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Role of Intermediaries in Linking TANF Recipients with Jobs: Final Report

Publication Date
Feb 9, 2000



The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), enacted in August 1996, brought sweeping changes to the country's welfare system.  Through the elimination of the 61-year-old Aid to Families with Dependent Children (AFDC) program and the creation of the Temporary Assistance for Needy Families (TANF) block grant, the new law shifted the emphasis of the welfare system from providing ongoing cash assistance to placing welfare recipients in jobs.

Local welfare offices have relied on a number of different strategies to shift to a more work-oriented assistance system.  Some have expanded the role of former income maintenance (eligibility) workers to include more tasks related to helping welfare recipients find employment, or they have hired additional staff to perform these functions.  Others have created closer alliances with or transferred primary responsibility for employment-related activities to the local workforce development system.  Still others have increased their use of intermediaries  private or public organizations that act as brokers between the welfare system and employers.


Study Purpose and Design

Although it is perceived that many welfare offices are using intermediaries to link welfare recipients with jobs, very little is known about how widely they are used, who these intermediaries are, how they operate or the issues they face in linking welfare recipients with jobs.  To better understand the characteristics of intermediary organizations and their role in current welfare reform efforts, the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation (ASPE) contracted with Mathematica Policy Research, Inc. (MPR) to conduct the exploratory research documented in this report.  This research has four purposes:

  1. To describe the characteristics of intermediaries
  2. To describe the key decisions local welfare offices have made regarding the use of intermediaries
  3. To provide in-depth information on the types of services intermediaries provide, the process they use to link welfare recipients with employers and the challenges they face
  4. To identify lessons that can benefit policymakers and other or newly emerging intermediaries and assess the implications of the findings for future research on welfare employment efforts

The devolution of responsibility from the federal government to the states for developing and implementing assistance policies for needy families has spawned a broad range of approaches to transforming the welfare system into a work-based assistance system.  To capture the way intermediaries function in these diverse policy environments, information for this study was gathered through site visits to 20 sites, one urban and one rural in each of ten states (see Figure ES-1).  Sites were selected to provide broad regional representation; a mix of large, medium, and small TANF caseloads; different approaches to moving welfare recipients into employment; and a diversity of administrative and service delivery structures.  Site visits were conducted between April and August 1999 by researchers from MPR and our subcontractor, the National Alliance of Businesses (NAB).


Figure ES-1
Study Sites

Figure ES-1. Study Sites.



Defining Intermediaries

Intermediaries are not new to the welfare system.  Prior to the implementation of TANF, some welfare offices used intermediaries (often referred to as employment and training service providers) to operate all or part of their Job Opportunities and Basic Skills training (JOBS) programs.  Intermediaries also provided services to welfare recipients and other low-income job seekers through the former Job Training Partnership Act (JTPA) programs.  In addition, some community-based organizations act as intermediaries, helping unemployed community residents (some of whom are welfare recipients) find employment, often in conjunction with participation in other programs.

Given the broad range of organizations that might be classified as intermediaries in any one community, we sought to develop a definition of an intermediary that would allow valid comparisons across communities.  After considering several definitions, we established two criteria that an organization had to meet to be classified as an intermediary for purposes of this study:

  1. They must provide services that help link welfare recipients with jobs.
  2. They must have a formal relationship with the welfare office or other administrative entity that has responsibility for moving welfare recipients into the labor market.(1)

While narrow in some respects, this definition made it possible to gather and compare information on the universe of intermediaries within select communities in a relatively short time frame and with modest financial resources.


What Is an Intermediary?
Intermediary An organization that has responsibility for linking TANF recipients with jobs through a formal relationship with the state or local entity responsible for the administration of TANF or Welfare-to-Work employment programs.
Primary Intermediary An intermediary that operates a job search and placement assistance program targeted to most TANF recipients who are required to find employment.
Secondary Intermediary An intermediary that operates a work experience, education, training, supported work, job retention, advancement or other specialized employment program for a limited pool of TANF recipients.

