Trends and Challenges

The seven intermediaries in this project vary in terms of their staff size, the number of youth they serve, their organizational strategies, and their geographic locations. Still, they face many of the same challenges when it comes to financing their work. Based on the quantitative and qualitative information provided to us through the intermediaries’ survey responses and our in-depth interviews with three of the seven respondents, we have identified six of the most common, pressing challenges WBL intermediaries face in developing funding models.

Intermediaries in this analysis shared that some aspects of their work are easier to fund than others. For most, funding costs associated with classroom training and certification¹ is relatively easy. The majority report using public funds to cover at least part of the costs of classroom training. Based on our case study interviews, we know that some leverage public education dollars that are not included in their budgets but are critical to their programs (see Intermediaries struggle to communicate the true costs and value of their programs below). Several intermediaries indicated that funds for supportive services (e.g., student advising) and direct student supports (e.g., stipends, transportation, books and supplies) are also easy to secure relative to other costs, but many also said they are insufficient to cover students’ needs (especially transportation costs). Program expenses with clear benefits for young people were the easiest for intermediaries to secure funding for—in part, as one intermediary explained, because these costs can be tied directly to enrollments and outcomes.

On the other hand, all of the intermediaries reported that adequately funding staff capacity is a challenge. The survey asked intermediaries, “If your organization were to receive 50 percent of your current budget in unrestricted funds, how would you use those resources?” All seven intermediaries said they would add capacity, including personnel, to improve mentoring and advising for students, or staff to recruit business partners, expand communications functions, engage with policymakers, or strengthen evaluation and research capacity.

Many of these examples are roles that may not be directly involved in program implementation, but which provide coordination or outreach critical for growth (e.g., recruiting employers). We learned in interviews that administrative and operational roles—like finance staff responsible for managing intermediaries’ complex budgets—can also be difficult to fund at adequate levels. As a work-around, some intermediaries devote a portion of a program staff member’s time to these critical functions, a solution common in the nonprofit space, but one that may not allow for sufficient specialization and could limit an organization’s ability to improve, innovate, and grow in key areas. In some cases, as one of our interviewees observed, this “many hats” approach can contribute to staff burnout and turnover.

The intermediaries in this analysis rely heavily on time-limited grants from both public and philanthropic sources. Only three of the seven intermediaries in this analysis reported public formula-based funding as part of their intermediary revenue. And for those that have developed fee-for-service revenue streams or receive in-kind donations, those sources made up a small portion of overall revenue.

This heavy reliance on time-limited grants means an ongoing cycle of fundraising and reporting. While this perpetual development cycle is not uncommon in the nonprofit space, it can be time- and resource-intensive, especially for smaller, newer organizations. Sometimes, intermediaries noted, the reporting requirements are not commensurate with the amount or duration of the grant, and they said that this can be true for both philanthropic and public grants. Additionally, whether public or private, small, short-term grants may not align with multi-year WBL program cycles, which can cause cash flow issues, especially for smaller intermediaries. That is, a grant may last for just one calendar year but support a program that enrolls students for two academic years.

Intermediaries also expressed a concern that short-term funding may make it more difficult for them to bring on new implementation partners, particularly employers, who may be skeptical of the program’s sustainability. If an intermediary is reliant on a mix of one- and two-year grants that may not be renewed, why should a partner sign on to hire an apprentice for three years?

Intermediaries recognize that program growth can unlock new funding opportunities, but some felt growth and innovation was constrained by their short-term funding cycles, so it’s not surprising that those in our analysis shared open-ended responses that made it clear that “multi-year funding is essential for this work.”

Our analysis found evidence that nonprofit WBL intermediaries can tap into more public funding as they establish a track record of success and begin operating on a greater scale. Newer intermediaries reported a higher number of short, small philanthropic grants (i.e., 12 months or shorter, $100,000 or less). Older, more established intermediaries also braided funding from short-term grants, but a larger share of these were public revenue sources, some of which were renewable. They combined these short-term resources with larger, longer-term funds, including multiple federal grants. For two of these more mature organizations, short, small philanthropic grants (e.g., $75,000) are “no longer worth the time” it takes to apply, report, and renew them.

