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Exploring Innovative Financing Models to Strengthen Talent Pipelines

April 12, 2024 3-minute read
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Sectoral workforce training programs are a critical part of the landscape of workforce development. The most effective models are built on partnerships with employers and provide learners with a clear and direct path to a good job. The role of these programs will be even more critical as millions of new jobs are created in green energy, infrastructure, and advanced manufacturing. These new jobs, many of which will require less than a bachelor’s degree and pay above-average wages, add to an already low unemployment rate and significant existing unmet workforce demand in key sectors like health and education services and manufacturing (Sources: The Brookings Institution, U.S. Chamber of Commerce).

But there aren’t enough training programs to meet these needs, and many that do exist are not designed to serve low-wage workers and learners from low-income backgrounds that can most benefit (Source: National Skills Coalition). Social Finance, a national nonprofit, is undertaking a multi-year effort to pilot innovative financing models focused on developing more high-quality sectoral training pathways that respond to local workforce needs and the needs of diverse learners. These innovative financing strategies address what Social Finance sees as the core barrier to developing and scaling effective training pathways: coordination across employers, providers, and governments to align interests and resources.

With an Ascendium grant, Social Finance will build on its work developing financing and partnership strategies in two areas: expanding pre-apprenticeship in high-demand fields and building rural talent development pipelines to serve local learners and employers.

Expanding pre-apprenticeships in high-demand fields. Pre-apprenticeship programs are intended to help learners build the fundamental academic and professional skills necessary to gain access to apprenticeships, which are often selective and may require preexisting industry knowledge and training. But unlike apprenticeships, pre-apprenticeships are typically unpaid and don’t guarantee entry into a job. They’re also underutilized and underfunded as a strategy for growing a diverse talent pipeline. Social Finance will bring together unions, employers, and training providers to explore how they can collaboratively develop more pre-apprenticeship pathways, specifically by solving for the challenges of financing those programs in a way that recognizes the value they offer to multiple stakeholders and that make those programs viable and effective for learners from low-income backgrounds.

Building rural talent pipelines. Many employers understand that they need to adapt to a changing labor market by investing in the talent they require. However, they may not have the capital or capacity to experiment with talent development models, especially in rural areas. The cost to developing or significantly expanding training programs may be too high for employers in rural areas, particularly when they aren’t sure whether or when those investments will pay off in terms of a robust talent pipeline. Social Finance will partner with anchor employers in rural regions, such as large healthcare systems, as well as government and postsecondary leaders, to create training pathways that meet local needs. Core to that strategy will be the development of financing innovations that lower the risk for employers and align the interests and incentives of all stakeholders critical to creating a thriving talent development ecosystem in rural regions.

Ascendium’s investment in Social Finance recognizes that experimentation and innovation are critical to finding ways to scale effective training programs that have the potential to give learners from low-income backgrounds a path to great careers. Social Finance is also the learning and management partner for the Google Career Certificates Fund, through which Ascendium is investing in the growth of Merit America and Year Up as providers combining digital skills training and supportive services to help more than 20,000 learners find good jobs in tech fields. The learning across these projects is vital to a future where more learners have access to training programs that offer them a direct path to a career and upward mobility.