How do I Fund My Philanthropic/Social Enterprise Idea?
Matthew Overton
Fairly frequently these days, people from different places will reach out to me as they are trying to launch their local social enterprise or missional idea. Some people want to make profit as a for profit. Some people are simply launching a charity. Others want to generate net profit, but run as a non profit simply by directing their profits back into the mission of the overall organization. What many of them struggle with is trying to raise the initial funds to get started.
When I began my landscaping company and my non profit I had no idea where the money would come from. I didn't even know how much money I would need. What I did know was that our mission was worth doing and that I was called to do this work. I have learned a lot in the last few years on how to get up and running. Over the past 3 years I have raised about 125k in funding for my organization and I have done that while working a full time job and doing my enterprise on the side.Here is how you might get started.
1.) Your Personal Funds- I know you don't have any, but bear with me. When I started my own enterprise I had to put up about 5k of my own funds. Later I invested much more than that. Your funds matter because unless you are willing to risk for this enterprise you are starting you may not have an idea that is worth pursuing in earnest. Second, when you risk, others believe that their risk might be worth while. You cannot expect others to sacrifice what they have earned if you are not willing to do so yourself. Watch it here though! You do not want to be the only one risking for your idea and if you have means you do not want to fund your idea to the point that it becomes to reliant upon you or your funding stream. That kind of dependency can lead your organization and mission to fold if you step out of the frame or if your personal funding picture should change in some significant way.
2.) Friend Funds- No matter what you do, you are probably going to need to raise funds from those around you. They might be friends or they might be folks that come out of the woodwork as they hear about your ideas. They might also be folks on your board or team that you have assembled. I have been struck at how often folks have emerged with dollars when they have heard about what we are doing. I have also had to learn to make a pitch and ask. This has been a difficult task for me as I don't love talking about money and cannot stand asking for it, but if the mission is good, I will do what I have to in order to forward it. Again, this is a great test for the quality of your idea. If folks aren't interested in funding it then it might not have what it takes to move forward.
3. Grants- You will definitely have to mine local foundation and granting agencies. Just do some Google research and talk, talk, talk to folks about what you are up to. There are loads of sources of funding that your network of folks knows about that you don't. For profits can sometimes get loans from foundations or important advice from them about funding. They can also connect you with people who know the industry that you are about to launch into. Don't underestimate the value of such advice and connection points!!!! Just don't expect those foundations to perpetually fund your dream. They often want to see if you have a plan and have what it takes to hang around for a few years on your own. Their funding will only last a couple of years, so they want to know that you can sustain yourself without their perpetual help.
4. Awards- Along the way I have won three awards for our work with Mowtown and the Forge. Periodically you just come across these things. Some of the awards are small (1-3k), but some might be larger (5-20k). I also won these awards as a for profit. I had to pay taxes on those awards, but it was still very much worth it. They are a nice boost to your bottom line and another sign that you might be headed in the right direction.
5. Denominational Sources- I work in the church world, so I have some connections through institutional networks. I found funding though my local region as well as through a national source that is seeking to launch new ministries around the nation. Sometimes these gifts will require various forms of reporting and accountability that might seem bureaucratic, but there is no source of revenue that has no accountability or strings attached to it.
6. Private Investment- Admittedly, this is the area that I know the least about. My enterprise was built with my own money and a few awards. I was able to do this because my particular industry (lawn care and landscaping) has a fairly low barrier to entry. But, if your idea is larger or more expensive to get off the ground you might need to take out a loan or seek out investors who are going to want return on their cash investment. It's possible that they may take a lower rate of return than is normal based on the fact that your project is socially engaged.
All I can say is that this is going to be a lot of work. Don't expect anyone to make this thing happen for you. It's going to take some sweat to make this work! I mean that in terms of sweat of your brow as well as anxious sweating it out as you figure out how to fund the next turn in the road. Blessings as you dream and launch!