Social Finance Announces UP Fund to Catalyze Economic Mobility

Impact investing nonprofit is contributing to an equitable recovery through a $40 million fund to help students land good jobs

Boston—Today, national nonprofit Social Finance announced the UP Fund, with anchor investments from Blue Meridian Partners, Schmidt Futures, Blue Haven Initiative, The Shapiro Foundation, and Donor Advised Fund accounts at Fidelity Charitable and Vanguard Charitable to finance worker upskilling and help students get jobs in growing sectors like information technology (IT), health care, and green jobs.

The UP Fund, Social Finance’s first investment fund, is structured to support 8-12 Career Impact Bonds to serve thousands of students and ultimately transform financing for education and job training. The Career Impact Bond is a new financing model that provides career-based education for unemployed or underemployed workers through student-first income share agreements. The UP Fund is currently training students through its first two Career Impact Bond investments: General Assembly’s accelerated tech education program and Acuitus’ IT education program, which has an emphasis on serving veterans.

The Career Impact Bond: A tool for equitable economic recovery

By increasing access to high-quality training programs for workers who may otherwise be left behind, the Career Impact Bond can help Americans reskill and upskill in the wake of Covid-19. The Career Impact Bond is tailored to students who face barriers to education and employment, such as criminal justice involvement, credit history, or low levels of educational attainment or professional experience—barriers that disproportionately affect people of color. In the General Assembly Career Impact Bond, 38% of learners are Black, more than six times the program’s traditional student population.

The Career Impact Bond was created prior to the pandemic, but the need for this impact-first model is more critical today as the labor market shifts and millions of workers are displaced. While many jobs are disappearing, there is a sustained demand for recession-resilient occupations in growing fields like IT, nursing, and skilled trades. General Assembly and Acuitus transitioned to online curriculum delivery during the pandemic and students are landing well-paying jobs, even in the current economic climate.

“The Career Impact Bond rocket-boosted me into a software engineering career,” Branden LaCour, recent graduate from the General Assembly software engineering immersive, said. “I was initially denied from the program due to my credit history. But I re-applied as part of the Career Impact Bond, and once I completed the program, I got a job as a software engineer at HGS Digital and nearly doubled my salary.”

How the Career Impact Bond works

“The Career Impact Bond puts the worker at the center of the future of work,” Tracy Palandjian, CEO and Co-Founder of Social Finance, said. “Typically, to pursue economic mobility, students either pay tuition up front or take out loans to enter training programs that may not necessarily translate to career success. The Career Impact Bond reallocates that risk away from students to impact investors and training providers.”

Students enrolled as part of a Career Impact Bond do not bear the upfront risk of paying for training. If students don’t land a job above a predetermined income threshold, they don’t pay. The Career Impact Bond is focused on student success, underpinned by a Student Bill of Rights, and features student-friendly repayment terms.

Impact investments through the UP Fund provide impact capital to training providers to cover upfront training costs and deliver wraparound support services, including benefits enrollment assistance and emergency aid funding.

The Career Impact Bond links a portion of training provider revenue to student success, incentivizing providers to prepare students for viable careers.

Investors and partners

Current UP Fund supporters include Blue Meridian Partners, Schmidt Futures, Blue Haven Initiative, The Shapiro Foundation, and individual donors through Donor Advised Funds. Certain Career Impact Bonds include additional investor and philanthropic support. After providing initial grant support to develop the General Assembly Career Impact Bond, Prudential Financial is now a co-investor in the project alongside the UP Fund.

The UP Fund is powered by data, through partnerships that provide real-time analytics and employer intelligence, to match individuals with in-demand careers. Each new Career Impact Bond starts with labor market data to identify the types of jobs that are open in a particular geography.

The UP Fund’s first close of $22.4 million was in December 2019, and a second close is anticipated for later this fall. Social Finance raises the capital and manages the UP Fund, as well as the individual Career Impact Bond projects, identifying and vetting training providers, structuring partnerships, and managing for impact throughout the 10-year life of the fund.

The nonprofit brought the Social Impact Bond, originally conceived in the U.K., to the U.S. in 2011 and launched the first-ever Career Impact Bond in 2019.

Disclaimer: The UP Fund offers partnership interests only to eligible investors and admission to the UP Fund as a limited partner is not open to the general public. Partnership interests in the UP Fund will be offered solely to U.S. persons who are “accredited investors” within the meaning of Rule 501(a) of Regulation D as described in the fund’s Confidential Private Offering Memorandum and related documents.

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About Social Finance
Social Finance is a 501(c)(3) nonprofit organization dedicated to mobilizing capital to drive social progress. We believe that everyone should have the opportunity to thrive and that we can catalyze those opportunities through a set of innovative financing strategies called Pay for Success. To date, Social Finance has mobilized nearly $150 million of capital to address a wide range of social issues in areas such as criminal justice, education, health, and workforce development.

Contact
Carrie Benjamin, Director of Communications, Social Finance
(617) 939-9900 x 55
cbenjamin@socialfinance.org