Theme:
ECD Financing
About the Issue
The first years of a child’s life lay the foundation for lifelong health, learning, economic, and well-being outcomes. Despite strong evidence of its importance and high returns—ranging from $6 to $17 for every dollar invested—financing for interventions that support early childhood development (ECD) remains inadequate and fragmented.
The financing landscape for ECD is complex, spanning multiple sectors—health, education, and social protection—and relying on diverse funding sources such as government budgets, international aid, and private contributions. This complexity often leads to fragmentation, inefficiencies, coverage gaps, and difficulties in scaling and coordinating interventions. Public funding for young children and their caregivers is typically deprioritized in national budgets, resulting in chronic underfunding of essential services. In low-income countries, early childhood programs often depend heavily on external donors, raising serious concerns about their sustainability.
Resource distribution for early childhood services is often inequitable, favoring wealthier communities and urban areas while leaving vulnerable populations underserved. Many countries also lack robust data systems to track expenditures and outcomes for young children, particularly across sectors, hindering efforts to assess the impact and efficiency of investments.
The Nurturing Care Framework provides clear guidance on what policies and interventions need to be financed in order for countries to build the human capital necessary to achieve the Sustainable Development Goals. Yet recent evidence reflects that only 30% of children in low- and middle-income countries receive adequate nurturing care in the between the ages of 2 and 5 years. Addressing this gap cannot be done without adequate financing. Solutions require innovative funding approaches, stronger political will, and improved stakeholder coordination to ensure all young children have equitable access to essential services when it matters most.
In 2025, ECDAN formed an Early Years Financing Technical Working Group that is assessing the current ECD financing landscape, identifying gaps and opportunities, and recommending innovative, sustainable reforms to strengthen multisectoral programs for young children. ECDAN is also part of the High Level Advisory Group for the Act for Early Years campaign.
This thematic page contains key information and resources to assist policymakers, advocates, and donors make decisions and communicate regarding financing for the early years. Related resources include the Cost of Inaction calculator and a repository of ECD costing tools.
Why it Matters
Early childhood is the period when investment in services that enable all children to receive nurturing care has the greatest long-term impact. Yet, governments typically spend more on older children and miss this critical window. Achieving the SDGs will not be possible without adequate. equitable, and effective investments in the early years.
Resources
In 2023, UNICEF published the Too Little, Too Late report that assessed public spending by age in 84 countries. Key insights from that report include:
- Public spending on children, especially the youngest, is insufficient and often allocated too late in the life course.
- Fewer than 1 in 2 children worldwide receive any form of social protection.
- Lower-income countries, where children need support even more for their development, spend considerably less on children than higher-income countries, exacerbating existing inequalities.
- Social protection spending, such as cash benefits and child allowances, remains minimal in low-income countries, at 6 percent of budgets for children, compared to high-income countries, at 27 percent.
- The education sector receives the greatest portion of funding for children, yet spending on pre-primary is far less than other levels and misses children who are not in school as well as omits other care needs.
- Spending on other human services, needed to address food insecurity, parental employment, etc., is less than 1 percent of budgets in low-income countries and 5 percent in high-income countries.
In 2024, UNICEF and UNESCO published the first Global Report on Early Childhood Care and Education with chapter 5 focused on financing. Key facts include:
- Of 98 countries with data, global median spending on pre-primary education is just 0.4 percent of GDP.
- In the Tashkent Declaration, governments have been called upon to spend 10 percent of their national education budgets on pre-primary. Yet only one-third of countries with data are even close to meeting this target, mostly high-income countries.
- In 2022, direct aid for pre-primary was only 1.7 percent of total aid for education.
- The financing gap to provide one year of pre-primary education in lower-income countries between 2023 and 2030 is estimated at 21 billion USD.
The Act for Early Years campaign has articulated three catalytic goals for public investments to ensure that every young child has access to high-quality nurturing care. These investments will transform future outcomes and benefit children, families, communities, and countries.
- Universal access to quality primary health care in support of health, wellbeing and development across pregnancy, birth, and early childhood.
- Universal access to quality, inclusive preschool education.
- Universal support for families including affordable and quality childcare, child benefits, and parent and caregiver support.
UNICEF’s Too Little, Too Late report makes the following recommendations for improving public investments for children:
- Spend more and spend it earlier in the life course. Invest in basic public pre-school provision, universal social protection, cash allowances, care policies, parental leave, and other employment support for parents. Dedicate 50 percent of every new aid dollar to children under six years until better balance in age-related spending is achieved.
- Prioritize investment in an overarching child policy portfolio that integrates sectors and reshapes systems to be effective, complementary, and frontloaded.
- Address inequalities by promoting inclusive access to all policies for all children. Revise policies and systems that perpetuate inequalities by age, gender, disability, or migration status. Prioritize social protection and social services for all children.
- Use foreign assistance, and less sustainable financing, to strengthen welfare systems instead of implementing programs and reduce demands for short-term evaluations.
UNICEF and UNESCO’s Global Report on Early Childhood Care and Education provides some examples of innovative financing mechanisms that some governments are using to supplement national budgets and increase funding for ECCE. At present, domestic financing and foreign aid combined are not sufficient to provide high-quality ECCE for all children. Innovative financing should be explored by governments to complement traditional public investment. They should never replace public investment and accountability for equitable spending and service delivery must remain with the government.
Innovative financing mechanisms highlighted in the report (p. 109) include:
- Results-based budgeting: This approach aligns financial resources directly with desired outcomes. Instead of allocating funds based on projected needs, this approach disburses payments only after achieving pre-defined and independently verified results. It ensures accountability and promotes efficient use of funds.
- Outcomes funds: This approach pools resources from multiple donors and contracts various implementers to achieve specified results. By doing so, they support diverse programs while generating valuable data on impact and cost-effectiveness through rigorous evaluations.
- Impact bonds and social impact investments: This mechanism introduces private capital to fund social services, with repayment contingent on achieving certain outcomes. Investors provide upfront funding, alleviating the immediate financial burden on governments, and are repaid only if the program succeeds.
- Block grants: Governments also utilize block grants to provide lump-sum funding to state or local governments for specific purposes like ECCE. This method offers flexibility in how funds are used to meet local needs.
- Social franchising: This mechanism leverages the franchising model to achieve social benefits rather than profits. It enables non-state providers to expand access to quality services efficiently.
The report also includes examples for each mechanism as well as alternative financing sources such as lottery, taxes, corporate social responsibility, and private lending.
