Market-Based Solutions: How Philanthropy Can Facilitate Sustainable, Scalable Impact through Markets
Funders working in the Global South can incorporate market-based solutions to widen the development resource pool and build pathways…
Rapid shifts in education and workforce, driven by technological advances, automation, and artificial intelligence, are underway and are likely to accelerate. AI is projected to drive a 65% shift in job skill requirements by 2030, according to recent LinkedIn data. These shifts will mean that entire job categories will decline, and new ones will be created.
The economic impact will be significant—generative AI is projected to create nearly $500 billion in household wealth by 2045. While that growth is significant, it does not come without risk for stark inequities. Gita Gopinath, the International Monetary Fund ‘s First Deputy Managing Director recently shared at Davos, “Everybody agrees that [AI] is transformational, with a lot of promise, but also risks associated with it…40% of the global workforce is exposed to AI…Some fraction of that will benefit, it will raise their productivity, that fraction is about half of that 40%, and the other half will have a hard time, maybe lower wages, displacement and so on.”
To ensure equitable economic opportunity amidst these changes, continuous, life-long learning that supports the workforce in both upskilling and reskilling will be critical. Corporate philanthropy has an important role to play, particularly in building a workforce pipeline that meets the rapidly shifting talent needs of companies while ensuring no one is left behind.
Coming into 2024, we are observing three key opportunities for corporate foundations and social impact teams:
1. Funding new innovations in education and workforce
Companies can support historically marginalized communities to enter new skill-based industries through numerous different avenues. Some highlights include:
- Grants, Sponsorships, and Partnerships: Corporations can provide financial support through grants or sponsorships to educational institutions, non-profits, or startups working on innovative projects in education and workforce development. Collaboration with non-profit organizations focused on education and workforce development allows corporations to leverage their resources and expertise for impactful initiatives. This could involve joint projects, mentorship programs, or skill-building initiatives.
- Technology and Infrastructure Investment: Corporations can invest in the development and deployment of technology solutions that enhance educational tools, platforms, and infrastructure. This may include funding for edtech startups or supporting the integration of technology in educational institutions. For example, Google has expanded upon its partnership with Cambridge University to fund a new AI research center & continues to support the development of ethical AI.
Our work over the last two decades with a broad set of CSR, foundation, and business leaders has revealed some unique opportunities for companies. These include opportunities to not only fund new innovations in education and workforce, but also to de-risk these innovations through piloting/testing so that larger funds (including federal funding) can create scale. The nuance is that it is critical for funders to maintain flexibility and support grantees in applying solutions in ways that fit their context. Scaling interventions takes significantly more resources for capacity building than one might expect, especially in an educational context. Leveraging landmark opportunities like federal dollars or policy changes can support scaling for much needed resources and ensure that outcomes are impactful and complimentary.
2. Raising awareness of existing and emerging career opportunities
Deep inequities exist in exposure to new and existing career opportunities, especially those in AI, automation, and clean energy. As Talent Rewire observed when researching emerging clean energy jobs in the greater Houston region, “There is an awareness issue, in that community members are not informed about the range of job opportunities, relevant skills, or how to access training and education to build their skills for these jobs.” When new opportunities come down the pipeline, it will be critical for companies to support more equitable exposure to green jobs and high-paying trade careers that won’t be affected by AI & automation. Some ideas include:
- Partnerships with Educational Institutions: Only 20 percent of Fortune 100 companies have a K–12 STEM partnership focused on students in underserved communities, according to a McKinsey analysis. Corporations can collaborate with schools, colleges, and universities to integrate career awareness programs into the curriculum and address disparities in STEM exposure. This could involve guest lectures, industry visits, and internship opportunities. HBCUs, trade schools, and junior colleges would especially benefit from these opportunities.
- Internship and Apprenticeship Programs: Corporations can offer internship and apprenticeship programs that provide hands-on experience. These programs not only expose individuals to potential career paths but also help them develop practical in-demand skills. To assist in developing robust internship and apprenticeship programs that support pathways for populations typically left out of economic development, many companies have been able to access significant federal funding (e.g., CHIPS and Science Act, Inflation Reduction Act) to complement existing philanthropic funding. One example includes Micron’s Registered Apprenticeship Program.
- Sponsorship Programs: Companies can establish sponsorship programs where experienced professionals from the corporate sector to guide, mentor, and support individuals who are exploring career options. This can provide valuable insights and networking opportunities.
However, raising awareness is only the first step. Companies benefit substantially when communities are meaningfully engaged and exposed to industries and skills because they cultivate more diverse and robust talent pipelines within their workforce. In addition, companies can make internal shifts including supporting their hiring managers to change their mindsets about who can thrive in these industries. (Note: FSG/Talent Rewire will be publishing research on the role hiring managers can play in shifting corporate talent systems later this winter).
3. Identifying and helping to build core skills necessary to succeed in the workforce of the future
Upskilling and reskilling are central to equitable access to new industries and the ability to grow and change with existing industries. Companies can employ a variety of skill-building initiatives that align with emerging industry trends. This could include supporting training programs, online courses, or workshops that enhance the skills required for in-demand careers.
We are excited to see companies deploy some of these strategies to support innovation, awareness, and building core skills in ways that enable equitable economic mobility. AI and automation are moving quickly, and there is urgency for the private sector to take a leading role in helping to develop a skilled and diverse workforce for the future.
This blog is part of a series written by FSG leaders on opportunities for corporate philanthropy in 2024. Read the full series with pieces on health equity, environment, education/workforce development, and financial inclusion here.
