Executive Summary

The United States cannot solve its childcare crisis by expanding licensed center-based care alone. A large share of young children—often from one-third to over one-half—receive care in informal arrangements, making this the most common form of non-parental care in the United States. Yet public funding and quality systems overwhelmingly target licensed centers and homes, leaving the care most used by infants, toddlers, low-income families, immigrants, and families working nontraditional hours largely unsubsidized and unsupported.

This paper proposes a national certification-and-subsidy framework for informal childcare providers—including nannies, family members, neighbors, and other home-based caregivers—that preserves license-exempt status while establishing light-touch standards for safety and quality—background checks, basic health and safety training, and simple accountability—paired with subsidies that follow the child to certified caregivers. By aligning federal dollars with how families actually secure care, this model builds real supply, stabilizes the childcare workforce (including the largely invisible, predominantly immigrant nanny workforce), and advances economic opportunity and equity.

The Problem: An Invisible Majority of Care

Despite decades of investment in licensed childcare through grants, contracts, and tax incentives, the gap between available licensed slots and the number of children needing care remains substantial. Persistent "childcare deserts" characterize communities nationwide, particularly affecting families seeking care for infants, toddlers, and children requiring nontraditional work hour arrangements. Parents bridge this structural gap by patching together informal care arrangements or by leaving or reducing their participation in the workforce, with measurable harms to employment, earnings, and economic stability.

National estimates suggest that roughly one-third to over one-half of young children are cared for in informal arrangements by in-home caregivers such as nannies, family members, neighbors, and friends. Some analysts estimate that around 60 percent of children under age 5 spend time in informal in-home care, underscoring that policy solutions must address this sector directly. Nannies and other private in-home caregivers represent a particularly large and largely invisible segment of the childcare workforce, predominantly comprised of immigrant women who provide individualized, often full-time care but typically operate outside regulated systems without formal training requirements, background check verification through public mechanisms, or eligibility for public subsidies. Because informal childcare—including nanny care—remains largely unrecognized and unfunded in public policy, caregivers often operate without basic health and safety training or oversight, and families who rely on them are excluded from most childcare subsidies.

The result is a two-tiered system: formal, licensed childcare draws public dollars and policy attention, while the most common form of care—especially for the most vulnerable families - remains invisible in funding conversations and quality frameworks.

Policy Objective and Core Mechanism

The central objective is to expand safe, reliable, affordable childcare by integrating informal, in-home care into the funded childcare system without forcing providers into full licensure, which many cannot meet and which could inadvertently shrink existing supply. This approach treats informal caregivers as essential infrastructure rather than marginal or temporary stopgaps.

• The proposed mechanism is a national or State-backed certification-and-subsidy model for informal providers that: Establishes a streamlined certification standard focused on safety, basic quality, and accountability: background checks, CPR/First Aid and health and safety training, reference checks, and simple record-keeping compatible with home-based settings. Certification is explicitly not a backdoor licensing pathway.

• Preserves license-exempt status for participating caregivers, allowing trusted community providers to operate within their existing regulatory frameworks while meeting clear quality and safety benchmarks.

• Makes families eligible for childcare subsidies when they use certified informal providers, with vouchers or other means-tested assistance that follows the child to that caregiver, allowing families to use public support in the settings they already rely on instead of being restricted to scarce licensed slots.

How the Certification Model Works in Practice

For informal childcare providers:

Informal caregivers—family members, neighbors, nannies, and other in-home childcare providers—opt into a streamlined certification process focused on safety, basic quality, and accountability. Participation involves completing professional portfolios with resumes, references, driving records, background checks, and completing health and safety training, compatible with home settings. Crucially, certification is not a licensing pathway; providers remain non-licensed or license-exempt, preserving their operational flexibility and community trust.

Once certified, these providers become eligible to receive payments from childcare subsidy programs on behalf of families they serve, converting invisible, underpaid, or unpaid care into an investable part of the formal childcare market.

For families:

Families who choose a certified informal provider can access means-tested subsidies (vouchers or direct payments) that follow the child to that caregiver. They use public support in the setting they already rely on—an informal arrangement with a family member, neighbor, or nanny—rather than being forced to seek scarce licensed slots that often do not exist in their neighborhood or do not accommodate their work hours.

For the childcare market:

This approach expands usable, publicly supported supply by:

• Bringing a large share of currently invisible, unfunded care into a light-touch quality and safety framework without displacing existing providers.

