The childcare sector has specific needs in relation to legal requirements over ratios, record-keeping and staffing. CAN has experience of working with starting-up, helping to grow and coming in to trouble-shoot for various childcare co-operatives.

From pre-school, to after-school, to holiday clubs, CAN has worked in the following areas with childcare organisations:

• Business Planning
• Governance
• Payroll
• Bookkeeping
• Year-End
• Financial analysis and reporting
• Tax returns
• Financial forecasting

For an after-school club, one area that we have recently been involved with is linking a childcare-specific booking and invoicing system to a proprietary accounting package, enabling both ease of booking and full financial management control.

We have trained and provided ongoing support to a start-up nursery after it was passed over from ownership by the church where it is located. This work was to help the group set up their organisational structure (within the confines of the regulatory framework for childcare organisations), clarify how their multi-stakeholder co-op worked and establish a pattern of meetings that enabled democratic control while being able to run effectively as a business.

Our clients have included:

• Sparks Inc
• Windsor Playgroup
• Bishopston Beanstalk
• Air Balloon After School Club

Structures for Child Care Co-operatives

There are three basic structures that can be used to establish Child Care Co-operatives:

• Community Co-operatives
• User (Parents and Guardians) Co-operatives
• Worker Co-operatives

They are defined by their membership.

Community Co-operatives

serve a defined community. Its members are anyone in that community who cares to join. It can provide facilities for that community including child care. It is very like a voluntary sector organisation in nature except that it operates according to co-operative principles.

• members are drawn from the defined community. One member, one vote
• the members decide what services will be provided to the community
• the co-operative is managed by a committee elected by the members
• committee members manage the co-operative on a voluntary basis. They may receive expenses and act in a paid professional capacity for the co-operative, but they are not paid for being committee members
• the co-operative may employ staff
• if the co-operative makes a profit, the members may decide to re-invest it in the co-operative, or pay a bonus to the members or make a donation to a charity, or a combination of these things

User co-operatives

are made up of the people who use the service. In this case it is the people who buy child care for their children.

• parents and guardians of the children who regularly use the facilities are eligible for membership of it. One member, one vote.
• the co-operative is managed by a committee elected by the members
• the committee members manage the co-operative on a voluntary basis. They may receive expenses and act in a paid professional capacity for the co-operative, but they are not paid for being committee members
• if the co-operative makes a profit, the members may decide to re-invest it in the co-operative, or pay a bonus to the members or make a donation to a charity, or a combination of these things

Worker co-operatives

are made up of the people who work in the business.

• everyone who works in the co-operative is eligible for membership (after a probationary period). Only people who work in the co-operative are allowed to become members
• the co-operative is managed by those who work in it, and only those who work in it may be directors of it
• if the co-operative makes a profit, the members may decide to re-invest it in the co-operative, or pay a bonus to the members or make a donation to a charity, or a combination of these things

The co-operative principles that apply to all are:

• Open membership to all who qualify. First decide your membership criteria then apply fairly. No ruling cliques excluding others, no unrealistic hurdles to jump
• Democratic government. Good information flow. Policy decided by general meetings of the full membership. No outside control
• Equality. One person, one vote
• Limited return on capital. No running the business for the benefit of outside investors
• Education of members (so that they can play a full part in the co‑operative)
• Social responsibility - consideration of the community and the eco‑system in which they operate
• Co‑operation with other co-operatives (to extend the co‑operative system and accomplish together what could not be addressed separately)

The pros and cons

Community Co-operatives

Pros

• a means to mobilise the community
• can take on other issues as well
• easier to “sell”

Cons

• focus can wander
• other things can take priority
• resource allocation dilemmas

User co-operatives

Pros

• high motivation to provide quality care and personal development for children
• instant market research and customer communication

Cons

• turnover of members
• induction and training requirement for new members
• short termism
• inward investors may be concerned about management turnover

Worker Co-operatives

Pros

• high motivation to keep the business running
• direct communication between users and management
• builds team work

Cons

• getting inward investment

Legal matters

Legal structure

The most popular for all the above is an Industrial & Provident Society (IPS) with membership criteria established according to the form chosen.

It is recommended to register the Society first and build the business inside it. This means that everyone knows what they are joining, what their rights are and what their responsibilities are.

Those who take responsibility such as membership of a management committee should become directors. They should be provided with adequate training and recourse to professional advice to ensure that they do not operate fraudulently or wrongfully but maintain their limit of liability (normally to £1).

Common Ownership

Normally, though not necessarily, co-operatives are common ownership organisations.

Common ownership means that the assets are held in common dedicated to the purpose for which the co-operative was established. There are no individual property rights over these assets and members cannot leave and insist that a share of the asset value is paid to them. This makes for long term security of operation and guards against internal or external take over and asset stripping.

The Practicalities

Co‑operatives of any kind are best established where the objective is to bring to bear the enthusiasm and skills of a group of people and focus them on a common objective. A large part of that objective should be sustainability. This pre‑supposes providing an excellent and appropriate service to an identifiable market using adequate resources of people, facilities, cash and organisation.

There is no substitute for detailed planning and proper research. This takes time, patience and most of all, the assertiveness to ask for help.

Advice on all aspects of business planning, legal registration services and grant aid are available through our service.

Our Childcare trade sector lead worker is Brian Titley.  Email This email address is being protected from spambots. You need JavaScript enabled to view it.