The federal Office of Literacy and Essential Skills contracted SRDC in 2014 to conduct independent evaluations of two pilot projects in Essential Skills (ES) training for low-skilled Canadians. Both feature pay-for-success funding approaches, whereby private investors pay up front for training and are repaid by the government if the training is successful in achieving pre-established outcomes.
The pilots represent the first time in Canada these innovative funding approaches have been applied to ES training. They are part of a wider Government of Canada movement towards experimenting with social innovation and social finance approaches for improving the effectiveness and efficiency of government funding programs. Both pilots share the attributes of having pay-for-success funding models with literacy skill gains as the payment metric, and private (non-government) investors. A closer examination reveals that beyond that, the two models are distinctly different.
The first is a true Social Impact Bond: led by Colleges and Institutes Canada, Essential Skills Social Finance (ESSF) offered ES training to low skilled unemployed Canadians, through three College delivery partners. Private investors paid up front for the training, and were eligible for a return on investment of up to 15% if the training was successful in increasing participants’ literacy skills.
The second project is Skilling UP, led by Alberta Workforce Essential Skills Society (AWES). In this workplace-based training intervention, employers were eligible to receive up to 50% of their upfront investment in training for their workers, if targeted literacy gains were achieved.
Since employers in general are primarily motivated by financial benefits associated with a more highly skilled workforce, and not by the prospect of achieving social or environmental benefits per se, we consider this model not to be aligned so much with social finance, but more akin to a conditional government subsidy for training
Published: August 2019
Capability: Program Evaluation/ Performance Measurement
Policy Area: Adult Learning - Adult Training
Population: Low-skilled Workers