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It has been a particularly rough few years for parents with young children, as the COVID-19 pandemic induced school and child care closures. Now that schools and child care programs are largely reopened, parents face a knock-on crisis: a crippling staffing shortage that is shearing an already-scarce child care supply. This child care crisis impacts every Southern state, and philanthropy must act to address it.

The overall child care crisis is caused by structural failure in the economic model. Because America treats child care more like a restaurant than a social good like a public school or library, programs are dependent on parent fees. Yet unlike a restaurant, the fixed costs in child care are so high due to necessarily low child-to-adult ratios – so although the price tag is staggering, programs cannot charge parents the true cost of care. Programs respond to this market failure the only way they can: by cutting educator wages. In 2020, the median wage was slightly above $12 an hour.

This reality left the child care sector barely treading water before the pandemic, but in the face of major retail and fast food companies significantly raising their base compensation, child care programs cannot keep up. As a result, although the overall U.S. economy has recovered to within 2 percent of pre-pandemic staffing levels, the child care sector is languishing more than 12 percent below, a loss of over 100,000 jobs. This is not a pandemic artifact, but the new normal.

Southern states are struggling as much as anyone. A robust study of Louisiana child care programs over the summer of 2021 found that, “84% of site leaders reported asking staff to work more hours or take on additional roles to make up for staffing shortages. Three-quarters worried that staffing issues negatively affected children at their site. Almost half indicated that they served fewer children or turned away families due to staffing challenges, and nearly two-thirds indicated they currently had a waitlist.” The story is similar in Virginia, where “almost all leaders (92%) found staffing their site difficult” and over half reported “losing valuable teachers.”

This rampant turnover creates immense stress on educators and site directors (a workforce heavily made up of women of color). It also stands in opposition to healthy child development; children thrive on caregiver reliability and consistency. In the worst-case scenarios, programs must close permanently because they simply cannot remain staffed at a level that allows for sustainable operations. State data shows that, for instance, Jefferson County (Louisville), Kentucky has lost nearly 10 percent of its child care supply since the start of the pandemic.

Hurricane Ida made landfall on August 29 as the second-most intense hurricane to strike Louisiana, behind only Hurricane Katrina in 2005. The storm has caused multiple deaths, left millions without power and caused at least $15 billion in damage in Louisiana alone.

A number of SECF members have responded by either establishing relief funds that are accepting donations or making grants of their own. Follow the links below to learn more.

Relief Funds

• Greater New Orleans Foundation: Hurricane Ida Disaster Fund
• Foundation for Louisiana: Hurricane Ida Relief Fund

SECF Members Supporting Relief & Recovery

• Regions Bank and Regions Foundation Launch Comprehensive Hurricane Ida Response
• The Arthur M. Blank Family Foundation Pledges $1 Million to Hurricane Ida Relief Efforts
• Blue Cross and Blue Shield of Louisiana Foundation Commits $5 Million to Hurricane Ida Relief

SECF co-sponsored a webinar for funders earlier today hosted by the Center for Disaster Philanthropy. A recording of the webinar will be posted here when it is available.

Following the passage of the 2017 tax reform bill, nonprofits are re-evaluating how they determine their unrelated business taxable income (UBTI) tax, specifically in regard to transportation benefits. This week, we’ll dive into what the new transportation benefits provision could mean for your organization and your grantees, as well as what’s being done in Washington to help provide guidance.

Transportation Benefits Are Now Taxable

The 2017 tax reform bill made substantial changes to how transportation benefits are treated. Congress wanted all parking and transportation costs to be paid with after-tax dollars, which was fairly easy to apply to for-profit companies and their employees.  For nonprofits, however, Congress thought that by simply applying UBIT of 21 percent on any employer-provided transportation benefit would effectively push employers to stop offering the benefit, and employees would just pay for transportation with after tax dollars. 

Likely unforeseen was that this UBIT assessment will have a significant impact on charitable organizations’ bottom lines. This will increase the UBIT owed by many organizations and will lead many nonprofits to pay UBIT for the first time.