Significantly, however, it’s not possible for us to establish clear causation. Did these intermediaries receive more public dollars because they grew and matured, or were they able to mature because they had access to public dollars from inception? Our case study interviews would suggest both.

Intermediaries in our analysis did not express strong preferences for public or private funding overall, since both types came with benefits and challenges, and both come with significant application and reporting requirements. Applications for public grant dollars can be intense and complex. They often vary significantly, both within and between agencies, which can mean submitting two very different applications for resources supporting the same WBL program. This variation can also contribute to burdensome reporting on the back end. Public dollars also come with more restrictions, which make budgets harder to modify once the work is underway. With dynamic budgets that involve a significant amount of braiding, this inflexibility can be challenging for intermediaries, especially during early pilot phases.

However, public dollars tend to be more predictable and that stability can make the administrative challenges worthwhile, according to our interviews. Public funding streams that run on annual cycles follow similar timelines and processes each year, which aids planning. And when a particular public funding stream is about to dry up, recipients typically know well in advance so they can plan accordingly. As two of our interviewees observed, the same is not always true for philanthropic dollars.

Intermediaries interviewed in our case studies agreed that public formula funds would provide much-needed stability to their budgets and operations. At D214—the only intermediary in the group accessing true formula funds—dollars from the district’s annual budget are used to support staffing for the Center for Career Discovery. This ensured it has adequate personnel to implement WBL programming, even if that programming has to change due to shifts elsewhere in the center’s budget. The “stability and consistency [of formula funds] would be huge for us,” said staff at CareerWise. “And planning for it and around it would be easier, too.”

Our analysis looked exclusively at intermediaries’ revenue sources and expenses. But many of the intermediaries in this analysis operate programs that rely to some extent on funding that flows through partner organizations. This funding does not appear in intermediaries’ budgets, nor do they have discretion over how it is used. For example, multiple intermediaries in this analysis operate youth apprenticeship programs that include high school coursework as part of the required related technical instruction for apprentices. These courses are typically funded by a mix of state and federal sources, including Perkins dollars, which support career and technical education, and stay within the public school system.² The intermediaries do not receive these funds directly, but they leverage them as part of program implementation. In theory, an intermediary might also leverage a partner’s philanthropic funds if, for example, it taps into grant-funded student supports offered by the partner agency.

Intermediaries struggle to estimate the extent of the resources they leverage through their partners, which makes it difficult for them to estimate the full cost of their programs. Significantly, it also complicates their ability to communicate the full value of their offerings to partners, policymakers, and potential funders. If youth apprenticeship programming connected to high school CTE coursework improves CTE outcomes and increases graduation rates, for example, the program could be said to be a strategy for making more effective, efficient use of those dollars, too. But if staff members cannot quantify this impact in terms of student outcomes and dollars leveraged, they will underestimate the full extent of the program’s benefit.

All intermediaries aspire to be financially sustainable, but there is little consensus about what sustainability would or should look like for different organizations. How many sources of funding is ideal? What is the optimal mix? For some of the organizations in our case studies, there was a recognition that sustainability could be “decades out, not five years away” or that it might not exist at all. “Everyone wants you to say, ‘We can make this 100 percent sustainable,’” a leader at one intermediary shared, but “I don't think any funding source is truly sustainable.”

Our interviewees could, however, define financial stability and articulate the work they have done to achieve it. To them, stability meant reaching a level of confidence in the financial health of the organization and having the ability to predict what funding might look like a year or more into the future. It meant developing processes and systems to budget effectively, track costs, and forecast future priorities. It meant diversifying funding sources, renewing major grants, finding ways to tap into more reliable funding streams, and securing resources to pursue new priorities. And it meant feeling that the organization could weather financial uncertainty.