This is part 2 of a series. Read Part 1

September 21, 2020 – By Betsy Zeidman, Cristina Alaniz and Iliriana Kaçaniku

Since America’s inception, immigrants and refugees have come to the U.S. in search of a better life. They settle with or near family and seek employment using the experience they bring from their home countries. They may access resources provided by government or social service agencies, or in the case of refugees, resettlement agencies. They receive services for a set number of weeks and success is determined by how many find a job upon completing the program. But little incentive exists to find a “quality” job, that is, one with equitable benefits and compensation, support in and out of the workplace, and growth potential. They often end up working in grocery stores or as home health aides, and are frequently overlooked by their customers and clients.

But this may be changing. The global COVID-19 pandemic has refocused our country on the value of “essential workers,” and heightened awareness of the large numbers of immigrants and refugees that compose this workforce. At the Beeck Center for Social Impact + Innovation, we see the many barriers these workers face in trying to integrate and advance in the workplace, and the long-term impact of such barriers on our society and economy as a whole. With the support of the World Education Services (WES) Mariam Assefa Fund, we have explored expanding the economic integration and mobility of immigrants and refugees through financing workforce training.

Recognizing that this is a multi-faceted challenge requiring multi-faceted approaches, we recently convened two meetings of individuals, intentionally selected for their diverse expertise in workforce training, immigrant integration and finance. During the first session, we focused on development and training programs and identified a number of best practices for programs serving this population. Our second session explored ways to finance effective training programs, which we summarize here.

The workforce development field is large and scattered with many players and fragmented funding, with the path for immigrants and refugees even more complex (See Figure 1). We also have little data on many critical elements, such as how many immigrants and refugees participate in workforce training programs (as they are not tracked as a discrete group); and how much it costs to train a worker (as important ancillary costs are rarely tabulated). We do know that money for these programs comes from government (federal, state and local), philanthropic grants, the immigrants themselves, and employers seeking to upskill their workers – with some supporting the programs and some offsetting the cost to workers. These funds then get distributed to organizations through charitable grants, loans, “earn & learn” apprenticeships, public-private partnerships, and more. Together, these financing efforts are important, but a large capital gap remains, as workforce development’s demand for funds simply outweighs its supply.

Chart of Marketplace of Immigrant Workforce Development and Funding
Figure 1 – Marketplace of Immigrant Workforce Development and Funding.

In seeking options to fill that gap, discussion participants agreed that capital supporting workforce development programs should be patient and flexible; how to find and deploy such capital is the question. There were multiple options, but six key recommendations emerged.

Clarify the problem, identify the program(s) that could solve it, and then determine the most appropriate source and form of capital to cover the cost. Discussions around funding often submit to the lure of innovative financing vehicles that can become overly complex and difficult to implement, and organizations lose sight of the problem at hand – immigrants and refugees need quality jobs, and employers need trained workers. Focus on those needs first, and then figure out the best funding tool.

Structure financing to reward and incentivize measurable outcomes. If the goal is higher wage jobs, establish benchmarks for measurement, track data rigorously, and share results. Pay-for-Success (PFS) models champion this type of outcomes-based financing, and there are several workforce PFS pilots underway. Two examples include:

  • The Massachusetts Pathways to Economic Advancement Social Impact Bond (SIB) raised over $12 million from private investors to front the cost of expanding vocational English language lessons designed for immigrants & refugees in Boston. Launched in 2017, investors received returns early, and trainees saw increased earnings as measured by administrative wage data.
  • Philadelphia Works, the city’s Workforce Development Board, is piloting a slightly different SIB, one that trains workers for a single employer. The employer (in this case, Comcast) is the ultimate payor, reimbursing the non-profit based on preset targets for both employment and retention. A third party monitors and measures results. Comcast’s involvement at the outset ensures that the training supports actual jobs.
  • There are also publicly funded programs that tie payment to performance measures. For example, Texas State Technical College receives payments from the state based on the earnings of its students over their first five years post graduation.

