How to Fund Your Private Adoption

If you are trying to adopt a baby through private adoption, you may be worried about how to fund your private adoption. My clients often ask me to walk them through the budgeting process and help them find creative solutions to help them pay for their adoptions. Today, I am sharing with you 8 ways to fund your adoption that aren’t all fundraisers.

Savings

I'm going to start with the most obvious, which is savings. More than likely, you have a little bit of savings that you want to use for your adoption. Now, there are a couple of things that I will talk to you about savings, some creative ways to save, and things like that. But the very first thing that I want you to hear me say from someone who's been there twice over and then coached thousands of others through this process as well, is that you don't want to completely drain your savings in this. So, making it up for conversation sakes, we know that the average American family has about $8,000 in savings. And based upon that, I would say that you would only want to use a portion, maybe call it $3,000 to 4,000 for your adoption process. Then, I would leave some in kind of reserve because there are going to be surprises that come along in your journey of adoption. Now, this would be beyond what I would call your traditional nest egg. Or, if you're a Dave Ramsey fan, you know, the folks saving, you know, for having six months of expenses, I would have these funds. Aside from that, I would not drain those types of funds. Because in the end, you need to be able to protect the roof over your head and any sort of unforeseen circumstances from that perspective.

There are some creative ways to build your savings as you prepare for the adoption journey. So, maybe you're not quite to the point yet, where you're gonna go live with this via a waiting family, and hoping to match, but maybe you're just doing a little prep work. So, I would suggest you do things like a no-spend challenge. My amazing best friend, Jen Smith over at Modern Frugality, they have a no spend challenge. She has a whole book on it. But it's basically the idea of how you can reduce your expenses as much as possible so that you can save for big life events and things of that nature.

When it comes to savings, the other thing that you want to pay attention to is if you are putting your money into an interest-bearing account. There are creative ways for your existing funds to make other existing funds. Now listen, I know that interest rates definitely aren't what we all knew grew up hearing about, and all of those types of things. But if you can put your money into something that is going to give you a little bit more money then why not do that right? So, that is kind of a creative and different spin on savings.

Fundraisers

The second way to fund your private adoption is through fundraising. I promise this is only one of the things that would be fundraisers. I know fundraisers are incredibly popular amongst hopeful adoptive families. I've even seen some friends use them for infertility as well. When it comes to fundraisers, I have tons of blog posts and podcast episodes about fundraisers in particular. So, you can go check those out if you need ideas on particular fundraisers to use and what actually makes you a lot of money. But let me talk a moment about fundraisers as a whole so that you have just kind of a general sense of the way fundraisers could work in your adoption journey.

First, you want to be really clear on your goals for the fundraisers, I've had some clients come to me and say, can you help me with this fundraiser? Because I just don't see how it's going to work. The first thing that I always challenge them with, is to be clear on what is the desired amount of money that they intend to get out of the fundraiser as well as what they think it's going to cost in order to raise that money, because you're going to make sure at the end of the day, that you're actually going to have a net positive result from the fundraiser. This is something that I walk my clients through inside the adoption financial planner because it is something that is important. At the end of the day, you want to make sure that it makes sense for your time. So, if you're going to go plan out five different fundraisers, and only one of those fundraisers is going to make any money, then that's the only fundraiser you want to move forward with, right? So, being really clear on what's your goal, and what it is going to cost, so that you can be really clear on the net income of that particular fundraiser.

It may sound like your business goal for a second, but really, that's what makes the most sense. Because you don't want to bombard your audience, your friends, and your family with a ton of different fundraisers. You want to focus on those that are going to be the most impactful. You might even need to learn from somebody who's gone before you. So jump into My Adoption Coach Facebook group, and ask any questions you may have. Being in the community will help you kind of leapfrog a little bit right, versus just kind of sitting there on your own trying to come up with different ideas.

The second thing you need to know about fundraising for your private adoption is to be intentional about planning out your fundraiser. For example, if you intend to raise $15,000 from fundraisers, and you plan them all out and have some initial projections, then you next want to take a calendar out and decide on your deadline to fundraise all of this money. Then, based on your deadline to fundraise all of this money, can I do this without just completely overwhelming my friends and family? You want to have a planned and intentional approach when you're asking for funds. You also want to ask for funds around the second payday of the month, when people tend to have more discretionary income. You want to ask for them maybe six or eight weeks apart after one has closed so that you know that you're going to take a little bit of time to fundraise. The point of the matter is you need to be intentional and plan out your fundraising.

