Earlier this year, a few of our Steering Committee members asked Workforce Matters if we could compile and share some resources on Income Share Agreements and Career Impact Bonds. In our scan, we looked at two related - but different - financing models for education and training:
- An income share agreement (ISA) is a financing tool used by education and training providers that ties repayment for the costs of a program to future earnings. Learners pay a pre-established share of their income over a defined term to repay their school or training program.
- A Career Impact Bond (CIB) riffs on the idea of an ISA, but layers in additional elements to promote equity and success. Social Finance describes the following differentiators:
- People-centered design. The CIB is designed for unemployed or underemployed people who face barriers to education, including ineligibility for private loans or scholarships for non-Title IV programs, poor credit history, justice system involvement, and immigration status—barriers that disproportionately affect people of color.
- Wraparound support services. The CIB provides a suite of wraparound support services, including career coaching, emergency aid funding, and benefits enrollment assistance, to help students address real-life challenges so they can focus on their training.
- Consumer-friendly repayment terms. Students have access to consumer-friendly repayment features like payment caps, fixed repayment terms, and downside protection, all of which are outlined in a Student Bill of Rights.
- Impact-first capital. Impact-first capital covers program costs and wraparound support services. These dollars come from philanthropically motivated impact investors through vehicles like our UP Fund. Governments can also use CIBs without the participation of impact investors to create pay-it-forward funds to train future workers.
- Aligned incentives. An outcomes-based contract focuses the project on student success and creating incentive alignment among students, training providers, and impact investors.
We compiled the information we collected from our quick scan in the Padlet below, where you'll find additional background information, links to sample ISA and CIB funds and initiatives, and research + analysis reflecting on equity concerns, regulatory issues, and program design considerations. If you know of additional resources that may be of interest to workforce funders, please email us - suggestions are always welcomed!