We include intermediaries funded with TANF and Welfare-to-Work (WtW) dollars in this study.  TANF employment programs generally are targeted to the entire TANF caseload while WtW programs are targeted more narrowly to hard-to-employ TANF recipients.  TANF employment programs usually are administered by the welfare department, although a state or local community can choose to transfer this responsibility to another organization, such as the Department of Labor or a local Workfoce Development Board.  The WtW program is administered through the Department of Labor at the federal level and through the workforce development system at the state and local level.  In the study sites, both programs were administered by the workforce development system in four sites; in the remaining sites, TANF employment programs were administered by the welfare department and WtW by the workforce development system.


The Characteristics of Intermediaries


  1. A broad range of organizations act as intermediaries for welfare recipients.  These organizations include non-profits, for-profit companies, educational institutions and government or quasi-government agencies.

The organizations that act as intermediaries bring a broad range of expertise to the task of linking welfare recipients with jobs.  The overwhelming majority of the intermediaries in the study sites are well-established non-profit organizations.  These organizations account for 67 percent of the intermediaries overall and 74 percent of the intermediaries in the urban sites (see Figure ES-2).  The intermediaries in the rural areas are more equally split among the various types of organizations.  While a few sites rely only on non-profit organizations, most use a mix of non-profit, for-profit, and public organizations, as well as educational institutions to link welfare recipients with jobs.


Figure ES-2
Types of Organizations Acting as Intermediaries

Figure ES-2. Types of Organizations Acting as Intermediaries

The majority of the non-profit organizations are of two types: (1) local entities or local affiliates of national organizations (e.g., the Urban league, Salvation Army, Goodwill, etc.) that have a long history of providing employment-related services to disadvantaged populations and (2) organizations with expertise in addressing the supportive service, and sometimes the employment, needs of special populations such as ex-offenders, persons with disabilities, or persons who speak limited English.  Only a few nonprofit organizations are new to the communities in which they provide services or have no experience providing employment services to or working with welfare recipients.

Represented among the for-profit intermediaries are organizations that have been providing employment services to welfare recipients for many years and organizations that are new to the employment service arena.  Most of the for-profit intermediaries are large organizations with a national presence, although a few are smaller local organizations.  The educational institutions that act as intermediaries include community colleges, adult education programs, and local school districts.  The public or quasi-public agencies that act as intermediaries include city governments, local JTPA agencies and public housing authorities.


  1. For-profit companies account for a relatively small share of all intermediaries in the study sites.  However, because most for-profits serve large numbers of TANF clients, they expect to serve almost half of all TANF recipients who are referred to intermediaries for services.

On average, the intermediaries included in this study expect to serve 370 TANF clients per year, but the range of clients served is wide, with the smallest intermediary expecting to serve only 25 recipients and the largest expecting to serve 4,000.  On average, for-profit organizations expect to serve 985 clients compared to 240 for non-profits.  Forty percent of the for-profit intermediaries in the study sites expect to serve more than 500 clients, compared to only 10 percent of the non-profit organizations.  Because they are more likely than other types of organizations to serve large number of clients, for-profits are projected to serve 45 percent of the total TANF clients to be served by intermediaries, even though they account for only 15 percent of the intermediaries.


Key Decisions Regarding the Use of Intermediaries


  1. Localities transfer various levels of responsibility for providing employment-related services to intermediaries.  While some localities transfer responsibility for job search and case management, others transfer responsibility only for job search and some do not transfer any responsibility.

Of the 20 study sites, 18 transfer some responsibility for providing employment-related services to intermediaries.  Due to their smaller size, it is less common for rural offices to transfer responsibility for employment-related services to intermediaries; the two sites that do not transfer any responsibility to intermediaries are both rural sites that provide all employment-related services in-house or rely on existing resources in the community.  (Sites were not selected for this study based on their use of intermediaries.  Thus, prior to conducting the study, we did not know whether the sites had transferred any responsibility to intermediaries.)

The majority of the study sites, seven urban and five rural, transferred responsibility for case management and job search assistance to intermediaries.  When case management responsibilities are transferred, intermediaries are responsible not only for linking TANF recipients with jobs but also for assessing client needs, working with clients to develop self-sufficiency plans and linking clients with the resources they need to achieve the goals outlined in their plans.