Grants

The third way you can pay for your private adoption is by using grants. Now there are adoption-specific grants. As a matter of fact, I have a list of over $360,000 in value grants that are based upon a couple of different factors. There are some grants that are focused on specific religions, specific sexual orientations, and specific geographies. There are tons of different types of grants. The biggest thing that you need to know about grants, is they exist and they have different sets of criteria by which you become eligible. The different grants all have different submission and award times, and the submission versus award times are when it’s determined who gets the grant. Those times can vary from 3-6 months, there can be a bit of a lag period there. So, the best thing you can do when it comes to planning to use grants is to make sure you have a list of all of the ones out there that are available to you and verify that those grants are still accepting applications because that changes all the time. You also need to understand when the application is, what the award period is, and then what are the potential amounts for that. Then you go into a grant writing mode, that's really kind of the last step in the grant process. What I coach my clients on is what's going to make them unique. The fact that you are hoping to adopt when you're kind of competing with other hopeful adoptive families does not make you unique. Your story of infertility that led to adoption likely doesn't make you unique. So, you're going to have to find other ways to do that. And again, those are things that I coach my clients through, but it's something that is highly one-to-one that we would need to talk through for you to dig deep there. So, I would encourage you to interview your friends and family and ask that question so that you know how to apply for those grants properly.

Loans

The fourth way you can fund your adoption is by using loans. There are adoption-specific loans. Now, there are some personal loans that have low fees that also have kind of low-interest rates that you can obviously go after. But then there are adoption-specific loans that are designed for folks who are going through the adoption process, and lenders that understand all of the different elements that you need to prepare for as you go through the adoption process.

Adoption-specific loans really require a couple of different things. They're going to require that you know what type of adoption you are pursuing. They're going to require that you have picked out your adoption partners. In most cases, they're also going to require that they actually pay the funds directly to the adoption partner. Now there are a few out there that will allow you to receive the loan, and just to begin making payments immediately on that. And then you hold the funds to share with your adoption partners when you have an opportunity come up.

There are a couple of things that you want to make sure that you protect yourself from when it comes to loans. One, you are going to be borrowing money, so even if the opportunity does move forward, and you've paid those funds for that opportunity, you're still gonna have a loan payment to make regardless of the outcome. You're still out of money, and so are they. So, you need to make sure that you're being highly protective of those funds in general. But especially if you're taking on loans. The next thing that I coach my clients to think about as it relates to loans is making sure that the monthly payment that comes with that loan is something that they can afford once the baby comes home. So again, just making it up as an example, if you plan to have a dual working household and you have daycare, formula, and other types of costs like feeding and clothing or bathing and putting a roof over the child's head. You know all of your traditional monthly expenses, plus the baby's expenses, you want to make sure that you've proactively budgeted for all of that, to make sure from a loan perspective that you're not taking out more than you can handle. You don't want when the baby comes home to be incredibly stressful as it relates to finances because you overestimated what you thought you could handle. Because let me tell you, there's going to be a whole other set of stressors in your life, once the baby comes home, you're going to be transitioning to be a family of, you know, three, or four or more. You're also going to have relationships that you're going to have formed throughout this process that are going to shift and morph as you go into the stage where the baby is home. So you're going to have a whole other set of emotions that you're dealing with. You don't want to have financial stress on top of that. So, my word to the wise is to be really careful as relates to loans.

Here are a few different types of loans to consider for funding your private adoption.

SOFI: Low rates and zero fees make these personal loans popular.
Lifesong: Loans available for two-parent Christian parents.
Prosper: Offering personal loans in a peer-to-peer marketplace.
Pathways for Little Feet: Provides interest-free loans to eligible families through their Family Fund Program.
Borrow from your 401K: One of the best loan options is to borrow from your 401k where you pay yourself back the interest. These loans don’t rely on credit history and you are borrowing from yourself and repaying yourself on a set schedule with interest. Check with your HR department for details.
Home equity loan: If you own your home, you may consider a home equity loan or a refinance of your mortgage to raise the funds you need.

Tax Credits

The fifth way that you can pay for your private adoption are tax credits. Now, tax credits do vary based upon your total adjusted gross income. There are limits at this time that the IRS will allow you to actually be able to take the tax credit. So, when it comes to tax credits, this is again in 2022, and I'm not an accountant, but I'm going to read to you what the IRS guidelines says.

