The Revolving Fund – Funding for training whenever you need it

pictures taken at community of experts event

The Community of Experts event recently hosted by i-Fundi created a platform for human resource practitioners, managers and skill development facilitators alike to share some of the major challenges they face on a daily basis.

With the introduction of the new BBBEE codes, employers have little choice but to broaden their scope of training. They are now asked to spend close to 6% of their payroll costs on accredited training, which is significantly more than they currently do. Given the continued financial pressures on companies, most struggle to fund that increase. However, Learning and development budgets are tight and one of the first to be cut. The focus is typically on the bare essentials of product and systems training which are needed for the running of a company.

Speaker and managing director of i-Fundi, Stefan Lauber says: “SETA grants are a welcome relieve when they are available. Unfortunately, companies can no longer count on these grants”. Lauber unpacks the issue, stating that, for one – the demand surpasses the availability of these grants. In recent years, SETA funding priorities have shifted away from employers to instead benefit public education institution. Even worse, the proposed new skills development strategy suggests that SETAs are relegated to become only advisory bodies. In other words, there will be no more SETA grants”.

The Revolving Fund

The one question on everyone’s mind is: What alternatives do employers have?

The Ubuntu Initiative has launched the Revolving Fund to finance training. It is a form of bridging finance, a solution that helps employers with their cash flow.

“Much of the training expenditures are upfront when new hires join a company. Companies can take advantage of generous tax incentives when they recruit young people and enrol them on learnerships. They also save every month because the stipend of a learner is lower than that of a more experienced candidate”, says Lauber.

As the table below shows, the savings and expenditures for the programme per learner are equal. In other words a company, gets free labour for one year.

It however takes more than a year before a company realises all of these benefits. The Revolving Fund therefore provides money upfront, which companies then repay in instalments as they accumulate their savings, month by month.

How does it work?

It’s simple. No funding windows and administrative red tape.

Lauber goes on to explain that with the Revolving Fund, a company is free to recruit and train the people as and when needed. All you need to do is submit an expression of interest. We then have a personal consultation with you to understand your personal needs are.

“Your application is approved after a credit check. If the training is conducted by an external training provider, you complete a service level agreement which states clear deliverables. Funding is releases in tranches that you determine. Once the work is completed, you sign off a proof of delivery, after which we will pay you. Our turnaround time is three days. No waiting. The whole point of our solution is to help you improve your cash flow”, he adds.

An answer to the current skills shortage

The workshop placed emphasis on the known fact that investing money in accredited training and learnership makes not only sense from a compliance point of view, but that it is the only sustainable solution to the shortage of skilled people that companies face.

Audience members strongly agreed that every employer obviously would like to hire people who are ready to perform as soon as they arrive. However, since the education system does not produce the calibre of people required, most companies look at their competitors as the fastest way to source people. This only increases attrition, on-boarding costs and salaries. Companies have therefore little choice but to invest in the development of their own talent pipeline.

Learnerships have proven to be a great alternative to grow human capital. Experience has shown that learners quickly outperform experienced hires because they are more motivated and better trained. Employers need to keep only the graduates who have proven themselves, it is like having a one year long interview.

Last and certainly not least, you help reduce unemployment, one of our greatest problems in South Africa. Research has shown that people with 6 to 12 months work experience have an 80% chance to find long term employment.

Whatever and whenever you need it

The Revolving Fund is an ideal funding alternative for training departments whose budget is strained and who cannot wait for SETA funding. It puts learning and development managers in charge. They determine what programmes to run and how to roll them out. It instantly frees them from red tape, saving time and reducing paper work.

The informative session was much appreciated by those in attendance, with one participant remarking: “thank you for the presentation on learnerships, it was a good refresher!”.

The next Community of Experts will be on 6 May 2016, and the topic will be on e-Learning. For more information on up-coming event, click here.