Local welfare offices have relied on three different models for providing employment-related services to an expanded pool of welfare recipients.  Some have expanded the role of former income maintenance (eligibility) workers to include more tasks related to helping welfare recipients find employment.  Others have hired additional staff to perform these functions and the remainder have transferred responsibility to intermediaries.  Many have relied on a combination of these approaches.

Given the emphasis on shifting the focus of the welfare office from determining eligibility to helping TANF recipients make the transition to unsubsidized employment, it is notable that so many of the sites transferred primary responsibility for providing case management services to intermediaries.  When case management responsibility is transferred to intermediaries, welfare office staff often are responsible only for eligibility determination, just as they were under the AFDC program.

Only four of the sites have expanded the role of former eligibility staff to include case management responsibilities.  The other sites that have not transferred all responsibility for case management to intermediaries have separate case management staff, usually working in a specialized unit, who provide case management and/or job search assistance to all or a portion of the TANF caseload.  When these units exist, they often function and are treated the same as other intermediaries.


  1. Most of the urban sites, but only a few of the rural sites transferred responsibility for providing job search assistance and/or case management to multiple intermediaries.

Seven of the urban sites and three of the rural sites transferred responsibility for providing job search assistance and/or case management assistance to multiple intermediaries.  Especially in the urban sites, the number of intermediaries determines how many clients each intermediary will serve.  Some sites have a small number of intermediaries that each serve a large number of clients while others have a larger number of intermediaries that each serve a smaller number of clients.  In the urban sites, clients are allocated to multiple intermediaries based on geography or a discretionary process with each intermediary providing the same services to a portion of the TANF caseload.  In the rural areas, multiple intermediaries' functions are more specialized, providing employment services to specific subgroups of the TANF caseload or a narrowly defined set of employment services to all TANF clients.


  1. When employment-related services other than job search and case management are provided to TANF recipients, they almost always are provided by intermediaries.  However, localities are in the very early stages of working with intermediaries to provide these services to TANF clients.  As a result, the availability of a comprehensive set of services for recipients who need more than job search assistance to make the transition to employment is the exception rather than the rule.

The study sites initially focused their employment-related efforts on increasing their capacity to provide job search assistance for applicants and recipients who are required to find employment.  Now that these services are in place, sites have begun to expand the employment-related services to include options other than job search.  These options include short-term training, subsidized employment, specialized services to promote job retention and advancement, and specialized services for the hard-to-employ.  Few sites provide all of these services.  Instead, individual sites have focused their efforts on a few of these options.  Often these services are provided through the Department of Labor's Welfare-to-Work program and operate outside of the primary TANF employment service system.  So far, these programs have served a relatively small number of recipients.  While some of the intermediaries that provide these more specialized services also provide job search assistance, most do not.


  1. The local sites made very different decisions about how and how much to pay intermediaries for the services they provide.  Although some intermediaries are reimbursed on a pay-for-performance basis, most are reimbursed for the actual costs they incur.  Even among intermediaries that provide similar services, there is considerable variation in the amount they are paid for the services they provide.

The shift to a work-based assistance system and greater emphasis on program outcomes has encouraged administrators of TANF employment programs to reconsider how they should reimburse intermediaries for the services they provide.  The experiences of the study sites suggests that while a few localities have shifted to performance-based payment arrangements, most still reimburse intermediaries on a cost-reimbursement basis.  Some localities combine the two methods of payment, reimbursing the intermediary for part of their costs through a cost reimbursement mechanism and the remainder through a performance incentive structure.  The local sites that rely on cost-reimbursement payment mechanisms often include performance criteria in their cost reimbursement contracts and evaluate the success of their intermediaries against these criteria.

Comparisons across four of the urban sites that used multiple intermediaries to provide primary TANF employment services suggest that there is considerable variation within and between the sites in how much intermediaries are reimbursed, even when they provide similar services.  The average per-person reimbursement across the four sites ranges from $1,045 to $2,360.  The sites with the highest and lowest average reimbursement provide comprehensive services  job search and placement assistance and case management  to TANF clients, suggesting that differences in the range of responsibility transferred to the intermediaries do not fully account for the variation in the amount they are reimbursed for the services they provide.  In three of the four sites, the minimum and maximum payment amounts vary dramatically even though the intermediaries have responsibility for providing the same services.  In one site, the highest-paid intermediary is paid almost four times the lowest paid intermediary.  In sites where payments are comparable across intermediaries, program administrators negotiate a similar price with intermediaries regardless of how much they indicate it will cost to provide services.  In sites where there is considerable variation, program administrators accept the price set by intermediaries in their response to the agency's request for bids to provide services.


