Most programs draw resources from a combination of sources, including the government, families and communities, NGOs and other civil society groups, private sector donations and philanthropists, and international organizations.

Regular government budgets
The most common source of financing for ECCD programs in most countries is the regular budget of the government. The parts of the budget from which support for ECCD programs is drawn vary considerably, depending on the type of program, the main target group, and the interest and negotiating power of people in different sectors. The most common lines of support are in the education budget and social welfare budgets. Occasionally, governments assign funds for ECCD programs through budgets provided for such areas as health, communications, women's programs, or rural or urban development.

Throughout the region, regular education budgets allocate less per child at the preschool level than at other levels of education. In Jamaica, for example, about 2.5 percent of the education budget is slated for early education, even though about 20 percent of the children in the education system are in preschool. Similarly, in Mexico preschooling accounts for 5 percent of the education budget but about 10 percent of the children in the education system. The reason for this anomaly is twofold: the quality of preschooling is poor, resulting in low unit costs, and communities shoulder a larger share of the costs of preschooling. Because preschooling receives such a low share, even a small shift in the budget toward preschooling can have a large impact on its coverage.

In countries where education and other social programs are being decentralized, the power of local governments to obtain funds through local taxation is often weak. So funding may still depend largely on the central government budget and on the basis on which transfers to the states are distributed.

Special taxes
ECCD programs also receive funding from earmarked taxes—specific taxes for ECCD programs or a fixed proportion of a more general tax. The effectiveness of different taxes in financing ECCD programs depends mainly on their adequacy, stability, and growth. Adequacy, because a financing method must provide the money needed to operate the system satisfactorily. Stability, because funds cannot fluctuate widely without adversely affecting an ECCD program. And growth, because funds for ECCD programs must grow to meet the increased demand for programs that usually accompanies a natural population increase and to continually improve quality.

From a public finance perspective earmarked taxes typically are not desirable. But when year-to-year decisions on the budgetary share for ECCD programs become wholly arbitrary, subject to the shifting political winds, earmarking can help ensure a minimum amount of expenditure as a "safety net" to protect programs from devastating shortfalls. Earmarking can also help "sell" a new tax to the public, which might be willing to accept a new tax if it is clear where the money is going, especially if the tax is for a popular purpose such as early child care and development. National lotteries, which have sometimes been used to finance or to supplement funds for public education, including preschooling, also could be used to finance nonformal ECCD programs.

Several countries in the region have used earmarked revenues to fund ECCD programs. Colombia collects a 3 percent payroll tax from all enterprises over a certain size. The funds are administered by the Instituto Colombiano de Bienestar Familiar (ICBF). This system, which taps private as well as public sector funds, was originally established to force employers to pay for a child care benefit. This type of tax fulfills the criteria of stability and growth. Ecuador has earmarked a percentage of its import and export taxes for early childhood care and development. The amount collected has varied from year to year with the economic and political climate, however, so the system has not provided as secure a financing base as had been hoped for.

Families and communities
Much emphasis is being placed on cost recovery from participants, and families and communities contribute to ECCD programs through fees as well as through donated labor, materials, and buildings. Although this emphasis on cost recovery needs to be tempered by considerations of ability to pay, almost every family can contribute something, no matter how small, to help cover the costs of a program that provides valuable services. Indeed, it may be wise to require at least a token contribution from all but the most destitute users of an ECCD service.

At the same time, however, it should be kept in mind that the social benefits of an ECCD program may far outweigh its private benefits, as the evaluation of the High/Scope Perry Preschool Study illustrates (see box 1.1 in tab 1). So if participation is desired, a subsidy may be justified. It should also be kept in mind that not all people can contribute at the same level and that in most programs participants and communities are already making contributions that are not normally registered in cost calculations. It is important not to overburden participants if the service is to be used and if the social as well as the private benefits are to be realized.

If governments are serious about a commitment to directing programs to low-income families and children at risk, they must realize that the ability of families and communities to cover costs will be limited and that subsidies will therefore be necessary. This lesson from experience runs counter to the desires of many governments and funding agencies that seek to transfer the financing burden to communities and families regardless of circumstances. It suggests a need for new instruments of support and for an approach that emphasizes partnership among all the actors—government, parents, communities, and business.

Governments' commitment to mobilizing resources for ECCD programs is the most important factor in determining the level of investment. If a program is truly seen as a priority—whether for political reasons or because it is thought to be cost-effective—resources will be found for it.

Trust funds and philanthropy
Trust funds have been established for education since Roman times. In more modern times people who have amassed large fortunes have also set up foundations to support education. But few have been established for ECCD programs. One of the rare examples is in Mauritius, where the government and the private sector contribute to a trust fund for ECCD projects. In Latin America trust funds and private sector donations and philanthropy have accounted for only a small share of the funds expended for ECCD programs. When such support is provided, it is usually for small and very specific programs, for example, for indigent and physically handicapped children in a particular area.

International organizations
International lending organizations have provided funds for ECCD programs as part of their general support for education and other social services, and their emphasis on early childhood care and development has increased during the 1990s. Although the funds from these organizations are small in comparison to total expenditures in the sector, they provide much-needed capital investment and seed money for experimental projects.