Empowering social change nonprofits with the right level of resources to help them do great work makes sense to me. But, the money flowing in this system is completely broken right now.
The painfully slow adoption of tech apprenticeships nationally could be attributed to the friction with educating tech companies and I feel equally the lack of real financial incentives to do this type of work. This week I want to share a bit about how the incentives are not aligned correctly and share what I think are some adjustments that need to be made.
Great tech apprenticeship programs need a program manager, classroom space, instructors, equipment, and so much more. But the funds apportioned to incentivize employers to create apprenticeship programs is around $2,000 per participant in many cases. This is a fraction of what is really needed to grow tech apprenticeships at scale. That amount could barely cover the cost of a laptop and a few hours of time online with an instructor. But what is worse is how challenging it can be to get those funds.
Here is a breakdown of what happens now: Small community-based organizations hire a part-time grant writer that has the capacity to win $100,000 or so a year in small awards. The big grants remain out of reach for under-resourced community-based organizations until several years of activity. Meanwhile, the large state and federal grants in the workforce space are won by large nonprofit organizations, community colleges, regional workforce development agencies, or workforce development boards. None of them have demonstrated an ability at scale to make the change that is happening at the local level with community-based organizations at the lead. These organizations instead typically route the funds to sub-recipients who run amazing programs.
more than 70% of the revenue that creates jobs in our tech apprenticeship program comes from fee-based services to our enterprise customers
Employers, service providers, and program operators don’t win big grants directly. The majority of funds allocated by the state and the federal government flow to smaller community-based organizations or employer partners that request reimbursement for activities from the grant award, but some of the funds are already spent by the administrative overhead of the big awardee. The sub-recipient (that’s the community-based organization doing the work or the employer) will typically only see an amount somewhere between $500 to $3,000 per participant.
When you consider that to teach someone how to code it’s going to cost closer to a minimum of around $10,000 to $15,000 we have a huge gap in the resources needed. A tuition of $12,500 is pretty close to the national average for a coding Bootcamp. Perhaps that is a more appropriate amount to start with if we need people to gain software engineering skills? How we arrived at the participant to funding ratio seems to just be a historical artifact and unrelated to the demand for avenues to skill people.
I founded Creating Coding Careers a 501c3 to promote the earn and learn pathway for folks into new-collar careers. I intentionally created a financial model where the operating revenue would come from providing services instead of relying on grants and philanthropy. I thought that a nonprofit has to be a sustainable business to serve my community. I wanted to ensure we would never be beholden to finding donors to keep our doors open. One of our greatest success stories is that more than 70% of our revenue comes from fee-based services to our enterprise customers.
If you are thinking about creating an earn and learn pathway, try to create models where the employer can participate and be the driver of revenue to sustain the program. Employers have the most to gain, so they can be better partners than donors.
Find great partners and you will be able to do great things.
Since we know apprenticeship works, we have allocated a small amount of our time and resources to seek out donors that are passionate about workforce development. We have found some champions, but I’ve also found that changing giving is even harder than the social change it should be driving. Champions like Microsoft and ServiceNow who are doing great work in the area of programs and trusted philanthropy need to become more of the norm.
Funding is largely unrelated to impact, evidence of systemic success, and the real quality of outcomes. Funders want to pour resources into organizations that have long track records or meet a very narrow set of issues that are important to the foundations.
Philanthropy could be braver and smarter about how it allocates resources – if they directly funded data-driven, results-oriented outcomes at the community level. Seek evidence at the early point where capital can make a huge difference. Better donor support would allow social change organizations to scale key initiatives that are already working in communities across America.
I’ve heard (and maybe read between the lines) that some donors don’t trust that organizations can handle managing the money. So why not create endowments and/or outcomes-based models. Help more organizations grow, rather than rewarding the few.
Philanthropy may also be becoming more opaque. Recently after the COVID efforts, some foundations have found themselves evaluating what is next. Foundations are closing off the application process — shifting to invite-only scenarios, and retooling for what makes sense next. This makes it even more challenging for small organizations lacking long track records but are doing meaningful work that makes an outsized impact. While Mackenzie Scott’s resource bombs are a powerful force, the reality is I don’t know her people. So there is a zero percent chance that we would win that lottery, and I can say the same for dozens of other great programs I know.
The good news is great employers are stepping up and still making it happen. We create well-paying job opportunities with them directly. Employers realize that they benefit from investing in talent. The earn and learn model is now a reality for more folks. Apprenticeship is starting to gain attention. So we all grow intentionally. I still spend a lot of time explaining how apprenticeship is different from internships, but the companies that get it, really get it. Great employers are willing to invest the right amount of capital to develop the talent needed for the future of work. Tech Apprenticeships grow, new-collar careers gain traction, and we all benefit from upskilling Americans.
My hope is that philanthropy and the decision-makers at the state and federal level catch wind of these examples and start to step up on trust and support, so we can bring more employers along and roll out tech apprenticeships at scale, and much faster.
Drop me a comment with your thoughts. What do you think it will take to redirect capital to make tech apprenticeships more approachable for employers and help tech apprenticeships scale quickly?