The Implementation of the Intermediary Function


  1. The path that a welfare recipient takes to get to an intermediary ranges from a simple referral from the welfare office to a complex chain of referrals from one intermediary to another.

The process of linking welfare recipients with intermediaries is complex and highly dependent on the service delivery structure in which intermediaries operate.  As a result, there is considerable variation in the way in which welfare recipients are linked with intermediaries and the ease with which this process occurs.  The success sites have in linking welfare recipients with intermediaries is determined in part by how streamlined the referral process is and how well the different agencies communicate.

Regardless of how much responsibility is transferred to intermediaries, the referral process starts at the welfare office, usually when an eligibility worker determines whether a TANF applicant or recipient is required to look for work (see Figure ES-3).  The actual transfer of clients to an intermediary ranges from an automatic electronic transfer to a more complicated decision-making process that takes into account client needs and the unique characteristics of intermediaries.  In most of the sites, staff from the welfare office refer TANF clients directly to intermediaries.  In a few sites, clients are first referred to the workforce development system and then to intermediaries.  In sites where responsibility for case management is transferred to intermediaries, staff from the welfare office make the initial referral to an intermediary but all subsequent referrals to other intermediaries are made by an intermediary.




  1. To enforce mandatory participation requirements and achieve high work participation rates, the referral process is often tightly defined and monitored, making it difficult for intermediaries outside the primary TANF employment system to receive referrals.

In all of the local sites participation in employment-related activities is mandatory.  Most of the sites have developed their referral and client monitoring systems expecting that clients will participate in programs offered by intermediaries directly under their purview.  In developing these systems, the organizations that are responsible for managing TANF employment programs aim to achieve two different goals: (1) ensure that clients who are mandated to find work have access to job search and placement assistance, and (2) ensure that the intermediaries to which they have transferred responsibility for providing these services have the opportunity to provide them.  In the sites where multiple intermediaries provide job search and placement assistance, intermediaries generally did not feel they were competing with each other for clients.  However, the situation is quite different for intermediaries providing services other than job search.

In sites where the TANF and WtW employment programs are operated by different entities, WtW intermediaries often have difficulties (over and above those related to eligibility criteria) receiving referrals for TANF clients.  In some sites, WtW providers are dependent upon other intermediaries to refer clients to them; in others, they are dependent upon welfare office staff to consider them along with primary TANF employment intermediaries as potential service providers for their clients.  Especially in sites where there is excess service capacity, welfare administrators who encourage referrals to WtW providers run the risk of having even greater excess capacity among their own providers.  When the primary TANF employment and the WtW programs are managed by the same administrative entity, it is easier for WtW and TANF providers to be receive equal consideration.  As WtW intermediaries become more established and their programs more distinguishable from those provided by TANF intermediaries, some of the issues WtW intermediaries currently face may be alleviated.


  1. Intermediaries that provide job search and placement assistance to welfare recipients differ little in the specific services they provide.  These intermediaries do, however, differ in their approach to providing these services and the context in which the services are provided.

In a work first environment, the primary effort intermediaries are engaged in is preparing TANF clients to enter the labor market as quickly as possible.  Thus, most intermediaries that provide job search assistance and/or case management provide a fairly standard set of services including assessment, orientation, job search skills development and post-placement assistance.  Dimensions on which these programs differ are often quite subtle and include factors such as: (1) the extent to which they assess client strengths, needs and employment interests; (2) the amount of guidance provided to TANF recipients to help them find employment; and (3) the amount of emphasis placed on the development of job readiness skills and/or addressing job retention or advancement issues.  Intermediaries also are distinguished by their ability to link TANF clients with ancillary services.  Intermediaries that provide comprehensive services to disadvantaged families often are able to access a broader range of services for their TANF clients than intermediaries that only provide job search assistance.