Align financing with growth. These variations on the PFS models use growth as the proxy for success and help mitigate risks to the trainee. Examples include:

  • An Income Sharing Agreement (ISA) allows people to enroll in education programs for low or no cost, and pay tuition over time as a share of their earnings. These have traditionally been the province of students in 4-year college programs and challenged due to their high interest rates. The San Diego Workforce Partnership (SDWP) is piloting a student-centric ISA: interest rates are reasonable and no repayment is due until a student’s annual salary is at least $40,000. SDWP is the first Workforce Board to try an ISA.
  • The Career Impact Bond (CIB), developed by Social Finance, is similar to the ISA and the SIB, as it draws together a wide variety of stakeholders (employers, training organizations, donors and investors) to advance economic mobility among overlooked communities. The model integrates incentives and aligns risk among all parties:
    • the training entity fronts some of the initial costs, with repayment from investors;
    • high quality training for sectors in need of workers (in this case IT) maximizes job placement;
    • building in philanthropic support allows the CIB to finance wraparound services (linked to higher completion rates), and
    • student-centric terms similar to those used by SDWP increase repayment.
  • Revenue-Based Models: Where ISAs enable individuals to access training and pay for it once they generate income, revenue-based financing allows commercial entities to access capital and repay it once they generate income. This financing (also known as royalty financing) could serve as an alternative to debt for training organizations that support immigrants and refugees (and is of particular interest to Muslim immigrants whose tradition rejects paying interest). However an organization must have a clear plan to generate revenue, e.g., a contract to train the workforce of a stable employer.

Braid in different streams of capital – public, philanthropic and private – in two key ways:

  1. Staging: Program needs evolve over time, so staging sources and structures of capital may make sense. Government and philanthropy support training for basic skills, such as English language learning. As workers seek more specialized training, employer support kicks in.
  2. Blended Models: Workplace solutions increasingly appeal to impact investors and foundations seeking opportunities for mission-related investments. A blended capital fund may support a training program, where sources with low- to no-return expectations (e.g., philanthropic funds’ program-related investments) could absorb risk that private capital generally wouldn’t bear.

Research all available pools of capital. Important sources of capital for workforce training and development can sometimes be overlooked or underutilized, so supporters should be sure they are looking into all available options. A few examples include:

  • Government funds resting in federal, state and local programs. For example, many community colleges providing workforce training can receive funding for administrative services from SNAP E&T (Supplemental Nutrition Assistance Program Education and Training). SNAP E&T also covers a student’s tuition and fees, and a portion of ancillary expenses, such as books, dependent care and transportation, as do Pell Grants. Community Development Block Grants (CDBG) channel funds to local workforce departments.
  • Equity to help build businesses that provide or support training, participate in purchasing cooperatives and make investments in social enterprises that provide critical support services.
  • Community Development Financial Institutions (CDFIs) as useful (and underutilized) partners. They exist amid the targeted populations and know the communities’ needs. They are patient and flexible, and often provide a bridge to mainstream capital. In the recent economic crisis, they have been invaluable and are largely limited only by their size.

Keep it local. Local community partnerships can finance effective, sustainable workforce training programs. As an example, the Alamo Colleges Westside Education and Training Center is a specialty campus for workforce development of immigrants and refugees on the West Side of San Antonio, Texas. It represents a collaboration among the city, local economic development department, community college, school district, small businesses, nonprofits and funders, and offers targeted academic programs and social service services. When the last Levi’s plant closed the facility became available and the full community rallied. Government, foundations, and employers provide financial support.

