Targeted Funding for Disadvantage

Targeted Funding for Disadvantage aims to improve the affordability and quality of early learning for tamariki/children from disadvantaged backgrounds and ensure they start school ready to learn.

Funding is targeted to ECE services and ngā kōhanga reo with high proportions of children from disadvantaged backgrounds.

Guidelines for Targeted Funding for Disadvantage

The Ministry of Education has published Guidelines for Targeted Funding to help ECE services and ngā kōhanga reo use Targeted Funding in ways that most benefit children from disadvantaged backgrounds. These guidelines contain:

  • four key Spending Areas, which you must spend Targeted Funding within
  • evidence-based examples to help you decide how to use Targeted Funding
  • suggested planning and review processes for Targeted Funding, and
  • a list of expenses Targeted Funding cannot be used for.

Guidelines for Targeted Funding [PDF, 681 KB]

Reporting Requirements for Targeted Funding

Every year ECE services and ngā kōhanga reo that received $2,000 or more in Targeted Funding must report on how they spent their funding. Reporting can be completed online.

Reporting requirements for targeted funding for disadvantage(external link) 

Alternatively, ECE services and ngā kōhanga reo can fill out the paper-based reporting template.

Reporting template for targeted funding [PDF, 166 KB]

Email the completed template to

Reporting is due with the Ministry of Education on 1 February the year after funding is received. This relates to funding received during the previous year’s March and July funding drops and half of November’s funding drop.

Reporting must be completed at a licence level, but umbrella organisations can collate the reporting templates of their individual ECE services or ngā kōhanga reo and supply them to the Ministry on their behalf.

This information helps the Ministry of Education better understand how funding is used and how effective it is at supporting children.

Services are expected to keep a record of how they use Targeted Funding during the year, which will help when completing the reporting template.

Funding Handbook Chapter

Chapter 13 of the ECE Funding Handbook provides further information on Targeted Funding. This includes how ECE services and ngā kōhanga reo are able to pool Targeted Funding.

Questions and answers

How will the Ministry identify children from disadvantaged backgrounds?

For the purpose of the funding calculation, the 20% of children attending ECE who have spent the largest portion of their life as the dependent of a beneficiary are considered to be from disadvantaged backgrounds.

How is funding calculated?

Funding is based on an estimate of the number of Funded Child Hours (FCH) children from disadvantaged backgrounds will generate in each early learning service in the coming year – these are referred to as Targeted Hours.

Who is eligible for Targeted Funding?

Licensed ECE services and ngā kōhanga reo are eligible to receive Targeted Funding except:

  • casual education and care services
  • hospital-based services.

Certificated Playgroups are not eligible to receive Targeted Funding.

ECE services and ngā kōhanga reo with less than 20% Targeted Hours as a proportion of total FCH are ineligible for funding. This recognises that services with higher proportions of children from disadvantaged backgrounds have additional challenges.

Funding is paid on an hourly basis

Similar to how Equity Funding Component A is provided, eligible ECE services and ngā kōhanga reo will receive additional funding for each Targeted Hour.

The funding rate per Targeted Hour will be determined in December 2017 and will remain fixed unless a decision is made to change it as part of the annual Budget process.

Is funding an entitlement generated from past attendance?

No. Funding is based on an estimate of future attendance and need. It is not an entitlement generated from past attendance.

Will funding follow a forecast and wash-up cycle, similar to general ECE subsidies?

No. Funding entitlements will only be calculated once per year. Funding will not be recalculated or altered during the year based on actual attendance.

Is Targeted Funding for Disadvantage a separate funding stream?

Yes. Targeted Funding for Disadvantage is separate to other funding streams, such as Equity Funding and general ECE subsidies.

Targeted Funding for Disadvantage will show up as a separate item in funding notices.

How often will funding be re-calculated?

In December each year, starting in December 2017, the Ministry will calculate the amount of funding ECE services and ngā kōhanga reo will receive in the coming year.

You do not need to apply to be included in this process. On 1 February each year, those entitled to funding will receive a letter with their funding entitlement for the coming year.

Any change in funding entitlement will be effective from the first working day of March. Funding is likely to fluctuate year to year due to changes in attendance.

When will funding commence?

Targeted Funding for Disadvantage officially starts on 1 January 2018.

Funding will then be paid in three instalments each year in line with the ECE operational funding cycle (March, July, and November).

The first payment will be made on 1 March 2018. As shown below, this payment will cover the six month period from 1 January to 30 June 2018. All subsequent payments will only cover a four month period.

Table 1: Payments dates and coverage



Payment date

Period funding is provided for 

First year of funding


March payment 2018

1 January – 30 June 2018


July payment 2018

1 July – 31 October 2018


November payment 2018

1 November 2018 – 28 Feb 2019

Subsequent years 


March payment 2019

1 March 2019 – 30 June 2019


July payment 2019

1 July 2019 – 31 October 2019


November payment 2019

1 November 2019 – 29 Feb 2020


Payment of funding may be delayed if you have not submitted your RS7 Funding Return / Maramataka.

Will I be told which children are from disadvantaged backgrounds?

No. To protect the privacy of individual children and avoid the risk of stigmatisation, we will not identify which children are considered to be from disadvantaged backgrounds.

The Ministry’s expectation is that ECE services and ngā kōhanga reo use their professional judgement to identify and support children that require additional support due to their background.

What information will be communicated to ECE services and ngā kōhanga reo?

On 1 February each year, ECE services entitled to Targeted Funding will receive a letter from the Ministry detailing their funding entitlement for the coming year.

On 1 February each year, the Ministry will advise the Te Kōhanga Reo National Trust of all kōhanga reo entitled to Targeted Funding and their funding entitlement for the coming year. The Trust will then notify each eligible kōhanga reo individually of their entitlement.

What information is used to estimate attendance?

Our estimate of attendance for the coming year is based on FCH data submitted in the RS7 Funding Return / Maramataka for Kōhanga Reo.

If an ECE services and ngā kōhanga reo does not have a full year of attendance data, we will adjust our estimates to account for this.

What data needs to be submitted to the Ministry?

In December each year, the Ministry will calculate funding entitlements for the coming funding period.

To be included in this calculation, you must have submitted your RS7 return / Maramataka for the months between June and September that year. This ensures the Ministry can accurately estimate attendance in the coming year.

You should also ensure your ELI data is up-to-date in November each year as this data is used in the funding calculation.

How does Targeted Funding for Disadvantage relate to Equity Funding?

Targeted Funding for Disadvantage will not impact the level of Equity Funding you receive.

This initiative is not replacing Equity Funding. It is intended to complement Equity Funding Component A and its objective of reducing educational disparities in New Zealand.

Are there any restrictions on the use of Targeted Funding?

Yes. Targeted Funding cannot be used for general operating expenses or profit. On February 1 2018, these restrictions will be detailed in Chapter 13 of the ECE Funding Handbook.

How will the Ministry protect privacy and data security?

As part of this initiative, the Ministry has completed a Privacy Impact Assessment as per the best practice guidelines published by the Privacy Commissioner. This is available in the link below:

Service closures or suspensions

To be entitled to the full amount of Targeted Funding, ECE services and ngā kōhanga reo must not close or be suspended during the period that Targeted Funding is provided for.

If an ECE service or kōhanga reo closes or is suspended after receiving Targeted Funding, they will not receive any additional payments.

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