A few months ago, I naively wrote a quick post about HelpUs Adopt.org. They were doing a fundraiser for their adoption grants, and wanted to get the word out about a bracelet that had been designed for the cause. I wasn’t expecting the response that short post got.

It seems that in between the time we adopted our daughter (2005) and we adopted our son (2008), the idea of “adoption fundraisers” caught on like wildfire. Maybe I just wasn’t as immersed in the blogosphere in 2005 as I am now, but adoption fundraising seems to have become a popular, accepted way to raise funds to pay for adoption expenses.

Last month, I posted a run down on adoption expenses, and promised that this month I’d throw out some ideas on how to finance such a venture. Let me start out by saying that I know the fact that money is exchanged in adoption is a controversial, sometimes shady topic. Certainly corruption exists in the adoption field, just like it does every place else. Certainly there are money-hungry opportunists who prey on the not only the biological parents to relinquish a child, but also adoptive parents who want to parent more than anything in the world and who will jump through hoops and write large checks to do so.

But like anything else, adoption services do cost money. Social workers and attorneys are trained professionals entitled to make a living. Every business has expenses. As a prospective adoptive parent, I strongly encourage you to find out how the fees you pay are being used.

HOW TO PAY FOR AN ADOPTION

Paying for adoption can be comparable to paying for a year of daycare, a year of tuition at state college or a year of college at private college. The difference is that usually, the placement fee is due at time of placement. This means that you need to have the funds available when you accept an adoptive placement. If you are doing a domestic adoption, once you are home study approved, a placement could happen in a week or in a year, there is really no telling. Our agency made it clear that we should really have the funding available once our home study was complete and our profile book was ready to be shown.

So, how do you raise the money for an adoption?

1)      Personal Savings – Ideally, you’d have a healthy savings account to dip into for adoption fees. I’ve yet to meet an adoptive family that had all the money just sitting there in an interest bearing account, but I’m sure they are out there.

2)      Home Equity Loan-If you’ve built equity in your home, this may be an option.

3)      Personal Loan/Line of Credit—the tricky thing about borrowing money for an adoption is that there is no collateral. If you default on your loan, the bank has no recourse. The interest rate on this kind of loan will depend largely on your credit score, and it will probably be higher than installment loan rates.

4)      Borrow from your IRA or 401(k)—there are tax implications for this, but if you’d rather borrow from yourself than take on new debt, this could be a good option.

5)      Employer Assistance-many companies offer some reimbursement for adoption expenses. While the benefit may be stated as particular amount, typically that amount is subject to taxes. Also, funds are not typically disbursed until after the adoption is finalized.

6)      Start paying yourself/budgeting for your child’s expenses-this is probably easiest for your first adoption, particularly if you are currently earning two incomes and are either planning on paying for childcare or living on only one income after you adopt. Basically, save the money you will have to allocate for childcare or bank the income you’ll be saying goodbye to when your child comes home. You’ll be amazed at how quickly it adds up (infant daycare can easily cost the upwards of $1000 per month).

7) Adoption Grants There are grants available to help pay for adoption expenses. I don’t know of anyone personally who has used grant funding, but http://www.affordingadoption.com/grants.php is a good resource for some ideas of where to start looking for such funding.

8) Adoption Fundraisers As I stated above, these seem to have become a normal and accepted way to fund an adoption. The very first adoption fundraiser I ever saw was at my church in 2005, shortly after Macey was born. At our annual funfest/craft fair, a family held a bake sale and cookbook sale. They were working on funding their second adoption. They appealed to their community, and the community responded.

Since then, I have seen dozens of ways to fund raise on the Internet for an adoption. After thinking about it, my take on them is this: it’s basically getting a second job. Instead of doing a second job after hours, these families are basically setting up Internet shops to raise funds. And by advertising  why they are selling candles or lip balm or tote bags, the hope is they will sell a few more. Like anything else, people are free to support them, or if the idea leaves a bad taste in your mouth, you’re free not to support them.

Regardless of How You Fund Your Adoption, Keep This in Mind

As soon as we started looking into adoption, agencies were eager to tell us about the adoption tax credit, a tax credit that is applicable once your adoption is finalized. It is a handy tax credit for adoptive families….once your adoption is finalized. For us, Junior was born and placed with us in June of 2008. We were able to claim him as a dependent on our 2008 taxes, but not able to start using the tax credit because his adoption wasn’t finalized until January 2009. This means that it’s only now, in February 2010, that we are seeing the benefits of that tax credit. There is more posted about the adoption credit by Clint, and I encourage you to become knowledgeable about how it works. There can be months, even years, between the time you pay out funds for an adoption and the time you actually get any sort of credit applied to your Federal Income Taxes.

Michelle Mc is eagerly awaiting her tax refund from Uncle Sam this year. When not playing with TurboTax to maximize her refund, she can be found on her own personal blog, Gotchababy.