Cost of Care and Redirection of Resources

Developing a high quality alternative care system requires adequate funding and resources. In countries that are working to reform their care systems, efforts are needed to redirect financing from residential care options towards new initiatives that support parents, prevent family separation, and provide children with a range of family and community based care alternatives.

Cost-benefit studies of different forms of alternative care demonstrate that it makes good economic sense for governments to invest in family based alternatives rather than residential care. While costs may increase for a temporary period as countries make the shift to family-based care – for example to fund training of social workers, develop social welfare services and establish tracing and foster programmes – in the long run it costs less than keeping children in institutions where funds are required to pay salaries for staff, maintain buildings and provide food and other services. The bottom line is that for the cost of keeping one child in residential care, many more girls and boys can be supported within families.

Funding for care reform involves allocating (or redirecting) resources from institutional care towards a range of family-based care services, investing in the development of a competent social welfare workforce, supporting carers, and providing financial and practical support to children leaving care. It also means investing in programmes that tackle the factors that lead to family separation and children being placed in alternative care – such as poverty, unemployment, disability, health and conflict. This could include promoting access to basic health, education and housing services, developing social protection and financial assistance initiatives, and working to strengthen families through parenting education or counselling.

Governments also need to make a commitment to putting in place licensing and regulation mechanisms to ensure that funding of care is motivated by children’s best interest rather than the financial benefit of the provider – and that resources are directed towards families rather than institutions. Unfortunately in many countries, there are vested interests in admitting or keeping children within formal care (particularly residential facilities) for profit-making, and large numbers of private care facilities operate outside the control of authorities.

The literature in this section focuses on budget and cost analysis pertaining to children’s care, including preventive services to support family based care and the provision of a range of alternative care options.

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Doing Better for Children: The Way Forward, Chapter 7

Organisation for Economic Co-Operation and Development, 2009

This document is the seventh, and final, chapter of Doing Better for Children: The Way Forward, produced by the Organisation for Economic Co-operation and Development. The aim of this chapter is to contribute to the policy debate on child well-being, synthesising the previous chapters and drawing on the existing research and policy literature.

Deinstitutionalisation and community living – outcomes and costs: report of a European Study

Mansell J, Knapp M, Beadle-Brown J and Beecham, J , 2007

This project aimed to bring together the available information on the number of disabled people living in residential institutions in 28 European countries, and to identify successful strategies for replacing institutions with community-based services, paying particular attention to economic issues in the transition. It is the largest study of its kind. This project was funded in order to identify as a priority the practical considerations of how to support states making the transition to community-based services, including managing the costs of doing so.

Conditional Cash Transfers: An Annotated Bibliography

Andrea Schapper, International Labour Organization, 02 Jan 2006

This document contains a bibliography global conditional cash transfer documents.

The State of Foster Care: Putting Families First

The Economist, 2005

Economist article which argues for changes in US federal welfare funding to maintain family unity and reduce the numbers of children entering into foster care.

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Capacity Building in Social Policy Reform in Moldova

David Larter and Eugenia Veveritsa , 2005

This paper analyses the financial costs of residential services as compared to community-based services in Moldova. It also addresses the negative effects of institutional care on the well-being of children and society as a whole.

Cost Benefit Analysis of Children in Care - Moldova.doc

Family Matters: A Study of Institutional Child Care in Central and Eastern Europe and the Former Soviet Union (Shorter Version)

Richard Carter - Every Child, 2005

This report reviews the faltering progress made in childcare reform across Central and Eastern Europe and the former Soviet Union over the 15 years since the ‘orphanages’ of Romania were revealed to the world.

A Costing Analysis of Community-Based Programs for Children Affected by HIV/AIDS: Results from Zambia and Rwanda

Leanne Dougherty, Steven Forsythe, William Winfrey, Kathy Buek and Minki Chatterji , 2005

A report which analyzes the costs associated with various types of interventions for orphans and vulnerable children, including institutional care, tracing and reintegration, and community-based care.

Expenditure on the Residential Care of Children in the Republic of Moldova: A Financial Analysis Based on 2005 Budget Data

David Larter and Eugenia Veverita, 2005

Reports on the financial costs of residential care for children in the Republic of Moldova. Highlights significant financial inefficiencies and advocates for closure of residential institutions.

The Cost of Foster Care: Investing in our Children's Future

Robert Tapsfield and Felicity Collier, 2005

This report assesses the expenditure which is required to transform foster care services across the UK, in order to give children in public care the same opportunities to have a successful future as other children. Contains relevant statistics and social welfare system reform recommendations.

The Promise of a Future: Strengthening Family and Community Care for Orphans and Vulnerable Children in Sub-Saharan Africa

Kerry Olson, Ruth Messinger, Laura Sutherland, and Jennifer Astone , 2005

A brief document advocating for the strengthening and support of community based responses to children and families affected by HIV/AIDS in Africa.