The Rise of Private Equity in Fostering — What It Means

1. Private Equity’s Growing Role in UK Fostering

Private equity (PE) investment has rapidly expanded within the UK’s fostering sector. As of mid-2025, nearly a quarter (23%) of foster placements in England are managed by Independent Fostering Agencies (IFAs) backed by private equity .

These firms—including the National Fostering Group (NFA)—are now major players, handling over 16,000 places.

In 2023, NFA generated an underlying profit of £104 million, representing a 21% profit margin. Meanwhile, Foster Care Associates (FCA) achieved an average EBITDA of £1,500 per placement

2. Financial Impact and Ethical Concerns

The influx of PE has reshaped the financial dynamics of fostering:

• Large profit margins—such as the £40 million combined profit from the top three PE-backed agencies in 2024—raise questions about the commercial nature of these services .
• Analysts have noted inflated placement costs—councils may pay up to £8,400 more per child via IFAs than through local authorities, increasing strain on public finances .
• In tightly managed sectors like childcare, PE-backed providers have been criticized for focusing on expansion and profit over quality and equity, especially in underserved or deprived areas .

The commodification of care—treating vulnerable children as profit centers—has sparked ethical backlash, with thinktank Common Wealth warning of increased instability and risk should one of these firms collapse .

3. Operational Risks and Systemic Dependence

Local authorities increasingly depend on PE-backed IFAs to plug gaps in foster placements:

• Independent Fostering Agencies now account for about half of all foster placements, up from one-third in 2016 .
• The Local Government Association has raised alarms that should a major provider fail, councils would struggle to rehouse large numbers of children quickly .
• Financial pressures on councils, combined with supply shortages, have deepened reliance on private providers, potentially distorting long-term planning and support models .

4. Calls for Reform and Ethical Alternatives

The current climate has prompted strong pushback:

• TACT’s CEO called for the “dismantling” of private equity involvement in fostering, advocating for non-profit alternatives and a system that prioritizes children’s welfare over profit.
• Campaigners argue for greater transparency, stricter regulation, and a rebalancing toward council-led and charity-run offerings that aren’t driven by financial returns.
• The Department for Education has acknowledged concerns and is exploring legislation to limit “excessive profits” and bolster foster carer numbers through funding .

5. Voices from the Field

Here’s how real-world perspectives reflect the debate:

We’re being told to do more with less… children and carers are the ones who are worse off.”
— A foster care worker commenting on PE ownership, highlighting cuts and pressure for profit over welfare

It can be absolutely impossible to follow the money. The agencies are owned by one company which is owned by another…

— A concern expressed about opaque ownership chains and lack of transparency.

6. What It All Means

In Summary

The rise of private equity in the UK fostering sector has undeniably reshaped the landscape. While it has filled gaps, it has also introduced high profit margins, ethical concerns, and systemic fragility. For many stakeholders, the emerging consensus is clear: children deserve care systems rooted in stability and empathy—not profit.