• Making it financially viable for informal providers to offer more consistent hours of care, because families now have subsidies to pay them, stabilizing caregiver income and supply.

• Leveraging existing informal capacity and directly connecting that capacity to public dollars, rather than relying solely on efforts to build new licensed slots, which has not kept pace with demand.

Evidence Base: Quality, Equity, and Economic Impact

Quality and Safety in In-Home Care

Research on informal home-based childcare indicates that when informal caregivers participate in structured training, coaching, and basic health and safety initiatives, observed quality in their settings and adult–child interactions improve. National and state quality frameworks consistently emphasize that core safety protections—background checks, basic health and safety training, and simple monitoring—are feasible for home-based providers connected to public systems and are associated with reduced risk of serious harm.

Full licensure often imposes facility, zoning, and administrative requirements that many informal childcare providers cannot meet. A certification framework sets a clear quality floor without creating barriers that would exclude trusted community caregivers or drive the existing workforce toward unregulated "grey market" alternatives.

Certification Standards in Practice: The TIFFAN Model

The Institute for Families and Nannies (TIFFAN) demonstrates how a streamlined certification approach can align with state safety standards while remaining accessible to informal in-home providers. TIFFAN's In-Home Childcare Provider Certification requirements address the unique needs of individual caregivers—emphasizing personal qualifications, training, and relationship with families rather than facility-based standards.

TIFFAN Certification vs. California Licensing Standards Comparison

Key Difference: TIFFAN certifies individuals for in-home care; California licenses facilities with group ratios and structured environments. TIFFAN's approach emphasizes the caregiver's personal qualifications, training, and relationship with each family—reflecting the realities of in-home childcare.

This model demonstrates that certification can establish rigorous safety and quality standards without imposing the facility-based requirements of traditional licensure. By focusing certification requirements on what matters most for individual caregivers in home settings - background verification, core training, immunizations, and mandated reporter training - certification frameworks achieve meaningful safety protections while remaining operationally feasible for informal providers.

Equity and Labor Force Participation

Informal childcare is especially prevalent among infants and toddlers, children in low-income, immigrant, and linguistically diverse families, and families working nontraditional or unpredictable hours. In-home caregivers are the preferred childcare arrangement for many families and are the primary option for families needing full-time, individualized care or working nonstandard hours, yet this segment remains largely invisible in childcare policy and funding streams.

Excluding informal in-home childcare providers from funding and quality systems deepens inequities in both early learning and parental employment. When public policy ignores informal childcare providers, families bridge the gap alone through unstable arrangements, lack of formal verification of qualifications, or informal cash payments that provide no worker protections or tax documentation for either family or caregiver. Parents—disproportionately mothers—may leave the workforce entirely or cobble together unsustainable care arrangements, undermining labor force participation and economic stability, particularly for marginalized communities. At the same time, in-home childcare providers themselves remain largely invisible workers without access to standard employment protections, benefits, or pathways to formalize their work.

By channeling subsidies into certified informal care, policymakers can expand effective supply across income levels and work schedules, directly support labor force participation for all families, and create formal recognition and economic stability for an essential but chronically undervalued workforce. By channeling subsidies into certified informal care, policymakers can expand effective supply in communities where building new licensed facilities is slow or infeasible, directly support labor force participation, and advance economic growth and opportunity for the families that need it most.

Audience-Specific Implications

For Federal Legislators and Their Staff

Certifying the existing informal childcare market transforms a large, unregulated system into an investable part of the childcare infrastructure without imposing full licensure that many providers cannot meet. This approach turns a perceived liability into a pragmatic, politically viable supply-building strategy that commands bipartisan support.

Legislators can embed this framework in childcare, labor, tax, and appropriations legislation to close childcare deserts while respecting family choice and community norms. The mechanism does not require massive federal expansion of licensed facilities or workforce; instead, it leverages existing capacity and converts current informal arrangements into accountable, supported infrastructure.

For Federal Agencies and National Policy Influencers

This framework offers a practical middle path between "no standards" and "full licensure or nothing." Federal agencies—particularly HHS/ACF (administering CCDBG and Early Head Start), the Department of Education, the Treasury (tax credits and financing tools), and the Department of Labor—should explicitly design regulations and subsidy mechanisms to include certified informal childcare providers.

National policy influencers, including think tanks, advocacy coalitions, business groups, and bipartisan child advocacy networks, should incorporate certified informal childcare into model policies, funding strategies, and narrative frameworks focused on workforce development, racial equity, and economic growth. When influential organizations explicitly include informal childcare arrangements in their reports, scorecards, and policy recommendations, they legitimize it as central infrastructure and unlock cross-sector investments that expand supply where formal expansion is slow or infeasible.

