The mismatch between workforce development and job creation efforts need to be addressed if we want to ensure that these hard-to-hire individuals (such as English language learners, foster youth, or formerly incarcerated individuals) are able to land quality jobs.
Despite national gains in some job sectors, individuals facing the highest barriers to employment are not benefitting from this job growth. The mismatch between workforce development and job creation efforts need to be addressed if we want to ensure that these hard-to-hire individuals (such as English language learners, foster youth, or formerly incarcerated individuals) are able to land quality jobs.
Last week, we highlighted the launch of new efforts to address this mismatch in an interview with Jose Corona, CEO of Inner City Advisors (ICA), and Sean Murphy, President & Managing Director of Fund Good Jobs. As you may have read in the last installment, Fund Good Jobs is an innovative impact investment fund to help grow minority-owned small businesses while generating local jobs for hard-to-hire populations.
In the first part of this interview series, Jose and Sean highlighted the challenge that small companies face in attaining capital and the way that the Fund seeks to address this challenge. Now, we discuss the structure of the fund and how it plans to connect target populations to quality jobs.
How does the Fund’s structure help attract and deploy capital?
Since the Fund is structured as a nonprofit entity, we are attracting capital that is aligned with the mission of ICA. We are reaching out to the philanthropic community by targeting national foundations, major community foundations and major donors. We are also thinking about how to engage capital in our community and securing support from them, which we primarily see as donations in campaigns.
In terms of deploying capital, we have 8-10 active companies in our portfolio and at least 20% have high need for growth. These are thoughtful, careful businesses that have challenging capital needs. We operate as a boutique management consulting style system to identify those needs and then act like an investment banker to structure deals and preserve at least 30% capital for that company as we do the deal. Through the process we work towards getting them ahead, leading their next round growth equity and considering their needs years down the line. A lot of work goes into these deals. In the world of impact investing, we sometimes underappreciate that.
What were some of the challenges and successes to setting up the Fund?
When we started the process of engaging banks, investors and entrepreneurs around addressing this gap in capital through the Fund, we looked to board members, philanthropic partners and other capital advisors to help us think things through. We were really fortunate because of our track record and partnerships we had built along the way.
We were also fortunate enough to form the fund as a nonprofit entity itself and in doing so, we were able to partner and secure funds that are in line with our mission. As a result, we’ve been able to secure quite a bit of capital. But capital is not enough. Now that we have it and are seeking to raise more, we’ve learned that capital is only as powerful as support and workforce coordination we can provide across investments.
How do you work with workforce development organizations to connect people to jobs?
As much as we’ve built credibility with entrepreneurs, we’ve done the same with workforce development organizations. We did not want to create another workforce program since there are already so many out there. Instead, we wanted to partner with existing organizations to say ‘you have populations we want employed, and we have good jobs in which to place them.’
The biggest challenge these programs have is access to good, sustainable jobs. As a result, ICA has a tailored approach when working with workforce development organizations; rather than have them send people for the sake of sending people, ICA invests in growing the company first to ensure that individuals who are hired will also grow in the company.
Through Fund Good Jobs, we have the opportunity to unlock this model in a really great way. With capital as part of this process we can influence it in a different way and establish a pipeline that is more direct and effective. For instance, we are able to embed in our deals certain indicators (such as interest reduction, real financial incentives for hiring opportunities, etc.) to hold businesses accountable to creating good jobs.