||Social Finance Accelerates Workforce Efforts with $2.3 Million from Schmidt Futures, Prudential Financial, Bank of America Charitable Foundation, and Google.org
New investment strategies like the career impact bond will improve economic mobility and address the skills gap faced by millions of Americans
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June 11, 2019 08:30 ET | Source: Social Finance
Boston, MA, June 11, 2019 (GLOBE NEWSWIRE) --
Social Finance today announced a new round of funding from Schmidt Futures, Prudential Financial, Bank of America Charitable Foundation, and Google.org. With this support, Social Finance is accelerating its innovative finance portfolio focused on unlocking access for low-income individuals to workforce training programs for in-demand jobs.
For the majority of Americans, economic mobility is declining and the prospect of achieving the American Dream is eroding. These challenges are compounded by steady divestment in the public workforce system and a growing skills gap. Low-income individuals are often unable to access critical training programs that lead to good jobs due to an inability to finance the upfront costs, perpetuating a cycle that keeps them under-skilled and under-employed.
Social Finance will build on expertise gained by establishing the social impact bond market to develop a new Pay for Success strategy, the career impact bond (CIB). The CIB is a student-centric income share agreement with a distinct impact focus on improving access to high-quality skills training programs for low-income populations. In a CIB, investors cover upfront program costs, which students repay as a fixed percent of their future income, once they gain meaningful employment. Unlike student loans, CIBs link payment to actual earnings through a set of student-friendly terms that provide down-side protection and are time- and dollar-capped.
“From healthcare to coding, advanced manufacturing to green construction, employers face persistent talent shortages," said Tracy Palandjian, CEO and Co-Founder of Social Finance. "With the career impact bond, our ambition is to up-skill individuals who have been left behind, enabling them to get good jobs and achieve economic mobility, while building the inclusive, skilled labor force that is essential to America’s long term economic competitiveness.”
Social Finance’s CIB approach is focused on effective, industry-recognized training programs in the highest growth career pathways, such as information technology, healthcare, green jobs, and skilled trades. In addition to skills training, CIBs fund critical wraparound support services, such as social workers or emergency aid funds, to ensure that all participants can enroll, persist, graduate and achieve their desired employment outcomes.
Funding from these four partners will support Social Finance to implement a series of CIB pilots over the next two years. Through a partnership with BrightHive, Social Finance is gathering and analyzing outcomes data to identify high-quality training programs appropriate for CIBs.
Social Finance will launch the world’s first CIB this year, enabling low-income individuals in ten U.S. cities to attend a best-in-class coding boot camp. Future CIBs will address a range of industries and geographies across the U.S., from green jobs in Baltimore, to welding in Tacoma, to data science in New York City.
Alongside these projects, this funding will also support the broader dissemination of learnings and best practices. Social Finance is currently working in partnership with the Federal Reserve Banks system to explore and communicate how innovative, results-based financing models are reshaping the workforce and driving better economic mobility outcomes.
“At Schmidt Futures, we aim to promote shared prosperity by connecting people to higher paying jobs and breaking down barriers that keep people chronically underemployed,” said Jordan Blashek, Manager at Schmidt Futures. “We are excited to partner with Social Finance as they develop the world’s first career impact bond to address the systemic workforce challenges that we care deeply about.”
“Skills training and education are critical components to securing lifelong financial wellness, but too often out of reach because of their high cost,” said Sarah Keh, Vice President of Corporate Social Responsibility with Prudential. “Prudential’s support of Social Finance’s innovative financing options will help alleviate the financial burden to access high quality workforce development efforts and will help to ensure that all Americans have the resources they need to succeed.”
“For Bank of America, this work builds on our longstanding partnership with Social Finance to advance innovative solutions to pervasive economic mobility challenges,” said Kerry Sullivan, President of the Bank of America Charitable Foundation. “We’re honored to support this cross sector collaboration and help contribute to dialogue on how to up-skill Americans and improve the long-term sustainability of our communities.”
“At Google.org, we're committed to helping people access the skills they need to thrive as work changes,” said Andrew Dunckelman, Head of Economic Opportunity at Google.org. “That's why we're delighted to support Social Finance's new initiative, which will generate new data about what programs succeed at equipping people with skills and help low-income people access those programs.”
Social Finance is accelerating efforts to improve economic mobility, in partnership with Schmidt Futures, Prudential Financial, Bank of America Charitable Foundation, and Google.org, with the ultimate goal of unlocking opportunities for all individuals to thrive.
Social Finance is a 501(c)(3) nonprofit organization dedicated to mobilizing capital to drive social progress. We believe that everyone should have the opportunity to thrive and that we can catalyze those opportunities through a set of innovative financing strategies called Pay for Success. To date, Social Finance has mobilized nearly $100 million of capital to address a wide range of social issues in areas such as criminal justice, education, health, and workforce development. Our sister organization, Social Finance UK, launched the world’s first Social Impact Bond in 2010.