Forte enables the cost of education to be covered by the increase in future income tax revenue caused by that training.
Why It Works
The cost of training is often less than the increase in future tax revenue caused by that training.
Forte uses this empirical reality by enabling disadvantaged individuals to pay for their own training with their future tax. Think of it as “Future Lydia’s taxes paying for Present Lydia’s training.”
How It Works
1. Transfer the Risk (Training Financing): Investors, via Forte, cover the cost of training for individuals who would otherwise be paying no or negligible tax.
2. Grow the Pie (Social Impact): This training, by its nature, increases expected employment, income and government income tax revenue. The quantity and quality of work both increase.
3. Split the Surplus (Tax Transfer): Each year, for a set number of years, the government passes back to investors, via Forte, a portion of the tax revenue collected that is attributable to the training recipients (such as 50% of tax for 3 years, or 30% for 5 years).
This arrangement is mutually beneficial. A true win-win.
Individuals receive training at no cost and with no risk. They just pay the usual tax rate. They’re effectively paying for their own training with their future tax.
Governments pay nothing upfront. They can increase the skilled modern workforce, overcome skill gaps, and help those in need, without worsening the budget! Importantly, there are mathematical ways of structuring the contract, so they only pass on in the future what they otherwise would not have had.
Investors get high yield, uncapped, low-risk, short-term returns. They can do well while doing good.
Why Needed Now?
Millions need high-quality training to develop skills so they can get new or better jobs, earn a higher income, and support their families.
Some of the groups most in need of reskilling are as follows:
Why This Approach?
We don’t currently have a way to finance high-quality education, particularly vocational reskilling, at the scale required.
Savings? Try that you’re living paycheck to paycheck.
Loans? Good luck with that if you have poor credit history. And even if you can take out a loan, congratulations – you’re rewarded for that with decades of crippling debt.
Government Lump-Sum Funding? It’s often not possible for economic or political reasons.
Philanthropy? It’s great, but it’s too limited for the scale we’re talking about.
How about Income-Share Agreements or Social Impact Bonds? They’ve been beset by problems.
Forte, which utilizes Tradable Income-Based Securities (TIBS), has all the advantages of existing approaches, with none of the downsides.
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