How Flexible Funding Can Accelerate Workforce Equity and Innovation

The High Road Training Fund: One Year Since Launch

How does empowering grantees with flexible funding translate to more resilient organizations better equipped to address community needs? The answers might surprise you.

The HRTF proposed a clear value proposition for grantees: provide flexibility around how funds could be used and address delays in receiving state funding. We trusted that organizations closest to community and worker needs would be best positioned to decide how to maximize the impact of their funding. A year into the fund, we have learned how flexible funding is a powerful tool for HRTF grantees to prioritize sustainability, authentically embed worker voice, unlock innovation, and more effectively engage high-need populations.

1. Moving from survival mode to sustainability: Organizations that typically receive restrictive funding have limited opportunities to plan beyond currently funded programs and grant timelines. In the first HRTF cohort, all four grantees—Worker Education & Resource Center (WERC), United Food and Commercial Workers (UFCW) WorkForward, Hospitality Training Academy, and Miguel Contreras Foundation—used flexible funds to hire additional staff members and increase organizational capacity. HRTPs hired roles spanning departments and seniority levels, including a senior accountant, industry coordinator, chief of staff, and outreach and admissions director. Though organizational needs varied, the four grantees wanted to grow their internal capacity beyond staff members solely dedicated to programs and invest in organizational resilience and sustainability.
2. Creating opportunities to ensure worker voice and needs are embedded in design and decision-making: During an April 2023 gathering at the University of California, Berkeley’s Labor Center, HRTPs shared that restrictive funding sources make it difficult to fund activities embedding worker voice in the program design and decision-making processes. Activities to engage community members, such as focus groups, stipends for participant meals, and transportation to training activities, are often not included in public dollars because they are classified as nonallowable costs or require a confusing and/or time-consuming reimbursement process. Flexible HRTF funding allowed WorkForward to center workers’ needs by providing paid training opportunities—in addition to covering training fees, workers received stipends to compensate for time attending these trainings. These stipends encourage more people to participate, normalize paid training, and allow trainees to use this experience when negotiating future paid training opportunities.
3. Unlocking innovation and experimenting with new approaches: Traditional and restrictive public sector funding based on models that present minimal risk can discourage organizations from innovative experimentation. Historically, HRTPs can’t pivot and shift priorities when unforeseen challenges (such as a pandemic) dramatically change their ecosystem. When the Miguel Contreras Foundation’s primary employer partner closed its doors in California, the HRTF’s flexible funding allowed its leadership team to develop an innovative partnership mobilization strategy to build new regional employer and industry partnerships. Innovation is only possible when organizations have access to resources (capital and talent) to develop creative approaches addressing intractable challenges.
4. Targeting high-need, hard-to-reach populations: State workforce programs like HRTP build inclusive support systems and create opportunities for people and communities that have been pushed to society’s margins. However, restrictive funding and stringent reporting requirements force organizations to prioritize quantity over quality, putting a higher value on the number of workers trained rather than the outcome of workers trained. Since populations such as people working low-wage jobs, immigrants, refugees, youth, and those experiencing multiple barriers to training or employment are harder to reach and support, they are often passed over for those requiring fewer resources. Through the HRTF, the Hospitality Training Academy and the Worker Education and Resource Center focus on marketing and recruitment to reach new populations and participants who can benefit significantly from their services. Unfortunately, using public dollars to support those two essential strategies is often forbidden or burdensome.

These insights from the first year of the fund illustrate how flexible funding is particularly critical in systems change initiatives, where intractable problems are pervasive, and it can take time to achieve measurable outcomes.

Recommendations for State and Philanthropic Leaders

Achieve flexibility with accountability

Private and public funders can make funding more flexible while still making an impact. Typically, public funding for workforce development is heavily regulated and restrictive and often prioritizes compliance over community needs. Private funding, while not always as restrictive, can have a narrow vision of purpose and definition of success. Building off a robust and evidence-based practice within trust-based philanthropy, funding entities should explore ways to allow grantees to set the terms (for example, indicators) of success and collaborate on funding priorities. Flexibility does not mean unrestricted; training providers can still be held to rigorous impact and outcome standards. However, access to funds without rigid requirements allows grantees the agility to support their clients and communities best.

Improve disbursement practices

The HRTP program, along with many other state and federal programs, utilizes a “reimbursement model” to disburse funds to grantees, meaning that funds can only be received after incurring expenses. This model can be especially burdensome to small organizations lacking cash reserves to front program implementation costs while waiting for state reimbursement, which can take six months or more. These delayed turnaround times may limit how organizations design and execute programs, often leading to programmatic gaps. To address these challenges, funders should provide funds upfront instead of reimbursing grantees later. Funders can also offer resources and technical support to help grantees navigate complex grant administration and reporting processes.