Financial Facts for Funding Adoptions




Kelly Hughes and her husband started discussing plans for their future family before they even walked down the aisle. They decided they wanted children and that they saw adoption as a part of that picture. Foster care wasn’t their initial plan, but after thoroughly researching their options, they decided it was the best path for them.

“We learned that there are many unethical adoption agencies and a lot of birth parents who are being coerced into giving their children up for adoption,” says Kelly. “While we certainly don’t think this is the case for all adoption, we wanted to proceed very cautiously.”

Kelly, who has now fostered eight children, describes foster care as “walking alongside families who are in very dire circumstances.” She notes that the goal isn’t adoption itself, but rather to be a part of a support system that enables biological parents to get to a point where they can welcome their children back into their own homes.

“Adoption is giving your family to a child in need – not about getting a child for your family,” she explains. “If you pursue foster care with the single mindset of adoption, you may experience a lot of anger if it doesn’t work out. Many people adopt through foster care and there is very high need, but you will need to be patient as the process can be very long and drawn out.”

Foster care is free

Foster care, for all its emotional contingencies, is a much cheaper alternative to private adoption. Kelly and her family incurred only minimal costs and most of those were reimbursed. Foster parents are provided with a monthly stipend, including health and dental insurance for the child and may be eligible for federal and state tax deductions and/or refundable tax credits.

Aid with private adoption

According to the US Department of Health and Human Services’ Child Welfare Information Gateway, the cost of an agency adoption varies depending on circumstances, but may end up costing between $20,000 to $45,000 after all is said and done. Here are some ways to reduce those costs.

Employer Assistance – A study by Aon Hewitt Associates shows that 56 percent of employers offer a financial adoption benefit. These benefits are most often distributed as a reimbursement after the adoption has been completed.

Adoption Tax Credit – The Adoption Tax Credit is a federal tax credit which can bring your tax burden as low at $0. If the credit is more than the amount of tax you owe, you can carry over the difference for up to five years. 

The max credit for the 2016 tax year was $13,460. If your Modified Adjusted Gross Income (MAGI) was $241,920 or more, you did not qualify.

You can exclude any employer-sponsored assistance from your taxable income, but doing so will make you ineligible for the Adoption Tax Credit. Sit down with a tax professional to figure out the best route for your specific circumstances.

Private Grants – There are many organizations providing private grants to adoptive families for both domestic and international adoption. Here are some organizations to look to:

  • Child Waits Foundation – International adoption only.
  • Gift of Adoption Fund – Domestic and international adoption.
  • – Domestic and international adoption.
  • National Adoption Foundation – Domestic and international adoption.
  • Fundraising – Fundraising, while still difficult, is made easier by the advent of social media. The Child Welfare Information Gateway recommends as a good source for setting up your crowdfunding campaign.
  • Financing Adoption Costs – Should you find that after all your efforts, you still don’t have enough money to fund your adoption, you may want to look for financing. The two main avenues people pursue in these instances are personal loans and Home Equity Lines of Credit (HELOCs.)

Personal loans are unsecured lines of credit, meaning you put up no collateral to take out the loan. HELOCs allow you to borrow against your home’s equity and typically have lower interest rates because your home is the collateral if you fail to repay your debt. 

“Personal loans have a quicker turnaround time and require less documentation,” says Wendy Sciullo, Assistant Vice President and Banking Center Manager at Mars Bank. 

She notes that HELOCs do have longer terms, and that they may be more advantageous for some adoptive families as the money is only technically ‘borrowed’ once you write a check. If the adoption is delayed or put off, you’re not left with a loan you didn’t need for an adoption that never happened.

“When we [issue a personal loan or HELOC], we’re sensitive to the issues surrounding adoption in southern Butler and northern Allegheny counties,” says Sciullo. “These are not decisions being made hundreds of miles away. We have contact with the underwriters and let them know about the specific situation of each family.”

It’s All About Love

Today, Kelly and her husband have a robust family life with two biological and two adopted children. In 2014, she started the Foster Love Project to provide foster care kids with bags full of socks, books, toothbrushes, stuffed animals and other necessities to help them feel welcome in their new homes.

“My family has said goodbye to six children who have lived in our home,” she says. “Grieving the loss of someone still alive is one of the hardest things we’ve had to do. But we’ve walked through it and we’re stronger. We love deeper, and we would do it again.”  n

Brynne Conroy is a Pittsburgh based personal finance writer.