The National Day Nurseries Association (NDNA) commissioned Capacity, a public interest think-tank for children's services, to examine the impact of Government policy and look at how nursery owners can strengthen their businesses and diversify to respond to the changing market.
The report, Childcare: Good business for families and communities, identifies extended schools as 'probably the key factor in creating nervousness among private sector providers'.
Falling occupancy levels and plans for improved statutory maternity leave, which could mean fewer babies in daycare settings, are other major areas of concern for nursery owners, it says.
The researchers interviewed small day nurseries and larger chains, local authorities, policy experts and those working in social enterprise.
The report includes examples of private day nurseries that are extending the range of services they offer to the community, as examples of childcare businesses already operating along social enterprise lines. It says private day nurseries are well placed to develop as social enterprises - businesses where the prime motive is to benefit the community rather than to maximise profit.
Margaret Lochrie, director of Capacity, said, 'Within the nursery market they are mainstream businesses, but there are a number where the imperative for commercial profit is not as important as serving the community. The stereotype that "private" is all about business ends is completely wrong.
In many cases the private sector is serving the broader agenda of social inclusion as well.'
The report says that Community Interest Companies (CICs), a new legal form created by the Government for social enterprises that use their profits and assets for public good, 'could well be of significance to a number of day nurseries'.
Ms Lochrie suggested that CICs could be a model for children's centres and Sure Start local programmes.
The report says that the NDNA is 'well placed' to develop a charter for social responsibility so nurseries could develop their support for Government initiatives. This would position childcare businesses as part of social enterprise development and could lead to 'new and more innovative partnerships'.
It also warns that for the ten-year plan for childcare to be rolled out successfully, local authorities must play a key role in modelling ways in which childcare businesses can contribute to delivery, and that they need to be aware of how different partnership models affect sustainability.
Moreover, now that local authorities have a statutory duty to support the voluntary and private sector, they will need to monitor the impact of children's centre development on existing providers.
Ms Lochrie said, 'What we found is that in all areas, local authorities are working with the private sector, but there are a variety of models.
'Local authorities might want to look at the importance of different kinds of partnerships within the private sector. If the partnership includes funded places there will be a more stable sector.'
NDNAchief executive Purnima Tanuku said, 'If the potential for day nurseries to contribute to the ten-year strategy is to be maximised, effective models of partnership need to be developed between providers and local authorities.'
She added that the NDNA had already started to look at operational issues, building on some of the examples of business models for day nurseries given in the report.
