Employer-Sponsored Childcare Stipends Explained

To pay or not to pay? That is in question. Whether it’s nobler to offset a portion or all of employees’ childcare costs. Or cover none, but still, support workers with other childcare benefits?

The dramatic heart of the story is that you can provide childcare benefits for employees in a number of ways. And there’s the rub. Determining the optimal way to offer employer-sponsored childcare benefits may give you pause.

Many organizations considering childcare benefits are interested in just how childcare stipends work. Even if you ultimately decide to go a different route for your employee childcare benefits program, this will be a useful exercise to help determine whether stipends may be right for you and your employees.

Schedule some time with Upwards to chat about childcare stipends and any other employer childcare benefits you’re curious about.

What are childcare stipends?

If you guessed they are a predetermined amount of money designated for employees to spend on childcare, you’re absolutely right.

Childcare stipends are essentially employer-provided subsidies intended to help cover employee childcare costs. They can be designed to pay for full or partial costs of your employees’ childcare expenses.

While a childcare stipend is certainly not required as part of your employee childcare benefits package, it is appreciated very much by working families. It also happens to be quite effective for businesses to increase retention, boost productivity, and improve recruitment. These aspects have helped childcare stipend offerings become more prevalent of late.

Whether opting for a full or partial childcare stipend, the program is straightforward to grasp. As an added bonus, it can be implemented quickly for your working parents to start leveraging these game-changing benefits for their families without delay.

Stipend vs. subsidy: What’s the difference?

The English language is funny sometimes, with multiple ways to say the same thing.

There are several terms for the equivalent type of employee childcare benefits. Other ways to say childcare stipends include:

• Subsidies
  • Subsides are simply a way for employers to support working families by funding or discounting childcare.
• Family stipends
  • Another way to view family stipends is as employer-provided spending accounts, allotments, or fringe benefits designed to help cover the costs of childcare for employees.

Whatever you elect to dub them, childcare stipends are a powerful instrument to consider as you compose your childcare benefits symphony.

Why should employers provide stipends?

On a very fundamental level, offering childcare stipends is a great way to support your workforce. Childcare benefits help employers and employees, making stipends a smart business move for all types of organizations.

Employers should provide childcare stipends because they:

• Increase retention — Employees who feel supported and seen by their employers tend to stay longer and not look around for jobs with more care benefits. A happy employee makes for a happy employer.
• Boost productivity — When working parents struggle with childcare challenges, it impacts their ability to be as productive as they need to be at work. A childcare stipend can help employees afford the crucial childcare they need to avoid distractions and give their best during the workday.
• Improve recruitment — Not only are childcare stipends a great retention tool, they can also provide a boost to your recruitment and hiring efforts. Talented job candidates are seeking a work culture with comprehensive employee childcare benefits. Offering childcare stipends can help you land your next great hire.

Setting up childcare stipends for success

At the outset, think about how you’d like to structure your stipend program.

When setting up childcare stipends for your organization, the first step is to determine the amount you want to contribute to cover each family’s childcare needs.

This dollar amount can be per month or per year, whichever works best for you as the employer as well as your employees. Stipends can simply be applied directly to childcare costs or used as a reimbursement after care has been provided.

Your working parents can use their stipends on a variety of childcare options, such as daycares, babysitters, nannies, preschools, and tutors. The applications for childcare stipends span from school-age kids to infants and toddlers.

The flexibility of a childcare stipend makes it an incredibly valuable tool and practical benefit for families needing all types of care. This type of direct financial support can be life-changing for working parents struggling to afford childcare.

Tax credits among additional advantages of stipends

In addition to the advantages already outlined, employees supported with childcare stipends report feeling less stressed and more focused at work. This makes a lot of sense, since parents who have crossed childcare off their list of concerns have more mental bandwidth to devote to their employers.

The benefits of offering childcare stipends don’t just end there, however. When you help pay for employees’ childcare, you can take advantage of available tax credits. You may be eligible for up to $150,000 in federal tax credits!

If you’re interested in getting more insight, Upwards can perform an analysis to calculate how much money in tax credits your organization can receive. For some employers, crunching the numbers reveals that a childcare benefits program with stipends will pay for itself, and then some.

Upwards provides childcare stipends and more

When evaluating the childcare benefit options available, consider whether a stipend program is the right choice for your workforce. We are here to help at any point of the decision-making process and support you along the way.

We’re always around and reachable at benefits@upwards.com, by visiting Upwards.com, or by scheduling a call with our team.

As you ponder the great questions in life and business, let us help you avoid the Shakespearean tragedy of an unhappy employee population pining for childcare benefits.