In partnership with the WES Mariam Assefa Fund, the Beeck Center began exploring effective ways to finance and expand the economic integration of immigrants and refugees through workforce training a little over a year ago, when the world was a very different place. The arrival of COVID-19 clarified the importance of these efforts, and highlighted areas of opportunity, including:

  • We must get better data on the immigrant and refugee population. They are not simply a subset of low-income communities.
  • We know that these efforts work best when all stakeholders have skin in the game, so we must embed such mechanisms into partnerships of all sorts: labor-management partnerships; public-private partnerships; community collaborations, to name a few.
  • We know the field needs patient, flexible capital, so we must tap the ultimate patient capital, philanthropy. However, funders must not simply hand over grants. They should lean into risk mitigation and use their funds to catalyze the participation of new providers of capital.
  • We must determine which outcomes-based models work best, and for whom and replicate those with attention to each market’s local context.
  • We must consider the systemic issues that hinder immigrants and refugee workers, and advocate for incentives that support pro-worker programs.
  • We must remember that amid all these challenges, opportunities exist for those who remain aware. For instance, the Building Skills Partnership (BSP) recognized that before businesses could reopen after the COVID19 quarantine, they would need deep cleaning and sanitizing. Given the numbers, this would create a huge demand for workers. The Labor-Management Partnership created a program to train its janitors to meet this need.

We look forward to sharing these and additional lessons we’ve learned over the past year, and hope to help inform the broader diversity of stakeholders in the workforce development field as they move forward.

Betsy Zeidman is a Fellow in the Fair Finance team at the Beeck Center

Iliriana Kaçaniku is a Consultant in the Fair Finance team at the Beeck Center

Cristina Alaniz is a Student Analyst in the Fair Finance team with the Beeck Center.

This is part 1 of a series. Read Part 2

August 28, 2020 – By Betsy Zeidman + Cristina Alaniz

In the past six months, the U.S. has lived through the convergence of three crises: the worst pandemic in 100 years, the worst economic decline since the Great Depression, and multiple incidents of police violence that triggered unrest in many cities as society attempted to reckon with longstanding racial disparities. These events have generated chaos and insecurity; and forced us to rethink how to live and work, how to educate ourselves and our children, and how to keep our families healthy and safe. However, while everyone feels unsettled, some communities face greater disruption than others. This imbalance aggravates existing disparities and challenges the ability of our entire country to rebound.

The most affected groups include native-born communities of color and immigrants and refugees. They are more vulnerable to COVID, generally have less access to medical care and fewer resources to pay for it. The economic hits hit them the hardest. Twenty percent work in industries most affected by the downturn, and many are not eligible for the emergency funds provided by the government. Those who do have jobs fill our “essential” workforce: e.g., home health aides, janitors, grocery store employees, and bus, metro and taxi drivers. If they don’t work, their families suffer, but we suffer too. They need a way back into the workforce, and a way up from their entry-level, subsistence jobs.

With the support of the World Education Services Mariam Assefa Fund, the Beeck Center for Social Impact + Innovation has been exploring how targeted training might help immigrants and refugees integrate into the economy and build career paths. Recognizing that this is a multi-faceted challenge requiring multi-faceted approaches, we recently convened two sessions with a brain trust of experts in not only workforce training and adult education, but immigration integration and finance as well. We included employers and employees from the private sector, the social sector, and government. During the first discussion, we aimed to understand what makes a workforce development program that is high in quality, reasonable to implement and likely to generate measurable impact – providing workers with skills needed by employers; and placing workers on the road toward higher quality, higher wage jobs. The participants’ diversity of experience generated a wide-ranging discussion and some best practices emerged:

  • Engage key parties in designing the program. These parties include: workers, employers, training organizations, immigrant-support groups and funders. Incorporating input from everyone affected by a program increases its likelihood of success. Employers certify that the skills being taught are those for which they have jobs to fill; and it is important to include information and buy-in from the employers’ various stakeholders (e.g., management, human resources, C-Suite). Workers ensure the program will meet their needs with appropriate contextualized English language learning and life demands like child care. 
  • Invest in trusted intermediaries and foster ongoing connections among providers and immigrant groups to generate career pathways. Many of the training organizations noted that the insular nature of immigrant support groups limited their interactions, so spots in the programs remain empty. It makes sense to work with familiar intermediaries, such as community-based organizations, immigrants’ rights groups, and churches. Additionally, in the current climate, immigrants will be much more comfortable participating in something which has been “blessed” by a known party.