The maximum adoption credit taxpayers can claim on their 2021 tax return is $14,440 per eligible child.
There are income limits that could affect the amount of the credit
Taxpayers should complete Form 8839, Qualified Adoption Expenses. They use this form to figure how much credit they can claim on their tax return.
An eligible child must be younger than 18. If the adopted person is older, they must be unable to physically take care of themselves.
If your household income is less than $216K then you have the maximum amount of eligibility for the tax credit and if you are above $216 but below $256 then you can receive some; above $256 receive none.

What's important for you to hear me say is one, you should consult an accountant, because I'm clearly not one. But two, this is something that if you fall below that particularincome restrictions, this is actually a way to proactively plan ahead for your adoption. So for instance, for my husband and I, we were going through our adoption process, one at first, we didn't know anything about it, we didn't know that this existed, actually, until we started getting further down the path. For our first adoption opportunity, we were able to submit this to replenish our savings was how we used it, and it helped us kind of bring home our son. So, after our daughter's adoption finalized, we submitted all of this on our taxes, we got our money back, and then we used that money to help pay for our next adoption. So for us, you know, obviously trying to adopt to that was really kind of a jumpstart into our second adoption, and it was incredibly helpful for us.

Borrow from retirement

The sixth way to pay for your private adoption, would be borrowing from your retirement. Now, again, I'm not a financial adviser, but this was something that we did in our own journey that I did find value in because it really kind of helped us close the gap that we had in being able to bring our daughter home. When it came to borrowing from our retirement, I had to contact our retirement provider from my company, and we had to go through a set of paperwork. But basically, we took a lump sum out of my retirement, and then we had to pay that back as a loan payment. Now, again, it didn't matter if that adoption opportunity went through or not, we were still going to have to pay that money back. And it also did not matter if I was having a paycheck or not, because I was on maternity leave, they would still expect payment. Even if you have your 401k with fidelity and another friend who's adopted has as well, and you're both trying to you know, borrow individually, obviously from your individual 401ks they can have a different set of rules that govern loans within their 401k versus yours. Okay, so don't just assume that and do the research on your own for yourself, because every entity has a different perspective of that. You can also have different terms or lengths of time of the actual borrowing that you're taking out.

In my case, we had the option of one year or three years, and that was it. But I've heard from clients that have had the option of six months to a year. Again, this comes down to your budget after baby is home, what are you comfortable with, what is not going to put undue stress on your relationship, or on you personally, etc. On your finances in general, if this is something that you're doing now, there's just like the, I don't know, the logical person in the back of my mind just needs to call out to you a few things that you really need to take into consideration. When you're borrowing from your retirement versus maybe borrowing from some other entity, you want to think about the cost of borrowing that money, no matter which person or entity you're borrowing from, so that you're making an educated and informed decision, the market changes all the time. And this is definitely not my area of expertise. But if you are borrowing from yourself, so taking money out of the stock market, and you pay, you know, obviously fees for borrowing that money, you have the reduced capacity to earn money on that money, thing, you need to think about whether or not the cost of that borrowing is greater or lesser than the cost of a loan of another type and weigh that for yourself. In our instance, it was a different economy, you know, when our daughter was born, and so borrowing from our retirement, and paying the interest back to ourselves, was actually something that that time because the market was not performing well, was actually a better deal for us, because we were paying ourselves more back into our actual retirement fund.

In our particular case, it cost me $50, to borrow the money in total, because of the fees and the way my employer at the time had it set up. So, it was actually a better financial decision. Now, we certainly did consult some financial gurus in our family, we have a certified public accountant in our family, and he was really instrumental and helping us think about all the different things to weigh as we went into this, so that we can make a really informed decision. So, I would really encourage you again, to do your research, go to community, ask others inside the My Adoption Coach Facebook group and certainly always happy to share what my clients are finding with the caveat that I'm not an accountant, so always do your own research.

Crowdsourcing

The seventh way to pay for your private adoption would be crowdsourcing. I know this may seem a little weird, and it may be something that's not as traditional in some circles. Crowdfunding is a popular way to raise funds for your adoption. It’s a good way for you to get the word out to your friends and family. First, you’ll create a platform at an approved crowdfunding site like GoFundMe, AdoptTogether, Kickstarter, and Indiegogo. Make sure to include your story about adoption and how much it will cost.

When it comes to these types of things, they're very different than a fundraiser. For a fundraiser, people are expecting to get something back for the kind of exchange of their funds. You're going to give them a t-shirt if they buy it right, but when it comes to crowdsourcing, this is completely different. This is them just giving you money with the expectation of nothing. Now, I'll say it's probably not nothing. They want to know what's going on in your adoption journey. They're going to feel proud and like they contributed to your journey through crowdsourcing, but crowdsourcing is becoming a great way to initially kick off your adoption journey. Same with fundraising, some actually see better results than if you just say, I'm raising $50,000 for my adoption, that is not actually something that people just want to randomly give money over for. But instead, I coach my clients to share the adoption process with their friends and family and then fundraise or crowdsource from particular elements within the process. So, you're fundraising or crowdsourcing for your home study, you're crowdsourcing for your adoption profile, you're crowdsourcing for the legal fees, right?

