This dissertation builds on and contributes to work in the field of parent-school collaboration and the funds of knowledge approach. In South Africa, policies have been developed to promote collaboration between schools and parents. These policies, however, do not fully recognise or aim to use parents’ funds of knowledge in this collaboration. In addition, numerous studies have examined the challenges associated with collaboration amongst working-class households, however, little attention has been given to the lower middle-class in South Africa in particular. This study therefore explores the funds of knowledge of lower-middle class parents, and ways in which schools and parents manage these ‘funds’ to enhance the literacy development of foundation phase learners. The dissertation draws strongly on the work of Moll, Amanti, Neff and Gonzalez (1992) whose funds of knowledge approach holds a transformative perspective on people with a lower socio-economic background. The data for this qualitative study was collected through 30 semi-structured interviews. I argue that parents accumulate various knowledge, skills and abilities through their life experiences that could significantly enhance the literacy development of their children. The findings suggest that, while parents possess these skills, there is a lack of transmission of the skills and knowledge amongst their children. Factors that influence the collaborative use of these funds of knowledge are discussed and explored in this study. I conclude with a discussion on the dynamics of a South African classroom and existing policies on collaboration and how this affects the collaborative use of parents’ funds of knowledge to enhance the literacy of foundation phase learners.