Bawi Za Muang fled Burma due to severe and increasingly threatening mistreatment by the military. After struggling to survive for many years without a home, Muang and his family arrived in Des Moines, Iowa in 2013, speaking no English. They persevered, taking English classes and driving lessons, and eventually, Muang found a job with Tyson’s Food. In several of its markets (including Des Moines), Tyson’s has solved the problem of an aging workforce by hiring from local refugee populations. Muang advanced at the company, earning higher wages and eventually buying a house. Along the way, he benefitted from Tyson’s partnership with EMBARC (Ethnic Minorities of Burma Advocacy and Resource Center), a local refugee-led organization. EMBARC attunes Tyson’s to the real needs of its immigrant employees and provides services that help employees acclimate and thrive. In 2019, EMBARC’s Legal Navigator Program helped Muang and his wife obtain citizenship.

  • Incentivize programs that enable immigrants and refugees to access “good” jobs, as opposed to any job. Success in the current system tends to be defined by outputs (number of program graduates, number of placements in jobs) rather than outcomes (wage growth, jobs with benefits, etc.). In addition to providing more to the workers, the immigrants will have more money to spend in the local economy and will pay higher taxes, both of which return value to society. Some new initiatives are trying to focus on outcomes, but the system also needs incentives that enable workforce organizations to support the immigrants in their path toward better jobs (e.g., funds for ongoing assistance, access to networks, etc.).
  • Address digital literacy and digital access. Even before the pandemic heightened the need for facility with technology, digital skills were becoming important to almost all jobs (restaurant workers need to be able to enter orders electronically, much of healthcare uses technology, etc.). Immigrants are less likely to have access to the necessary technology or be able to afford broadband, limiting their ability to access training.

Maria Chavez has been studying English since 2018. She found it difficult to make progress because she didn’t have uninterrupted periods of time to go to class. When mobile-first learning company Cell-ED launched its Million Learner Challenge offering workers in low-quality jobs free access to its curriculum, she jumped at the chance. She listens to lessons over the phone, or receives them by text or message. ”It’s so practical because the class is always there.”

  • Emphasize other transferable skills such as capacity with English, and customer relations, both central to many jobs, in addition to sector-specific training. Formalize certifications, badges or other means of validating skills learned to communicate progress to employers and the broader community.
  • Bring the training to the workplace, including providing employees with the tools they need to participate. This ensures that the training includes the most relevant skills, and acknowledges the challenges immigrants face in trying to build training into a day that may already include more than one job, as well as family care responsibilities. 

Leonor, a janitor at Water Garden business park in Santa Monica, CA, recently completed the Infectious Disease Certification Program; a partnership among the nonprofit, Building Skills Partnership, her labor union, SEIU-USWW, and her employer, Allied Universal. She was grateful that her employer and instructors were committed to investing in her education at work. “It helps to have a supervisor who is very involved in the entire process,” she says. “One thing that stood out to me was that our supervisor was taking the class like everyone else, as if he was one of our peers.”  After the training, Leonor was able to explain to a building tenant at Water Garden the changes that she and her coworkers are making to help mitigate community spread.

  • Create apprenticeship or pre-apprenticeship programs. Partner with employers, trade unions or other relevant entities to develop a clear pathway to more stable employment.

Forrest Sebba was born in the Philippines and had struggled to secure steady work in the U.S. As a transgender person, he was subject to discrimination and suffered from depression. Cooking gave him joy, as it brought back memories of his grandmother. The Los Angeles Hospitality Training Academy’s Registered Culinary Apprenticeship Program, provided in partnership with the U.S. Department of Labor and the State of California, taught the skills he needed, allowed him to build confidence, and introduced him to potential employers. Before completing the apprenticeship, he secured a job as a union cook with the Loews Hollywood Hotel.

