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CACFP Administrative Manual Section 1.1

Child and Adult Care Food Program Administrative Manual Section 1.1: Business Entity Type.

Table of Contents
Terms, Definitions, and Acronyms

Section 1: Program Eligibility

1.1 Business Entity Type

To participate in the CACFP, an agency may be:

  • Public;
  • Private, nonprofit; or
  • Private, for-profit.

Public (Centers and Day Care Home Sponsors)

A public agency is part of a larger governmental entity that may be local, state, or federal. In some cases, a public agency may be part of an Indian Rancheria or reservation. Examples of public agencies include public institutions of higher education (such as colleges or universities), public SFAs (such as school districts), city or county governments, and military bases.

Private, Nonprofit (Centers and Day Care Home Sponsors)

A private, nonprofit agency will either have its own tax-exempt status or be part of a larger organization that is tax-exempt. The Internal Revenue Service (IRS) grants the tax-exempt status, issuing a Letter of Determination under IRS Code 501. Most private, nonprofit centers that participate in the program have tax-exempt status under Section 501(c)(3) of the IRS code. A nonprofit organization must also be incorporated in the State of California.

A nonprofit corporation is organized and operated for those public or charitable purposes recognized under State of California corporate law as well as federal and state statutes. Consequently, a nonprofit corporation must restrict its advocacy and lobbying activities to those allowed in their exempt certification and engage only in limited political campaign activities.

A nonprofit corporation in California must have a board of directors. The board of directors for an agency must have adequate oversight of the CACFP. At a minimum, the board of directors should have basic knowledge of the program, periodically assess program management, and know of any compliance issues that result from program reviews or audits. An acceptable Board consists of a majority of members whose livelihood is independent from, and who hold no personal financial interest in, the agency’s activities, and who are not related to each other or agency personnel.

Private, For-profit (Centers)

CC centers that are private, for-profit may qualify for program participation by meeting one of these two criteria:

i. The lesser of 25 percent of center enrollment or of the licensed capacity is eligible for free or reduced-price meal reimbursement according to the USDA income eligibility guidelines.

OR

ii. The lesser of 25 percent of center enrollment or of the licensed capacity receives subsidized care (federal Title XX benefits).

For-profit agencies interested in the At-risk Afterschool Meals Component of the CACFP must have a traditional CC center at the same location that meets one of the two criteria listed above. The 25 percent criteria is based on the enrollment/license capacity of the traditional CC center component, not the ARA Meals Component.

A private, for-profit ADC center may qualify as long as 25 percent of eligible, enrolled participants receive subsidized care (federal Title XIX or Title XX benefits).                    

A for-profit independent center must ensure initially, and for each claiming month thereafter, that it meets the appropriate eligibility criteria. That is, the center must meet the 25 percent eligibility threshold in order to claim meal reimbursement for each month of a program year, from October through September.

Likewise, a for-profit center sponsor must ensure that each of its sites meets the 25 percent threshold in order to claim meal reimbursement on a monthly basis for each center. For example, a sponsor with five sites must ensure that each site meets the eligibility threshold before it claims meal reimbursement for the site. If sites do not meet the threshold, the sponsor may claim meal reimbursement only for those sites that do meet the threshold for that claiming month.

Further guidance on independent centers and center sponsors will be addressed in the CACFP Administrative Manual Section 1.3.

Reporting Changes

As stated in the Agreement to Participate that agencies sign when joining the CACFP, if any of the following changes occur, agencies must immediately report such changes to their assigned CACFP Specialist:

  • Entity type
  • Tax ID number
  • Agency name
  • Agency address
  • Ownership or change in responsible principals

A list of program specialists by county can be found on the CDE CACFP Contact web page. Refer to CDE MB CACFP-06-2019: Reporting Entity Type, Tax ID Number, Name, Address, and Ownership Changes to the CACFP and the SFSP located on the CDE CACFP MB web page for more information. 

References: 7 CFR, sections 210.2, 226.2, 226.10(c), 226.11(c)(4), 226.17(b)(4), 226.19(b)(5), and 226.19a(b)(6); MB CACFP-06-2019: Reporting Entity Type, Tax ID Number, Name, Address, and Ownership Changes to the CACFP and the SFSP; MB CACFP-04-2016: Requirement for Independent Board of Directors; and MB 02-223 Eligibility of For-Profit Child Care Centers; USDA Guidance for Management Plans and Budgets

Questions:   Kayla Christensen | kchristensen@cde.ca.gov | 916-324-6153
Last Reviewed: Friday, June 12, 2020
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