The term social entrepreneur describes a person who has identified a social problem or need and has developed a business model around an innovative and sustainable solution. These solutions are often high impact and capable of radically transforming the target sector and community.
Whilst social enterprises may not immediately have the same channels of finance open to regular start-ups such as venture capital or equity financing. Funding opportunities open to the social entrepreneur has grown to include impact investment from international philanthropic organizations and even government bodies developed for the particular purpose of identifying and investing in high impact start-ups.
There are multiple financial routes a social impact start-up might seek to take. They include: partaking in revenue sharing partnerships with an established organization who can bring the economic value while they enjoy the goodwill drawn from the social impact project; philanthropic money from impact investors; angel investors; start-up competitions; and venture capitalists. The most important funding options open to social enterprises are referred to as grants. A grant, however, refers to an offer of financial aid without the requirement to be paid back. They are subventions given for individuals and organizations for financing a particular purpose. Some organizations involved in grant funding include Bill and Melinda Gates Foundation, Tony Elumelu Foundation, African Women’s Development Fund, among others. There are many start-ups vying for the attention of these organizations. In 2018 alone, Tony Elumelu Foundation received 150,000 applications for its $100 million TEF Entrepreneurship Programme. So while grant opportunities abound, whether or not you access it depends on a thin stroke of luck and a lot of preparation.
Create a scalable model
Social enterprises are born from the passion of the entrepreneur. It may center on an issue which attracts the empathy of sections of the public or it may be a hydra-headed social problems like healthcare and climate change which require multiple partnerships for any semblance of impact to be attained. Social impact investors are likely to access the viability of a social enterprise by employing measurable metrics and weighing the quality of the established structure. As Abhilash Mudaliar, the research director of Global Impact Investing Network says; Investors want to make sure the impact continues over the long term.
You will need to convince an investor of your capability to see the vision through and the best way to do this is through a workable business model. A business model is a design a business follows to bring greater value to clients and the target market. It is structured to enhance the capacity of the business to identify strategic angles from which to challenge a social concern while enhancing its ability to generate profit. Before adopting a model, it is important to ensure that such a model is inextricably linked to your overall objective. There are several applicable models such as fee for service model, employment model, market linkage model, service subsidization model, amongst others.
Having established the existence of numerous grant-awarding institutions, the importance of research cannot be overemphasized. In researching for a grant, your vision for your enterprise should remain at the fore. Every available grant must be weighed in light of your organizational goals and not the mere availability of funds.
Some websites such as Funds for NGO’s and Opportunity Desk provide regular updates and details about available grants which can prove invaluable in your search for funding opportunities. Research must also be made regarding the requirements for a grant and its implications for your enterprise. For example, some grants are tailored for the execution of specific projects which may not fall within the purview of your business. An inquiry into the requirements for the grant can be helpful in preparing in setting the immediate and long-term goals of your enterprise to harness opportunities as they arise.
Measure your impact
Investors are drawn to enterprises which can provide accurate data on the impact of their projects on the community. Measurable statistic is the truest proof of impact. Some tools which can be employed in measuring impact include social account and audit, logic models and social return on investment (SROI). Your record of impact should be updated regularly.
Write a winning application/proposal
The application or proposal must be detailed and potent. The quality of your application may determine whether your enterprise receives more than a cursory glance from the investor. The details of the application must be crafted to suit the peculiar perspective of the grantor.
The application should describe the organization and identify all key persons and their duties. It should include a compelling case on the social challenge uncovered and unveil the innovative solution. The proposal should outline the methodologies employed and the success or the immense potential of the venture. The financial model and budget of specific projects should be highlighted to show the profit-making possibilities of the venture.
In conclusion, it should be remembered that investors in social enterprises do not only seek to positively impact society but some seek to make a profit while doing so. The ability of the social entrepreneur to access grants or impact investments depends on how his structures respond to this dual need.