  • Build wraparound supports acknowledging the multiple demands on an immigrant’s life. These may include stipends to cover childcare, loaned tablets to trainees that don’t have access to computers, transportation vouchers for in-person training, and more.

There is no single solution to the challenges faced by immigrant and refugee workers (and aspiring workers). Furthermore, because of their tight community bonds, there shouldn’t be a single solution: programs must be culturally sensitive and aligned with the needs of the local community. That said, the lessons highlighted here can be applied toward building effective programs that generate opportunity for immigrants and refugees and unleash a workforce that will contribute to our wellbeing. Our second meeting with the group drilled into financing considerations. 

 

Betsy Zeidman is a Fellow in the Fair Finance team at the Beeck Center

Cristina Alaniz is a Student Analyst in the Fair Finance team with the Beeck Center.

Read Part 1: The Problem We’re Trying to Solve

Our Approach to Solving the Problem

The Beeck Center creates space and opportunity for uncomfortable conversations, while seeking and creating bold solutions. The Fair Finance Initiative is an ambitious program that aims to right the rules, both written and unwritten, currently in place for investment of capital in low-income, disenfranchised, and underserved communities. 

Over the next two to three years, the Fair Finance Initiative is focusing on the following programs:  

Reimagining Community Investing for the 21st Century

We are focused on a future for community and sustainable investing that is rooted in the lessons of the past, but which results in systems change driven by policies that do not simply tinker around the edges. The Beeck Center is soliciting, examining and designing policy solutions on a federal and local level to deliver positive social outcomes in communities that have been historically overlooked and underestimated by traditional investors. Potential policy recommendations include the creation and capitalization of a new form of tax-exempt community institutions, deconstruction of the U.S. Department of Housing and Urban Development, and the consolidation of programs focused on community development under a new agency. The initial stages of this work are being generously supported by Incite whose mission is to build movements by transforming big ideas into big deals.

Project Lead: Lisa Hall Funding Partner: Incite

To uncover bold new ideas we must first understand the past. This timeline, created by the Beeck Center, charts key programs and significant developments in “A History of Community Investing in the United States.” Created by Student Analyst Kriti Sapra through the Knight Lab. 

Driving Impact in Opportunity Zones

The bipartisan passage of Opportunity Zones legislation has led to multi-stakeholder conversations around community investing. The Beeck Center is supporting the original intent of the legislation by driving positive social outcomes in Opportunity Zones. Since February 2018, the Beeck Center has led national efforts to incorporate impact objectives into investment strategies for Opportunity Funds. We are using the conversation swell around OZs to collaborate with investors and test new models of community investment. 

Opportunity Zones are an ideal conduit for exploration of creative ideas for location-based community investing in the United States. Earlier this year, In partnership with U.S. Impact Investing Alliance, we produced the Guiding Principles and Impact Reporting Framework for Opportunity Zones in addition to creating an Opportunity Zone Investor Council. We are grateful for the generous support of the 15 Council Members, a powerful group of investors, developers and fund managers that are setting a new standard for impact. 

Project Lead: Jen Collins

Colorful grafitti saying "Real equality isn't possible if we don't celebrate our differences
Photo by Matteo Paganelli on Unsplash

Financing Immigrant and Refugee Integration

The U.S. population is rapidly diversifying. As has been the case since the founding of the country, much of this diversity comes from immigrants and refugees—currently over 44 million people, nearly half of whom are of working age. It benefits everyone to integrate these new arrivals into society and tap their expertise, energy and earning potential.

Yet, we currently have a systemic problem. Many individuals are unemployed or under-employed, At the same time, the U.S. anticipates a shortfall of 1.9 million workers by 2024 (Bureau of Labor Statistics). Bringing immigrants and refugees into the workforce will enable them to use their skills, support their families, and contribute to the U.S. economy. This integration would represent significant impact at scale.

