Building the ROI/Business Case for Early Childhood Development: A Practical Guide
By Sara Watson, Ph.D., Senior Advisor, Center for Business Champions
Fighting for scarce resources for children requires using all the tools available – including powerful evidence that ECD is good both for children and the economy.
One of the key tools to build support for early childhood development (ECD) from business leaders and policymakers is a document that clearly provides the business case for investment. In decades of engaging thousands of business champions, I have found that this document is critical to secure initial business leader interest, and build business and policymaker support over time.
The business case document explains how giving children a good start in life benefits both children and their parents (especially working parents); businesses and taxpayers; and the local and national economy. As its hallmark, it relies on quantitative data that demonstrate specific outcomes and, when possible, expresses benefits in monetary terms – such as a benefit-cost ratio or return on investment (ROI) figure. It also uses framing and language that capture ECD as not just a social or individual issue, but a broader concern that affects many sectors of society. Examples of business cases for investment analysis come from global organizations such as the Global Business Coalition for Education and specific countries or localities.
The business case can and should be complemented by qualitative information that illustrate the benefits of ECD. Many worthy services for children and working parents cannot be tested, their benefits cannot be expressed in numerical values, and their benefits may not outweigh their costs. But fighting for scarce resources for children requires using all the tools available – including powerful evidence that ECD is good both for children and the economy. These studies capture public and media attention, and give business champions and ECD advocates more arguments to win public and private resources.
Elements of the Business Case
Many countries, at a variety of income levels, have at least some data that can be used to make the business case. Below are major types of data and how they can be used to build a convincing argument.
A. Country-level data produced on a regular basis
A variety of global and national organizations, such as the World Bank, Organisation for Economic Cooperation and Development, UNICEF, and UNESCO Institute for Statistics, etc.; produce regular data that can start to make the business case for investment. Many countries also produce their own demographic or survey data. While this data doesn’t generally include ROI numbers, it creates a picture of the supply and demand for services. These variables include:
- Percentage of children receiving ECD services
- Educational and health status of young children
- Percentage of mothers in the workforce, and potential for growth
- Gap between supply and demand for skilled workers
It’s important that these variables are related to business concerns when possible – for example, programs that promote children’s health are good for children and also reduce workplace absenteeism by parents.
B. Studies that analyze data to show results from a variety of countries or companies
The next level of quantitative data comes from researchers who have created “return on investment” (ROI) studies showing the impact of ECD programs. By ROI, we mean studies that quantify impacts. This is especially powerful if the impacts can be compared to costs, using cost-benefit ratios or annual rate of return figures (analogous to a stock market return). While data from your own country is ideal, it can also be persuasive to use data from other countries, especially ones with similar demographics. Data from specific companies across a range of sizes, industries and locations is also very powerful.
For example, a variety of studies have shown the benefits of family-friendly practices such as support for child care, breastfeeding, or flexible leave, on parents’ ability to work. These include studies in individual countries (Vietnam), analyzing dozens or hundreds of studies to find widespread impacts, and using data from specific companies. For example, a report from IFC cited a study by a garment manufacturer in Jordan: “At MAS Kreeda Al Safi-Madaba, absences due to sick leave fell by 9 percent in the first nine months after a workplace crèche was opened.”
A few long-term programs in the U.S. have been studied extensively and show ROI rates of return of as much as 13%. These numbers have captured widespread attention, and can be used to illustrate possible outcomes. However, caution should be used to avoid implying similar results in other contexts.
C. Country-specific ROI studies
The most sophisticated studies have used country-specific data to calculate quantitative benefits of ECD programs for parents, government, business, and taxpayers. These generally require a combination of country-data on demographics, services, and costs, as well as parent surveys and other specialized data. The results can be spectacular:
- A UK study by Deloitte for the Royal Foundation found that country could gain￡45.5 billion each year by investing in early childhood.
- An Australian study by PriceWaterhouseCoopers, for The Front Project found the country would reap about AU$4.74 billion by adding one year of universal preschool, for a benefit-cost ratio of about 2:1.
- A U.S. study found that child care problems for children birth to three resulted in $122 billion annual cost to parents, taxpayers and business, from lower wages, lost educational opportunity, job loss, and lower tax revenues. The U.S. Chamber Foundation found comparable results in many diverse states across the U.S.
The biggest results are likely to be found in countries with a strong economy and low existing ECD services. Countries with research funds and a compelling need to make the case for investment can build on these methodologies to create their own impressive results.
D. Supplemental qualitative data
To supplement these numbers, advocates wishing to make the business case can use statements or examples of support from business leaders and media outlets. Short case studies of business actions can encourage others to act. The Harvard Business Review, one of the world’s most influential business journals, published an article, “Childcare is a Business Issue,” that asked “Why is childcare still an employee issue and not a business issue?” The Kenya Private Sector Alliance Foundation uses statements from many of its business members explaining the value of support for breastfeeding: Corporates that are not [supporting breastfeeding] are missing a great opportunity to increase the engagement score of their employees at the workplace. (Rita Kavashe, Isuzu East Africa)
Writing the Business Case
The business case document can use any of these data to make a compelling argument for ECD support. Several characteristics will make it most effective:
- Even if you develop a full report, there should be a short version – no more than two pages.
- Create graphics to summarize your most important data.
- Use business phrases – for example, “supply and demand” instead of “capacity and need.”
- Include quotes from well-known business leaders to illustrate support.
Conclusion
The business case for investment is an important tool in your complete kit to win support for ECD. It speaks not only to business but to policymakers who are attentive to budget pressures, responsive to outcomes data, and need all the arguments you can find to convince them of the short- and long-term value of ECD. Start with the data you have, adapt or mention data from other places, and consider commissioning studies that will build your case over time.
Childhood Education International’s Center for Business Champions can help you create an effective strategy to engage business champions to win support for critical investments in ECD to strengthen your current and future workforce. For more information, contact Yvette Murphy at ymurphy@ceinternational1892.org.
About the Author
Sara Watson, Ph.D., Senior Advisor, Center for Business Champions
Dr. Sara Watson founded and was the National and then Global Director of ReadyNation/ReadyNation International, designing, fundraising for, and leading the jointorganization for 14 years. Her hands-on work included personally persuading more than a thousand executives to join campaigns for early childhood investments, and supporting them to take action. She worked with local partners in Brazil, Australia, Romania and Uganda to create their own networks of business champions for early childhood.
Sara has spoken at more than 15 international meetings of child development and business leaders on how to build partnerships between the sectors. She led the organization of more than a dozen national (U.S.) and two Global Business Summits on Early Childhood and the first European Business Forum on Early Childhood for audiences of business executives. Sara also co-chaired ECDAN’s Advocacy Task Force in 2016-2018. Before creating ReadyNation, she led The Pew Charitable Trusts’ national advocacy campaign for pre-K. Dr. Watson is now an independent consultant and the founder and principal of Watson Strategies, LLC. She serves in a consulting capacity with CE International. Sara holds Master of Public Policy and Ph.D. degrees from the Harvard Kennedy School.