Catalytic Capital | April 12, 2021

Social Finance raises $36 million for ‘career impact bonds’ and backs American Diesel Training

Roodgally Senatus
ImpactAlpha Editor

Roodgally Senatus

ImpactAlpha, April 12 — Career impact bonds are bringing income-share agreements, which dozens of universities are using to provide help to low-income students with college tuition and other expenses (see Impact Voices, below), to vocational and certificate programs that upskill workers for in-demand occupations.

Boston-based Social Finance is launching a $4.7 million career impact bond with American Diesel Training Centers, or ADTC, to help unemployed and low-income Americans get trained as diesel technicians for careers in the trucking industry.

The commercial trucking industry will need approximately 200,000 truck technicians over the next decade, according to the American Trucking Associations. The financing will “unlock career opportunities for people who can’t pay the upfront tuition costs or lack the credit history for loans,” said Social Finance’s Tracy Palandjian (hear Palandjian on ImpactAlpha’s Agent of Impact podcast, “Career impact bonds transfer risk to investors as the future of work arrives”).

Catalytic capital

New investors in Social Finance’s UP fund include the MacArthur Foundation, which invested $5 million as part of the Catalytic Capital Consortium, or C3, which is seeking to demonstrate the value of patient, risk-tolerant, concessionary and flexible capital (disclosure: C3 is a sponsor of ImpactAlpha).

Also investing are Bill Ackman’s Pershing Square Foundation, the Dell Foundation, MFS Investment Management and clients of Align Impact (see, “Blue Meridian, Schmidt Futures back Social Finance). Also investing: A dozen holders of donor-advised funds at Fidelity, Vanguard, ImpactAssets and the Boston Foundation. The UP fund is targeting a $50 million close by the end of June. 

Pay for success

The American Diesel career impact bond aims to train up to 550 people for a 300-hour, two-year training program on truck mechanical fundamentals. Graduates who make between $30,000-$40,000 a year repay the tuition in 48 monthly payments of $150 each. Students making more than $40,000 pay $280 per month.

The UP Fund also has backed Alchemy Code Lab’s software engineering training, General Assembly’s accelerated tech education and Acuitus’ IT education, which targets veterans