How to fund an industry-led talent system · The Industry-Led Talent Initiative

What the money is for

Three areas of sector intermediary work a state can fund

There are three main areas of sector intermediary work that a state can fund: the intermediary’s core role as the voice of its sector, the workforce strategies it recommends, and the programs it operates. Not all three have to be funded at the same time, or by the same funding source. A state can start by funding the area that matches the role it is asking the intermediary to play, and add funding for the other areas of work as the intermediary proves its results.

Fund the intermediary’s core work

The steady operating budget that lets an organization speak for its sector.

The funding pays for a small team that builds and publishes the sector’s demand picture, develops competency frameworks for its priority occupations, serves as the sector’s front door to workforce development, brings the sector’s priorities to the state, and endorses the programs that teach to the picture.

Philanthropy is a natural first funder for the core work. Foundation grants move faster than public money, and they can cover the first two or three years of staff and startup costs while the intermediary builds its demand picture and its track record. Over time, a state appropriation can make the funding durable, since a line in the state budget survives grant cycles. The central support team that serves all of a state’s intermediaries is a natural first piece for a state to absorb: it is a single line item that benefits every sector at once.

Fund the strategies the intermediary recommends

Money set aside to act on the strategies the sector recommends.

The funding pays for the workforce strategies the intermediary identifies each year, for instance creating or expanding a program, buying equipment, or building work-based learning at scale. Strategies that need only a policy or licensure change, or that employers can carry out themselves, require no new program funding.

Several sources can pay for the first strategies a sector recommends. The WIOA Governor’s Reserve can fund sector strategies through the statewide workforce funds a governor already directs, state grant funds can pay for program creation and equipment at a scale operating budgets cannot reach, and federal grants and philanthropy can back the larger strategies. Over time, a dedicated state fund for sector strategies can make the funding durable, so that money is in place when a sector brings a recommendation forward. The largest source is money the state already spends: program dollars that flow every year to career and technical education, colleges, and apprenticeship can go to the programs that align with the sector’s demand picture and deliver the outcomes employers and students both want.

Fund the intermediary to run programs

Payment for results when the intermediary operates programs itself.

The funding pays for the intermediary to operate programs, or to serve as the intermediary for programs others run – classroom training, on-the-job training, apprenticeship, and other earn-and-learn pathways.

Programs can be paid for in more than one way at the start. Pay-for-performance contracts can pay the intermediary for each outcome it achieves, such as an apprentice who completes a probationary period or a graduate placed in a job. Grants and philanthropy can cover the startup costs of a new program before there are outcomes to pay for. Over time, pay-for-performance can sustain the programs on its own, because a program that places people generates the payments that keep it running.

Funding streams

Where the money can come from

Six sources can pay for this work. Each is described on its own terms – what it is, how it moves, and what it is good for – with an example where one exists.

Philanthropy

Foundation grants – from national funders, community foundations, or corporate philanthropy – typically run two to three years, move faster than public money, and can pay for what public funds struggle to cover: startup, senior staff, and the proof points a legislature wants to see before it appropriates. They end, so philanthropy works best as a bridge, with a public funder identified from the start.

Example: the Richard M. Fairbanks Foundation has committed nearly $13 million to stand up Indiana’s Industry Talent Associations.

The WIOA Governor’s Reserve

Under the federal Workforce Innovation and Opportunity Act, each state may set aside up to 15 percent of its formula workforce funds for statewide activities the governor directs, rather than passing them to local workforce boards. States use the reserve for statewide initiatives, sector strategies, and capacity building. The Department of Labor can also waive some WIOA spending rules at a state’s request.

Example: Career Connect Washington funded intermediary grants from these statewide activities funds.

State appropriation

A line in the state budget, created by the legislature and renewed each session. It is the most durable source: it survives grant cycles and does not depend on a federal waiver. It is also the hardest to secure first, which is why it usually follows proof produced with philanthropy or the Governor’s Reserve. An appropriation can fund the intermediaries directly or the state’s central support team, and it can be paired with statute that names the intermediary’s role.

Example: Utah’s legislature created Talent Ready Utah in 2018 and moved it into the state’s higher education system in 2022.

State grant funds

Dedicated state funds that award dollars to industry and education partnerships through an application process, often created with one-time money. They can pay for the strategies a sector recommends – program creation, equipment, work-based learning – at a scale annual operating budgets cannot reach, and they favor applicants who arrive with employers already organized.

Example: Colorado’s Opportunity Now fund awarded $2.8 million to the construction employers’ Project SCALE.

Federal grants

Multi-year awards from federal agencies for regional or sector-based workforce and economic development – the Economic Development Administration’s Tech Hubs, the Department of Labor’s apprenticeship grants, and similar programs. They are large, require a lead applicant, and reward applicants who can show organized employer demand, which is exactly what a sector intermediary holds.

Example: Elevate Quantum, the Mountain West’s quantum coalition, won a Tech Hub designation that drew roughly $41 million in federal funding plus state matching dollars.

Pay-for-performance

The funder pays a fixed amount for each outcome achieved – an apprentice enrolled, retained past a probationary period, or placed and kept in a job – rather than reimbursing costs. It shifts risk to the organization delivering the work and rewards the ones that reach scale, and it fits best where outcomes are countable, as in earn-and-learn programs.

Example: through a federal manufacturing apprenticeship incentive fund that Arkansas administers, program sponsors receive $3,500 for each new apprentice who completes a 90-day probationary period, passed through to employers.