When people become unemployed due to changes in our economy, they can feel like they’re in a hopeless situation. This can significantly impact people who can't afford to learn new skills needed to keep up within a changing market, which is why our guest, Nat Ware, has created proven models to assist these exact types of people.
Ware is a devoted social impact economist who has turned his philanthropic drive into practical designs through his organizations, 180 Degrees Consulting and Forte. This week, Nat sits down with Xander to discuss his advocacy and What We Don't Know about investing in the reskilling revolution.
Though he believes there's still value in going to college, the old model of a four-year degree leading to a permanent career is no longer the reality. Ware's focus is getting people good jobs in a short amount of time, and he explains the need to "reskill" due to the prevalence of shifting occupations.
There are approaches to address training workforce issues such as Income Shared Agreements (ISA) and Social Impact Bonds (SIB). Ware believes these programs have many shortcomings. There is income misreporting with ISA, and he says, "Invest to returns come at the expense of the individuals they are trying to help." SIB puts the burden of risk on the investor, but the metrics used to measure success change, often causing more cost and time to determine data.
"The order of payments is; government to an investor, and then hopefully the government gets a financial benefit in the future, but the reality is that most governments are very shortsighted and they care about the next 3-5 years. so that order of cash flows is not exactly optimal."
These approaches reinforced Ware's belief that money alone wasn't the answer. "Doing good is as much an intellectual endeavor as it is an emotional endeavor," he says, "How you approach problems just is, if not for me, more important than how much money you throw at it."
In 2007, Nat started 180 Degrees Consulting, and later he would focus on education and training. Ware spent years earning PHDs and degrees from Australia to the UK to fix mass layoffs as well as to offer re-training. He came up with a new model to fund learning through his social venture Forte, Financing Of Return To Employment.
"The cost of training individuals is less than the increase in future government income tax revenue ultimately caused by that training." He says, "If you're more skilled, you're more able to get employed and good income and pay income tax in the future."
However, governments don't invest due to budgeting. Forte fills this gap in programs and eliminates the risk for individuals by offering free training. "Say 1,000 people have lost their jobs due to COVID, investors could fund that training. If it's 10,000 apiece, investors pay that $10 million."
Investors contract with governments and give them back a percentage of tax revenue from those 1,000 workers again. Ware adds, "This is a way that governments can help groups of disadvantaged individuals without worsening the budget."
Nat believes Forte is the future of impact investing, inspiring people to see how capitalism can be for good. Ware says he lives by the advice to, "Live life assuming the universe will conspire in your favor." and with that, he hopes to see his model finance health and education within the next decade and hopes to encourage more investors. "Often, when people are encountering financial risk in a decision, I say, 'Well, consider all the risks involved if you don't do something,'" says Ware, "I think the risk of regret is an equally valid risk."