Financing for starting up an adult day care center usually comes from a variety of personal, public and private sources. Grants often can be vital in helping cash-strapped ADCs bootstrap their financing needs. However, you can avoid unnecessary hassles and disappointment by knowing the grant limitations for financing your operation.
Grants – A Partial Solution
There's a lack of conclusive data on ADC start-up financing. However, the 2010 MetLife national ADC study reveals that general purpose and program support grants make up only 8 percent of the total revenue for the average ADC. As such, it's highly unlikely that grants alone will finance your ADC start up. It's best to regard grants as one component of your larger start-up financing strategy.
IRS Grant Restrictions
Obtaining public or private-sector grant funding for an ADC is quite challenging unless your ADC is organized as an Internal Revenue Service tax-exempt 501(c)(3) non-profit organization. Make sure your ADC status complies with the funding requirements of grant-making organizations on your targeted list before filling out grant application forms.
Federal and state agencies are the primary funders of grants to ADCs, with most of the funds originating from the federal government.
The U.S. Department of Housing and Urban Development Community Development Block Grant program funds a variety senior-care services typical of those provided by ADCs. HUD awards lump-sum block grants to state and local community development agencies. These agencies award smaller “competitive grants” to local community-based organizations based on local funding priorities. Inquire with the state or local community development or community affairs agency in your area to learn if CBBG funds are available for your ADC.
The U.S. Department of Human Services, Administration on Aging, Supportive Services and Senior Centers Program funds programs that extend the time seniors can remain in their homes. The AOA Senior Centers Program includes funding for ADCs that provide transportation, meals, community education, health and health-screening programs, and exercise programs. Check with your local health and human services agency for more information about Senior Center grants in your community.
The U.S. Department of Agriculture, Food and Nutrition Service, Child and Adult Care Food Program can help reduce the cost of your food service operation. Specifically, CACFP will partially reimburse your ADC for serving nourishing meals to seniors 60 and older who are physically or mentally impaired.
The Veterans Administration's Adult Day Health Care program awards grants to states. These funds allow the states to pay ADCs half the per diem day care cost for disabled veterans, up to a specific maximum that changes periodically.
Private Foundation Grants
According to Key Facts on U.S. Foundations by the Foundation Center, over 86,000 private foundations distributed $52 billion in 2012. Narrow your search by focusing on foundations that support programs for the elderly, and specifically for the elderly with physical or mental disabilities.
Many foundations with a strong focus on aging do not award general purpose grants to ADCs. For example, the Robert Wood Johnson Foundation focuses on aging policy issues, education, training, analysis and demonstration project grants.
However, the membership roster of Grantmakers In Aging, a membership organization of private foundations, lists and links numerous foundations that do award general purpose grants to ADCs. Many of the foundations have a local focus; while others have a national focus.
Because of IRS 501(c)(3) proscriptions against awarding grants to for-profit entities, a small, but growing number of foundations work around this barrier by making program-related investments to for-profit social enterprises. Foundations are allowed to make IRS-qualified PRIs to social enterprises either as low-interest loans or as direct investments.
Social enterprises share two defining characteristics. They are committed to a social purpose and they rely on earned income to achieve that purpose, rather than donations and grants. ADCs generally qualify as social enterprises.