Technology companies know how to raise money. Start-up nonprofits and social enterprise businesses should take their example as potential way to fundraise. If you know anything about the tech industry, you know they’re great at raising investment capital.
So, my question to you is, do you have to only rely on the old methods and models of raising money for your new social enterprise? Or, can you think out of the box and see how to raise capital, take your foot off the perpetual philanthropic fundraising pedal and then shift to focus on the programmatic goals?
The Mindset
When you’re looking to fund your start-up social sector organization, you have to be clear about a fundraising mindset. The most successful tech companies that raise millions of dollars from the outset seek a specific amount of money. In addition, they are also clear about the goals they’re looking to reach with that money.
Having this type of thinking is critically important and it’s a mental shift from the traditional philanthropic fundraising. You see, most nonprofit executives look at their fundraising as an ongoing piece of their operation. It happens every day and at the same time they’re looking to execute their programs.
In the tech industry a company will raise its initial capital and then focus on doing the work. They devote all of their energy to achieving the goals and proving to their supporters that they have what it takes to make it happen. Then, when they’ve achieved those goals they enter a next stage of fundraising.
Imagine being able to go through a fundraising drive, raise the capital and then put that work to the side and focus exclusively on the programs!
Investment in Talent
Technology companies are not afraid to put money into talent. If you’re looking to establish a non-profit or social enterprise start-up, you shouldn’t fear that investment. Here’s the deal, you want the very best people on your team. For you to succeed you want to hire the absolute best program director. You want the best marketing professional who’ll get your brand to the masses.
But with that, you have to be prepared to explain this to your funders. I’ve written a number of times in the past about the push back nonprofits get from funders and paying their staff. That’s because the social sector has done a terrible job of communicating and explaining why paying for top talent makes sense.
By investing in talent, you get a team of professionals who will make it happen. The goals you set out for investment will be met if you have the right talent on board to work with you. That takes competitive money.
Demonstrating Impact
The days that a funder gave to his or her pet charity with little expectation of any results are long gone, as they should be. Today’s funders want to see outcomes and impact. They want results. Technology and the low cost of getting tools to crunch the data has caused more funders (even general gift donors) to want to put their money where they can see tangible results.
You need to get the data out there. Everything in today’s world is measurable. Don’t think it’s not. Be prepared to present your funders with the metrics and data they need to know you’ve been successful. And, when you go into a second or third round of fundraising for another goal or project, they will be more willing to support your vision.
Where to Look for Funding
Traditionally, nonprofits looked to major donors, institutional funders and the government to raise money. Although crowdfunding has been around for a long time, technology has enabled the social sector to become more creative about how they fundraise.
But beyond that, if you’re thinking about fundraising for your start-up social enterprise, then you need to think differently about your fundraising.
- Angel investors can support your first stage of funding for operational and program development.
- A single institutional funder or a handful of large funders can get a major piece of your early goals off the ground.
- Venture philanthropists are looking for the most innovative and ground-breaking organizations to fund.
- A co-founder with deep pockets can support you with your fundraising in whole or in great part. You can have the idea and the programmatic piece and your co-founder can help fund it through the initial stage.
Whatever you do, if you’re looking to create a new social enterprise or nonprofit, don’t just think of the traditional fundraising plan as the way to achieve success. I encourage you to look at the tech industry as a model for getting that initial round, and beyond, of capital you’ll need to succeed.