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How Flexible Funding Can Accelerate Workforce Equity and Innovation

October 6, 2023

In this blog, JFF shares lessons learned from year one of California’s High Road Training Fund, which empowers grantees to make decisions anchored in community needs.

Mara Lockowandt Director, Solutions Design & Delivery
Kathryn Uhl Senior Program Manager
Ashleigh Smallwood Program Manager
Practices & Centers

What if we treated publicly funded workforce training providers more like private sector entrepreneurs and startups? This would let workforce organizations innovate, ideate, and prototype to truly use their local assets and focus on populations with the highest need seeking advancement in the labor market. It would require large and flexible funds that reward innovation and remove the barriers to entry and reporting that often plague public workforce projects.

Flexible Funds for Future-Focused Workforce Systems

Enter Jobs for the Future’s (JFF’s) latest experiment with key partners in California: a flexible, multi-year fund created to drive workforce transformation and reduce economic disparities that have only escalated since the pandemic.

The funding is very, very, very helpful because very little funding helps you build your infrastructure, so as you’re building and trying to stay innovative in sometimes what can feel like a very rigid environment, I feel this funding continues to allow us to have those conversations. And then also, whether it’s hiring a consultant or trying to convert that into staffing positions and making that more sustainable, I feel like this funding is helping us plant those seeds to be able to do that work.

Amber Roth, executive director, Worker and Education Resource Center

The High Road Training Fund (HRTF) launched one year ago, disrupting the real and perceived limitations to innovation and flexibility of funding to advance California’s High Road vision for economic equity, job quality, and climate resiliency. In partnership with the California Workforce Development Board (CWDB), California Labor and Workforce Development Agency, and California Governor’s Office of Social Innovation, the fund empowers California’s High Road Training Partnerships (HRTPs) to make decisions anchored in community needs and unshackled by compliance-based requirements through greater power-sharing practices between funders and grantees.

By supporting workforce partners with flexible funds to creatively address regional disparities in training and employment outcomes, the HRTF reinforces JFF’s ongoing efforts to co-design and learn what it takes to build a future-focused workforce system. As we have written previously, traditional public sector investment models limit innovation and risk-taking, preventing workforce organizations from responding to seismic shifts in the labor market and limiting people’s pursuit of economic advancement.

At this critical one-year mark, we are eager to share our reflections and key lessons learned from designing, launching, and implementing a flexible fund to support our state and national partners and anyone looking to transform the public workforce system for all.

Flexible funding gives us an opportunity to be innovative and really think outside of the box.

Armando Loza, executive director, Miguel Contreras Foundation

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) WorkForwardHospitality 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.

Workforce training providers have significant funding and resource needs beyond immediate service delivery.

Strengthen equity-centered funding practices

The HRTF design shifts power dynamics between funder and grantees by centering the fund’s design and decision-making around workforce partners. This builds off JFF’s previous work acknowledging the significant value of community-based organizations in regional economic development and how human-centered approaches can transform the public workforce system. The HRTF embraces these practices by engaging HRTPs in the HRTF design, through the funding amount and disbursement process, and by reviewing the application and reporting requirements. This approach created a fund informed by the organizations (that is, HRTPs) it intended to support. Initial ideas for funders to explore based on our HRTF work include:

  • Designating and compensating community partners to consult on application materials and reporting requirements
  • Engaging in regular check-in calls to engage in peer learning, discussing adaptability of reporting requirements, and sharing valuable information instead of relying on standardized reports

Expand allowable expenses

Workforce training providers have significant funding and resource needs beyond immediate service delivery. From our research with the HRTF, we noted these fund categories critical to successfully implementing workforce programs:

  • Seed capital (for example, covering ramp-up costs)
  • Organizational capacity (for example, covering operating expenses, developing a community engagement strategy, staffing)
  • Supportive services (for example, covering the cost of counseling, child care, and stipends)
  • Program delivery (for example, covering the costs of technology infrastructure and instructional materials)
  • Stabilization services (for example, covering the cost of transitioning from a leased space to a permanent space)
  • Policy and systems change (for example, covering the cost to educate policymakers about promising practices and implementation challenges)

Funders should consider expanding a grant’s allowable expenses beyond direct programmatic or service offerings. This changes funder-grantee power dynamics, as fund usage decisions shift to community partners with the greatest understanding of those they serve.

Support continuous learning and improvement

Support ongoing learning, professional development, and peer connection among grantees. Our conversations revealed staff and organizational wellness are huge challenges right now, with many providers, especially smaller organizations, in survival mode. Funds and resources that help build supportive communities of organizations serving similar target populations, working in similar regions, or focusing on similar priorities can promote knowledge sharing, replication of best practices, and innovative thinking. Learn more about JFF’s Workforce Communities of Action here.

Keep Learning With Us

Thank you to our founding state partners and grantees for sharing your insights over the first year of the launch.

Stay connected to JFF’s work in California and our national efforts to transform the public workforce system.

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