Children Ahead of Profit

Our solution to BC’s child care crisis does not include the expansion of commercial child care chains.

Commercial child care chains are companies that own or franchise large numbers of child care programs. As with other commercial enterprises, their primary duty is to maximize the return on investment for owners, investors and shareholders. In our opinion, this is likely to put making a profit ahead of the needs of children and families!

Over and above the concerns raised by the primary duty of these chains, there is a considerable body of Canadian and international research that indicates that quality early care and learning programs are best provided through community based non-profit or public operations, not businesses.

CCCABC has long been concerned about the attempts by commercial child care chains to establish in BC. In 2007, when a foreign-based corporation actively but unsuccessfully tried to take over community-based child care providers, we launched the BC Child Care Not For Sale campaign.

Recently, we have been observing an increase in the number of child care chains looking for business opportunities here and in the rest of Canada. They are companies, with investors and/or shareholders, who own, want to own, or franchise, a large number of child care programs. Some promote their services to a particular clientele, for example, to employers as a response to the child care needs of employees for child care or to parents as early schooling for their children. These niche services appear to charge top-of-the-scale fees making them inaccessible to families with moderate incomes. Other companies appear to emphasize acquiring real estate and operating in well-to-do communities.

All seek to realize a profit or a return on investment. And, when and if a commercial child care chain fails (as in Australia) – families, communities and governments are left to pick up the pieces.

The CCCABC‘s position is that public funding should not go into profits for shareholders or investors. We have asked the BC Government to place a moratorium on new approvals of Child Care Operating Funding (CCOF) for commercial child care chains.

Mounting evidence supports the CCCABC position that relying on the market place is NOT the way to build a system that meets the needs of children, families, educators or communities.

Can Child Care Thrive in a Speculative Investment Environment?

In 2010, a group of child care centres in Alberta purchased by Edleun Inc. became the first commercial child care chain in Canada to list on the stock market, specifically the TSX Venture Exchange. This created considerable concern but it also provided an opportunity.

One concern was that Edleun appeared to be modeled on the Australian chain ABC Learning Inc. ABC’s rapid growth and subsequent failure caused havoc in that country – negatively impacting company investors; funders; the public purse; as well as access to and affordability of child care.

However, the fact that publicly traded companies must make a quantity of information available through the public reporting process was the opportunity. Such information might provide insight about the business approach typically used commercial child care chains and either support or refute the concerns about commercial child care chains.

The CCCABC decided that an analysis of the business model demonstrated by Edleun would be a useful and that it should be undertaken by someone familiar with the costs and constraints of delivering child care services in Canada. Gerry Dragomir, a Vancouver CMA was engaged. Dragomir’s company has knowledge and experience as public accountants working with the child care sector in British Columbia for the past 30 years.

Dragomir’s report Commercial Child Care in Canada: Can Child Care Thrive in a Speculative Investment Environment? is based on public information from government, the publicly traded child care chain, child care organizations, the public media and from information obtained by direct inquiry. His analysis provides information on the financial viability and sustainability of child care delivered via Edleun’s business model.

Can child care thrive in a speculative investment environment? Based on the analysis, Dragomir’s report concludes that the answer to this question is “not likely”.

The CCCABC has decided to make Dragomir’s report publicly available:
- Commercial Child Care in Canada: Can Child Care Thrive in a Speculative Investment Environment?
- Media Release
- Backgrounder