  1. In the current economic climate it is relatively easy for most intermediaries to link job-ready TANF recipients with employment opportunities.  Still, intermediaries rely on a variety of strategies to help TANF clients find employment.

An intermediary's success in linking welfare recipients with employment is crucial to the short-term and long-term success of the organization.  Finding employment for job-ready welfare recipients in the current economic environment is an easy task for most intermediaries; employers are looking for qualified employees and are eager to work with intermediaries who can supply them with job-ready applicants.  Intermediaries use a broad array of strategies to link welfare recipients with jobs.  For the most established intermediaries, job development often involves filling job orders for employers.  In other instances, intermediaries build relationships with employers by inviting them to participate in job fairs and mock interviewing sessions with job seekers, or by creating internships and work experience programs that allow employers to test out clients.  Job developers in all but the most established intermediaries also rely on cold calls to employers with whom they have not developed a relationship.


Implementation Challenges and Lessons Learned


  1. In many of the sites, numerous organizations are involved in providing assistance to TANF clients.  Consequently, clearly defined roles and responsibilities and procedures for transferring information between organizations are critical to the successful operation of a work-based assistance system.

Intermediaries are operating in a complex policy and administrative environment.  Regardless of how TANF is administered and how much responsibility is transferred to intermediaries, the process of linking welfare recipients with jobs is a shared responsibility.  Welfare office staff remain responsible for referring clients to intermediaries, imposing sanctions on clients who do not participate in work-related activities and authorizing work supports such as food stamps and Medicaid when clients are no longer eligible for cash assistance.  When the welfare office and the workforce development system are both involved in the administration of TANF or providing employment-related services to TANF recipients, clearly defined roles and responsibilities and clear procedures for transferring information between agencies are even more critical.

Unfortunately, many state or local automated data collection systems were not designed with intermediaries in mind.  As a result, the development of clear roles and responsibilities often requires establishing detailed  and sometimes cumbersome  procedures for transferring information between agencies.  As a result, it is an ongoing challenge to develop and maintain a system of communication that provides all involved parties with the information they need and is not overly burdensome on front line staff.


  1. Intermediaries are operating in a new and changing environment where the flow of clients is rarely steady and predictable.  Some intermediaries are serving more clients than they anticipated while others are serving fewer.  All intermediaries struggle with high no-show rates among the TANF clients referred to them.

When intermediaries enter into a formal agreement with the welfare office or their designee, they do so with the expectation that they will serve a specified number of clients.  However, in a rapidly changing environment it has been difficult to accurately predict how many TANF recipients will need to be served by intermediaries.  In some of the urban sites, intermediaries are serving more clients than they anticipated serving.  In the sites with the largest caseload declines intermediaries are serving far fewer TANF clients than they anticipated serving.

Even when intermediaries receive sufficient referrals, they have had to account for extremely high levels of non-participation.  Intermediaries report that they generally can expect only about half of the clients referred to them to participate in the program.  High no-show rates reduce the number of clients an intermediary can serve and create a huge paperwork burden since clients who do not show up for services are usually referred back to the welfare office for sanctioning.  In an effort to reduce the number of clients who do not participate in their programs, a few intermediaries have put outreach activities into place.  Outreach activities include calling the client the day before they are scheduled to begin participation and sending follow-up reminder cards.  Other outreach activities are more intensive and may include conducting home visits to clients.


  1. As TANF caseloads decline, intermediaries are concerned that there is a mismatch between the limited services they are being asked to provide and the needs of the clients they are being asked to serve.

As TANF caseloads decline, many intermediaries feel they are working with more clients with multiple barriers to employment.  Most intermediaries believe they could do a better job of serving these families if they had more time to work with clients and could provide a broader range of services.  Over time, it is possible that job search programs will be redefined to address the more diverse needs of the families remaining on the TANF caseload.  There may also be an increasing demand for longer-term supported work programs.  Given the more specialized knowledge needed to address the needs of some families with chronic barriers to employment, it is possible that a new set of intermediaries will be called upon to provide these services.  Alternatively, existing intermediaries may begin to collaborate with organizations that have more expertise in providing these more specialized services.