The Mariam Assefa Fund, a new initiative of World Education Services (WES), seeks to reduce the barriers that prevent immigrants and refugees from finding meaningful employment in the U.S. Thanks to a generous grant from WES, the Beeck Center is exploring ways to finance training and workforce development for these workers. We are reviewing the current landscape of workforce development financing, and will consider the history and applicability of other innovative financing programs that target outcomes with a social element (e.g., Pay for Performance contracting, or Loan Guarantees). We’ll engage a diverse group of stakeholders and experts including investors (both traditional and impact), policymakers, corporations, community leaders, academics (from both national universities and community colleges), and representatives from the immigrant and refugee communities, to identify the most promising (and most scalable) approaches to financing economic integration. Throughout, we will involve our students and seek collaboration with other centers and individuals at Georgetown.

Project Lead: Betsy Zeidman Funding Partner: WES – World Education Services

Promoting Inclusive Entrepreneurship

Creating prosperity for all, means including all communities in the nation’s economic growth. With the vast majority of net new jobs coming from new business startups, the people, policies and finance governing the field of entrepreneurship matters. Today, 92% of the decision makers behind the venture capital that drives most high-growth startups are men and less than 3% are investors of color. These investors provide 2.2% of that capital to female founders and only 1% to entrepreneurs of color. How we tell these stories is as important as the numbers themselves.

The world’s business news media was created more than 150 years ago. Today, even leading publications still view the world through this mindset, focusing on institutions, hierarchies and narrow, extractive views of what’s valuable. Many stories and important trends are left out when this world view is applied to journalism.

Times of Entrepreneurship is a new business publication that upends the old model. Times of Entrepreneurship highlights communities and individuals, regardless of race, place, class and gender. Its innovative reporting structure puts journalists in secondary U.S. markets, but gives them global beats in Money, Food, Climate, Security and Health, with two-cross-cutting channels, Women-Owned and Migrant-Owned Businesses. It covers innovation and trends in entrepreneurship and among leading investors. Our journalistic lens seeks different and new ways to measure value and to document the dynamic, entrepreneurial systems that shape institutions as they evolve — hopefully toward a more equitable and sustainable future.

Project Lead: Elizabeth MacBride Funding Partner: The Ewing Marion Kauffman Foundation

man reading business newspaper

Photo by Adeolu Eletu on Unsplash

Creating Equitable Capital Markets

The concept of capitalism presumes perfect information and equal opportunity. The reality of capital markets is that information and opportunities are distributed unevenly. ”Free market” absolutism has left behind millions of Americans over the past 10 years and created prosperity for a small number of Americans. At the Beeck Center we create opportunities that help shrink the racial and gender wealth gaps.

Initiatives like the Racial Equity Assets Lab (REAL), and the recent study sponsored by Knight Foundation are sparking discussions around the disparity in capital allocation to fund managers of color and women-led fund managers in spite of financial performance that matches the performance of white men. We collaborate with others to identify practical solutions to addressing barriers for these fund managers, through further research in conjunction with existing ecosystem players. Potential program activities include the creation and dissemination of video content to highlight market inequities and promote solutions, like the global directory of women in venture capital. We are also conducting a landscape survey of initiatives underway to bolster the ecosystem for fund managers of color and women-led fund managers. We are grateful for the generous support of Surdna Foundation, the seed funder of this work. 

Project Lead: Lisa Hall Funding Partner: Surdna Foundation

Through these projects, the Beeck Center contributes to the momentum of an existing flywheel for change in capital markets. We are connecting the dots between many disparate efforts around finance as a tool for prosperity including impact investing, community development finance, corporate social responsibility, and conscious capitalism. In our vision, prosperity is shared among many rather than hoarded by a few. Please join us in pushing the wealthiest nation in the world to provide equal access and a fair shot at sound economic and financial opportunity for all.