So, you're being specific about how much money you need to raise or to procure for that particular step. Then you're putting together a particular campaign for that particular element so that they specifically understand what's happening in your adoption journey. Ironically, the other kind of hidden benefit behind doing this and I've noticed with my clients is that they're getting less what I call random reach outs from their friends and family for updates on their journey. I had one client who went through their private adoption school with me all the way from start to finish. We worked on picking the method of matching that they were going to use. We wrote their financial plans together. We went all the way through until they brought their children home twice over now. In this step, where we were working through the adoption financial planner together, we were working through how they're going to pay for their adoption. We decided that we were going to crowdsource for the initial setup of the home study, so we were specific. I helped them with the materials that they can use to share with their friends and family to talk to them about the adoption process and how this is one step in it. Then they inserted the amount of money that they were trying to procure for their home study, and then they crowdsourced for their home study. Being really specific like that actually resulted in less questions from friends and family, about the process and about where they were in the process. And so they found it incredibly helpful to really use that process. And it's step-by-step in order to keep their friends and family updated, but also ask for funds in a different way.

Employer Adoption Reimbursement

The eighth and final way, or idea that I've come up with thus far, to help you pay for your private adoption, is through employer reimbursement plans. Now, some employers offer funds to help you pay for your adoption. I've heard of it being anywhere from $2,000 to $20,000, as it relates to reimbursement. How this typically works is that you are going to pay for the funds, or you know, pay for set items for your total adoption journey upfront. Then once you have finalized your adoption, have the adoption decree, you'll actually submit that along with receipts or etc. It's important to note that you do get reimbursed at a higher tax rate because it is seen as a bonus by the federal government. So if you're saying just for easy math sake, say they give you 10% or $10,000 of an adoption credit at your particular employer, then the government is likely going to tax that at a 40 to 50% rate versus your normal kind of paycheck every day. So, it is important that you don't just say, "Oh, great, 10 grand into my pocket", but you understand how much Uncle Sam is going to take so that you can use that. Now again, obviously those funds can be used to replenish your savings or they could be used to pay for your next adoption if that's what you're hoping to do. I know in our particular instance, both my husband's employer and my employer, actually both contributed and we ended up with $15,000 that was able to be applied to our next adoption. So, you can see where that and getting the tax credit back actually helped us have a nice little nest egg for our next opportunity to really kind of help us be further along in that process. Now, when it comes to your adoption reimbursement from your company, one, you want to make sure you understand the ins and outs and all of the requirements and restrictions and all of those types of things you want to understand if you can use it multiple times, you also want to understand the length of time in which you should anticipate getting the return. So some of them require it to be after finalization. And then they typically have a processing time beyond that. I know, in my particular instance, one of our employers had a 90-day processing period after the finalization window. Since it took six months to finalize our daughter's adoption, it actually took us nine months to have those funds returned back to us. So upfront, it was important for me to know that so that I wasn't planning for those funds to replenish my savings or my nest egg, so that we weren't putting ourselves in jeopardy of not being able to pay our bills, etc. Because we were counting on something that wouldn't come in a particular timeline.

Private Adoption Resources

So, there you have it. Eight ways to fund your private adoption. I hope those little kinds of tips hidden in there from both my clients' perspectives, and things that I've personally seen in my own adoption journeys were helpful. But remember, the point of this entire episode is to tell you that you need to really be focused on how much money do you need to save. And if you need help figuring that out, you can head on over to my Pathway resource and walk through what are the different types of adoption and how much money do you actually need to save in order to achieve that particular type of adoption.

If you need help actually planning out your finances, I have the adoption financial planner that helps you through all of that. If you have any questions remember the Facebook group is open 24/7, 365 to answer any questions that you have, and I'm in there several times a day, because remember you are worthy of support my friend, you do not have to go this alone. You do not have to spend hours upon hours googling until your fingers fall off to figure out how to achieve your dreams of adoption. Remember, anything's possible with the right plan and support, and I'm just a message away.

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Hi, I Am Amanda

I am an adoption profile expert on a mission to teach you how to adopt and help you create and share your family's story more affordably!

Amanda KovalDecember 15, 2022