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Managers of nurseries in Kent have warned councillors that funding shortfalls mean they have to rely on coffee mornings to stay afloat.
Bosses also told a meeting about funding for disadvantaged children that poor parents are not applying for financial support because they cannot be bothered to reapply each year.
Chris Millins, manager of Manor Road pre-school in Tunbridge Wells, told the pupil premium select committee at Kent County Council this was hitting the bottom line at many nurseries.
All three-year-olds get 15 hours a week at nursery for free, however this doubles if both parents work.
If parents apply for the pupil premium, which pays for extra services such as speech therapy, the nursery receives about £300 a year of central government money.
Mrs Millins said many parents found the process of applying for cash too laborious and were deciding not to come forward.
She said a solution could be automatically opting in children to receive financial support if parents received free child care when their child was two years old.
“Because the parents have to apply every year and the application forms are so long, they just don’t do it," she said.
“We can’t survive without this funding and without the community coming together to fundraise.”
Mrs Millins also told councillors her nursery covers its costs through sponsored events, fairs and coffee mornings.
Parents and families raise up to £1,200 every year to keep the nursery afloat.
She added: “In an ideal world, we wouldn’t have to rely on our parents and the community to give us money.
“I would love to be able to provide children with everything they deserve without having to worry about where the money is coming from.”
Christine Robinson, a childcare adviser for Kent County Council, told councillors that many nurseries are losing money every year as the threshold for funding changes significantly when the child reaches three years old.
She said: “The criteria for free-for-two (free nursery places for two-year-olds) is a lot different than early years pupil premium.
“The funding for two-year-olds and three or four-year-olds is too different.
“Lots of children who get free-for-two don’t get early years pupil premium next year.
"This equals 53 pence per hour and is so crucial.”
Sue Smith, early years and childcare equalities manager at the council, told the select committee that nurseries in Kent have joined an action group against “champagne nurseries for lemonade funding”.
This group, made up of nursery owners, has criticised the government for capping costs of childcare so providers cannot change the prices to cover staffing costs and rent for buildings.
Julie Miles, manager of Discovery Day Nursery in Maidstone, echoed the pleas for more funding.
She told councillors the pupil premium money they have received funds workshops on communication and a Mantra Lingua pen for bilingual children.
“In an ideal world, we wouldn’t have to rely on our parents and the community to give us
"We can’t survive without this funding and without the community coming together to fundraise" - Chris Millins
She said: “We have a lot of children who don’t have English as their first language so we got a device that means we can tell stories in two languages.
“We all read the gingerbread man in Polish. Parents also take these home to help them read stories to their children.“Talking to your children is so important for their communication skills.”During the meeting, Cllr Andy Booth asked all guests what they would do if they had a magic wand and were granted three wishes.All the managers said they would ask for extra money and more staff.