  1. There are a variety of ways to transfer employment-related responsibilities to intermediaries.  Given that localities have different resources, needs and priorities, a service delivery structure that works in one locality may not necessarily work in another.

The local sites examined for this study transferred responsibility to intermediaries in a number of different ways.  The decisions they made reflected differences in their in-house resources, administrative structure, prior experience with intermediaries and perceptions of the relative effectiveness of government and the private sector.  Based on their early experience, there is no evidence to suggest that one particular strategy for transferring responsibilities to intermediaries will produce better results than another.  Instead, what appears to matter is creating an infrastructure that builds on the strengths of the local community.

It is also important to note that the decisions one makes regarding how much responsibility to transfer to intermediaries can impact the kinds of organizations that are qualified to function as an intermediary.  In particular, when responsibilities are broadly defined and the number of clients to be served is large, non-profit organizations may be less likely than large for-profit organizations with a national infrastructure to act as an intermediary.


Expanding Our Knowledge Base


  1. The implementation of welfare reform cannot be fully understood without taking into account the role intermediaries play in linking welfare recipients with jobs.

Understanding the implementation of welfare reform is an extremely complex undertaking.  Because many implementation decisions are being made at the local level, the focal point for many implementation studies is the local welfare office.  This study suggests that, in some communities, the scope of inquiry may need to expand beyond the welfare office.  This is especially true for the analysis of implementation issues that involve significant worker-client interaction such as assessment practices, the implementation of sanction policies and efforts to link clients with ongoing work supports such as food stamps and Medicaid.  While we often think of these tasks within the purview of welfare office staff, it is clear that intermediaries have an important role to play in making sure that clients are aware of what is expected of them and the benefits to which they are entitled.


  1. Currently, there is no conclusive evidence on whether intermediaries with certain characteristics perform better than others.  Investing in research to examine this question could potentially help local welfare offices to develop more effective TANF employment service delivery systems.

In the current environment many intermediaries are being asked to provide the same set of services to welfare recipients.  However, intermediaries differ on a number of dimensions that may influence their performance.  Key characteristics that may influence performance include:

  1. The number of clients served;
  2. Previous history of providing employment-related services;
  3. Expertise serving hard-to-employ populations;
  4. Payment mechanism;
  5. Payment amount;
  6. Type of organization;
  7. Links to the business community; and
  8. The administrative structure in which the intermediary is operating.


  1. Work first programs, consisting primarily of job search and placement assistance are at the heart of most current efforts to increase employment among welfare recipients.  As these programs become more established, it would be useful to know whether one work first approach is more effective than another.

Job search assistance is the core service provided by most primary intermediaries.  While these programs are similar in many ways, often there are subtle differences.  Some of the dimensions on which these programs vary include:

  1. Length of the program;
  2. Amount of structure;
  3. Level of employer involvement;
  4. Extent to which life skills issues are addressed; and
  5. Length and extent of follow-up.

Currently, there is no information available to indicate whether different approaches to providing job search have any influence on program outcomes.  Additional information on what makes a good job search program may help to improve the overall quality of job search programs.

In many communities, intermediaries provide the primary link between welfare recipients and the paid labor market.  While a service delivery system that effectively links the welfare office, the workforce development system and intermediaries is in place in some communities, in others, an integrated service delivery system is still being created.  Given the changing nature of the TANF caseload and shifting priorities, the system for providing employment-related services to TANF clients is likely to be in transition for some time.  Over the next several years, states and localities will be implementing the Workforce Investment Act (WIA) which may encourage some local communities to again rethink how they transfer responsibility to intermediaries.  Examining how these transitions take place and how they affect the role intermediaries play in linking welfare recipients with jobs will help to broaden our knowledge of what it takes to create a stable work-based assistance system.



1.  In an effort to maintain a focus on intermediaries who link welfare recipients with jobs we explicitly excluded two potentially large groups of organizations that often are thought of as intermediaries:  (1) organizations that provide only supportive services (such as child care, transportation or legal assistance) and (2) organizations that offer only education or training services without a job placement component [such as Adult Basic Education (ABE) and General Equivalency Diploma (GED) programs and some community college education or training programs].

Low-Income Populations
Temporary Assistance for Needy Families (TANF)