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By Valuenomics Inc.

Reducing Unemployment in Northern British Columbia with a Multidimensional Approach to Social Finance

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Overview

• Background

• Solution

• Benefits of Solutions

• Performance Measurements

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Background

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• Current environment provides an opportunity for the use of a social finance structures (SFSs) as an alternative for addressing social issues

• Valuenomics approach to social finance: – Based on systems thinking and economic value generation

– Provides an effective framework for the implementation of sustainable SFSs

• Incorporates a multidimensional approach to: – Business analysis

– Project management

– Implementations that integrates several business disciplines

• Consultation with potential partners for the implementation of a pilot project to address youth unemployment in Northern BC under a SFS model

Introduction

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• In 2010, the unemployment rate for BC’s Aboriginal Youth was 21.4%; higher than the average unemployment rate for BC’s youth of 13.8%

• Long-term youth unemployment limits life-time earning potential and requires expensive interventions to return youth to the workforce2

Youth Unemployment in BC

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Aboriginal Employment in BC

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Aboriginal Employment in BC

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Aboriginal Employment in BC

• Potential exists to increase employability and employment participation in sectors such as energy and mining.

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Labour Market Opportunities in Northern BC

• One of the fastest-growing economic regions in North America due to significant investments in natural resources

• $34 billion in capital investments in the next 3 years will drive employment growth in northern communities • Within 10 years, the value of northern projects will increase to $64

billion

• Mining industry is struggling to attract workers while Aboriginal unemployment remains stubbornly high (Business in

Vancouver, July 10)

• Mining industry is expected to face a labour shortage, as 8 new mines are set to open by 2015 and 9 others require upgrading (Northeast News, July 25)

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Solution

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• Opportunity focused on generating economic value gains for all parties in a SFS as result of factors such as:

– Improved cost efficiencies and effectiveness in attracting, retaining, and training a skilled young workforce

– Improved community involvement and public relations

– Improved employability and economic independence of participants

– Return on the social investment

• The validity of the economic model ensures sustainability of the SFS

Social Finance Opportunity

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Social Finance Structure

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Pilot Project

• Implementation of a Social Finance Structure to fund a Community-Based Employment and Training Skills Development Program

• Based on: – 24/7 ongoing support

– Screening process

– Pre-employment training

– Life skills training

– Job ready training

– Job placement and coaching

– 75% rate of success

– 71% of Aboriginal youth or young adults

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Additional Employment Support

Financial support to pay for:

• Obtaining a driver’s license

• Purchasing safety and protective equipment

• Temporary provision of transportation

• Temporary dependent care

• Temporary basic living expenses

• Temporary dental care

• Paying for pardons for criminal records

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• Improve employment outcomes for a youth pilot group in a selected community of Northern BC

• Generate economic value to main stakeholders

• Prove SFSs are a valid and sustainable funding alternative for addressing social issues

• Develop a general framework for the management and implementation of SFSs in Canada

Pilot Project’s Objectives

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Implementation Approach

Plan, Design, Do, Check & Act (PDDCA):

• Plan – Establish objectives & processes to deliver results with expected output

• Design – Identify service providers & design program

• Do – Implement the plan

• Check – Measure & evaluate the program

• Act – Confirm results & Pay for Success

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Risk Management

Concept is new and in large part unproven the opportunity for unintended consequences:

• Negative impacts to non-for-profits delivering valuable but hard-to-measure services

• Public perception of political favouritism & corruption

• Suffer similar implementation weaknesses akin to a public private partnership, or P3

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Performance

Measurements

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Monitoring & Evaluation

• 85% graduate rate

• 75% placed into employment after 6 months

• 90% placed into employment remain employed after 6 months

• 75% of those placed into employment remain employed after 12 months

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• Employment rate after 6 months

• Employability index

• Income assistance participation rate

• Average income assistance

• Average wage per hour

• Average working hours per week

Social Performance Measures

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• Program recruitment rate

• Program completion rate

• Program satisfaction score – Participants

• Program satisfaction score – Employers

Service Delivery Performance Measures

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• Cost per hire

• Training cost per new hire

• New-hire cost to productivity

• New-hire turnover cost

• Income assistance payments

• Public relations costs

Economic Performance Measures

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Benefits of

Solution

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SFS Economic Benefits - Example

Item Baseline Post Savings

Cost Efficiencies

Cost per hire $13,3001 $5,000 $8,300

Training cost per new hire $5,000 $4,000 $1,000

Lost productivity per hire $4,000 $2,000 $2,000

Turnover cost per hire $5,000 $2,500 $2,500

Savings per Hire $27,300 $13,500 $13,800

Public Relations (breakeven savings) $3,200

Income Assistance Savings

Single family rate = $610 x 5 months*10 participants

$30,500

Total SFS economic benefits per hire $47,500

Notes: 1 Conference Board of Canada

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Potential Benefits & Assumptions

• Improved social outcomes

• Economically quantifiable benefits to stakeholders

– Benefits to:

• Payer/Guarantor

• Investors

• Community

• Government

• Service Provider

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Questions

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Why Northern British Columbia?

BC Unemployment Rate (June/12) - Total BC = 6.6% - Aboriginal Population = 11.7% (excludes those living on-reserve)

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SFS Framework Overview

Idea Selection

Testing & Piloting

Resource Allocation & Pilot Implementation

Conceptual Service

Modelling

Data Collection

Contractual Framework * Performance Plans * Performance agreements * Estimated Savings * Financial Return

Implementation & Service Intervention

Private Investors

Performance & Contract

Management

Structuring & Scaling

Understand the issue Selection &

Feasibility

Financial Modelling, Reporting & Analysis

SIB Structuring

Social Impact Measures and

Outcomes

Performance Management System