION COSTS
CONTINGENCY COSTS
·LIBRARY LINK: J. van der Gaag, and J. P. Tan. 1998. The Benefits of Early Childhood Development Programs: An Economic Analysis. Washington D.C.: World Bank Human Development Network.
Costing an ECCD Program
The exercise of considering the cost components of the ECCD project has two purposes. One is to help you create a budget for the purposes of determining the resource requirements for the project. This can be used in seeking funding and contributions. The other purpose of completing the costing exercise is to estimate the real costs of the endeavor (inclusive of contributions from organizations and individuals). This is important in considering what it would take to transfer the approach to a different setting and in looking at the relationship between costs, effectiveness and benefits.
Costs per Beneficiary per Year
·SITE VISIT LINK: Peru—A Nonformal Programme of Initial Education (PRONOEI). (Programa No-Formal de Educacion Inicial).
·SITE VISIT LINK: Home-based Community Day Care and Children’s Rights: The Colombian Case.
·SITE VISIT LINK: Hogares de Cuidado Diario–Home Day Care in Venezuela.
·LIBRARY LINK: M. Waiser. 1995. Early Childhood Care and Development Programs in Latin America: How Much Do They Cost?
Affordability
·ECCD BRIEF LINK: The Costs and Affordability of ECCD Programs.
Cost-Effectiveness
Cost-Benefit
Financing ECCD
A key question that needs to be answered in relation to an ECCD program is how it will be financed. The answer to this question needs to include, who will be involved in supporting the costs of the project, what their contribution will be, and how their contribution will change over the life of the project. The timeline for financing is important because stakeholders involved in making the initial investment want to be sure that there are sufficient resources at the beginning to create a quality project, and that a process is set in motion for ensuring the sustainability of the project over time.
Thus in planning for the financing of an ECCD project, it is important to determine what the appropriate contributions might be from international donor agencies, the national government, local government, and the community at each stage in the process.
·ECCD BRIEF LINK: Financing Early Childhood Programs.
The Role of International Agencies
• Raise awareness about the importance of ECCD.
• Support organizational capacity building.
• Influence policy.
• Provide investment funding and/or funds for the expansion of an ECCD project into a larger program.
• Encourage debt swaps.
• Stimulate local commitment to the financing of the project by funding the development of pilot projects and small-scale experiments.
• Provide technical assistance.
The Role of Families and Communities–Cost Recovery as a Way of Financing ECCD
• It is reasonable for society to contribute to the cost of ECCD programs.
• Not everyone can contribute at the same level.
• In most programs, contributions that are not normally included in cost calculations are being made by both users and communities.
• It is possible for a program to fail if government requires a contribution that families and communities are unwilling (or unable) to meet.
Role of Government
FINANCING ECCD THROUGH THE CURRENT GOVERNMENT BUDGET
·SIDE TRIP LINK: The Case for Pre-primary Education: The Cost Effectiveness of Shishu Kaksha Centers in Nepal.
• Budget allocations for ECCD.
• Decentralization and the implications for financing ECCD.
• ECCD financing through special taxes or activities.
• ECCD financing through trust funds.
Role of the Private Sector
ECCD AS A PRIVATE, FOR-PROFIT ENTERPRISE
ECCD AND THE BUSINESS COMMUNITY
ENDOWMENTS
The Role of Social Organizations
The Role and Possibility of Self-Financing–Micro-enterprise
• Recognize that ECCD programs can be developed as a micro-enterprise and provide appropriate support.
• Create micro-enterprise, income-generating activities where some of the proceeds will fund the ECCD program.
• Create micro-enterprise projects that allow women to earn enough money to pay for child care and other services.
·SITE VISIT LINK: Micro-enterprise and ECCD in Viet Nam.
Ways to Maximize Resources and Program Impact
The Integration of ECCD with Women in Development (WID) Activities
ECCD and Primary School
·LIBRARY LINK: R . G. Myers. 1997. Removing Roadblocks to Success; Transitions and Linkages Between Home, Preschool and Primary School.
·LIBRARY LINK: Compiled by J. L. Evans. 1997. Diagnosis and Solutions; Efforts to Address Transition and Linkages in Diverse Countries.
ECCD and Literacy Programs
ECCD and Urban Programs
ECCD and Emergency Programs
·SITE VISIT LINK: About The Family Education and Community Development Program of Community of Learners Foundation (COLF).
·LIBRARY LINK: J. L. Evans. 1997. Children as Zones of Peace: Working with Children Affected by Armed Violence.
Summary
There is increasing understanding of the costs and benefits associated with ECCD programs. Where the field lags is in terms of fully exploring alternative forms of financing these social investments. However, we have moved beyond a reliance on traditional forms of financing (e.g., government and parents) and are being more creative.
Conclusion
Within many organizations, the social and economic goals, existing program lines, and the varied and flexible financing available place them in an excellent position to invest in programs of early childhood care and development. This can be done both by incorporating ECCD into existing lines of program activity and also by creating integrated ECCD projects to meet a variety of social and economic goals.
·WORKSHEET 7-1 LINK: Costing an ECCD Project.
·WORKSHEET 7-2 LINK: Financing an ECCD Project.
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