For State Policymakers and Child Welfare Agencies

States can pilot certification-and-subsidy models by modifying existing childcare licensing and subsidy administration structures. The TIFFAN model demonstrates a state-level approach that maintains alignment with existing safety standards while creating accessible pathways for informal providers. State agencies should develop clear, publicly available certification requirements that specify exactly what informal providers must demonstrate (background verification, training completion, health and immunization requirements) while explicitly exempting them from facility-based inspections and regulatory oversight designed for group settings.

Policy Design Principles and Safeguards

• Accessibility and affordability:
  Certification must be low-cost and easily accessible to informal providers across income and education levels, including culturally responsive pathways and support for providers with varying literacy levels or language backgrounds. For informal childcare providers, certification processes must be available in multiple languages, accessible to workers who may not have formal documentation, and designed not to create barriers that increase their operational costs or discourage participation.

• Light-touch administration:
  Standards and reporting requirements should be minimal—focused on safety, basic accountability, and subsidy administration—and compatible with in-home, informal settings. Excessive paperwork or bureaucracy risks deterring participation and increasing the compliance burden on already-stretched providers.

• Preservation of autonomy:
  Certification explicitly does not convert informal providers into licensed facilities or employees. Providers maintain control over their operations, scheduling, and pedagogical approaches while meeting clear quality and safety benchmarks.

• Data and transparency:
  Reporting should be limited to what is necessary for safety monitoring, quality improvement, and subsidy administration. Providers and families should understand how their data is used and have confidence that it supports, rather than punishes, participation.

• Equitable access:
  Subsidy mechanisms must be designed so that low-income families and families historically excluded from childcare support become eligible, with straightforward application processes and subsidy levels that reflect actual care costs in informal settings.

Conclusion and Call to Action

For fifty years, the United States has pursued a strategy of expanding licensed center-based and in-home childcare. While that effort is valuable, it has not closed the gap between the supply families need and what formal systems provide. The result is persistent childcare deserts, workforce participation gaps, and deepened inequities for low-income, immigrant, and other marginalized families that disproportionately rely on informal care.

A national certification-and-subsidy framework for informal childcare providers offers a faster, more equitable path forward. It recognizes that informal care is not a temporary workaround but the foundation of how American families actually secure care. By bringing this sector into a light-touch quality framework and pairing it with public subsidies, policymakers can convert invisible care into supported infrastructure, stabilize the childcare workforce, and unlock labor force participation and economic opportunity.

Congress, federal agencies, and national coalitions are urged to:

• Explicitly incorporate certified informal childcare into forthcoming childcare legislation, federal regulations, and national policy frameworks, recognizing in-home childcare providers as a primary childcare arrangement across income levels and work schedules.

• Design subsidy mechanisms and quality systems that are accessible to informal providers and families, with low administrative burden, clear standards for safety and accountability, and language accessibility for immigrant caregivers.

• Support state and local pilots of certification-and-subsidy models to test implementation for in-home caregivers, identify best practices for reaching immigrant and multilingual providers, and build evidence on impact for workforce formalization and family economic outcomes.

• Shift national narratives to recognize nannies, family members, neighbors, and other informal childcare arrangements as central to early learning and economic opportunity for families across income levels, not marginal or temporary stopgaps. Explicitly acknowledge informal childcare providers as essential workers deserving of formal recognition, worker protections, and pathways to formalization through certification.

The childcare crisis is urgent, and its solutions must be bold. A certification-and-subsidy framework for the informal care that families already use is one of the most pragmatic, equitable, and achievable strategies available. It is time to act.

References

[1] National Center for Children in Poverty. Demographics of Family, Friend, and Neighbor Child Care in the United States.
https://www.nccp.org/publication/demographics-of-family-friend-and-neighbor-child-care-in-the-united-states/

[2] First Things First. Family, Friend, and Neighbor Caregivers Show Significant Improvement After Participation in Programs. (2025, March).
https://www.firstthingsfirst.org/2025/03/family-friend-and-neighbor-caregivers-show-significant-improvement-after-participation-in-programs/

[3] Kruse, A. M. Quality in Early Childhood Care and Education Settings: A Contextualized Perspective. Early Childhood Research & Practice, 14(2).
https://ecrp.illinois.edu/v14n2/kruse.html