How innovative strategies can bridge the skills gap in the U.S.
“Doing well while doing good,” as the saying goes, has become something of a rallying cry in the social impact investing community. The hope that we can create sustainable vehicles to create opportunity in communities that need it makes the prospect more viable. So we are taking that approach to one of today’s most pressing issues: persistently high unemployment even in the face of a seemingly robust job market.
The job numbers seem to contradict each other: unemployment is high across the globe, while data reveals that employers are having trouble finding workers who are trained for the jobs that are actually available. People need help bridging that gap to learn the skills required for growth industries and make a solid, living wage.
We want to capitalize on these new jobs to help as many job seekers as possible to secure these positions. Doing so requires innovation.
In recent years the global philanthropic community has been experimenting with new ways to maximize impact by engaging the full spectrum of financial tools, including grants, debt and equity. At JPMorgan Chase & Co. we are taking a similar approach to our own portfolio of mission-driven investments to ensure that we are using our capital to achieve the greatest social and environmental benefit.
In that spirit, JPMorgan Chase has committed $5 million to Vital Healthcare Capital (V-Cap), an organization that supports quality healthcare and good front-line healthcare jobs in low-income communities. In cities across the country the healthcare sector is booming, bringing with it millions of new jobs.
It’s predicted that in the coming years the healthcare industry will experience nearly 15 percent job growth in New York, Los Angeles and Columbus alone, according to JPMorgan Chase research. Many of these are middle-skill jobs that require specialized, technical training.
V-Cap works directly with healthcare providers to make sure employees receive the necessary training to succeed at their jobs and to ensure workers are offered opportunities for career advancement and future economic growth and opportunity.
Our support for V-Cap takes the form of a Program-Related Investment (PRI), an alternative to traditional grant making that allows a foundation to recycle its capital by investing philanthropic dollars in charitable interventions that return principal and a modest level of return. By using a PRI, for the first time in our history, we are enabling our Foundation to allocate its financial resources in a way that maximizes our impact.
Though a nonprofit, V-Cap generates a profit through its lending activities to high-quality healthcare providers and so is able to repay the PRI. The return of capital allows us to reinvest those dollars in other promising initiatives, further increasing our impact. V-Cap is also able to use our PRI dollars to attract more commercial lenders to its work – who might not have invested otherwise – multiplying the effect of our dollars and the ultimate impact of the organization.
Like V-Cap, many of today’s mission-driven organizations are extremely financially savvy and can accommodate a variety of investment vehicles. For example, just within JPMorgan Chase’s portfolio of healthcare-related impact investment work, we structured an investment fund established for the U.K. government to encourage better treatments for dementia, and worked with the Bill & Melinda Gates Foundation to develop a financing vehicle – which we also invested in - for late-stage global health technologies that have the potential to save millions of lives in low-income countries.
There is an ever-evolving range of opportunities to meaningfully invest in mission-driven activities and leverage our financial expertise to benefit communities in need. We invite our colleagues in both the corporate and philanthropic communities to join us in seizing these very real opportunities to engage with organizations like V-Cap that are simultaneously tackling important issues and innovating new financial models.
About the authors:
Amy Bell is the Head of Principal Investments for JPMorgan Chase's Social & Sustainable Finance business unit, which provides financial services to the growing market for impact investments, meaning those investments made with intent to generate impact alongside a financial return.
Chauncy Lennon is the Head of Workforce Initiatives for JPMorgan Chase, leading the firm’s efforts to close the skills gap through our $250 million New Skills at Work Initiative.