A (Somewhat) Quick Guide to Social Enterprise Funding

After receiving messages for over a year about challenges facing social entrepreneurs, there is a common theme: One of the biggest struggles facing social enterprises is understanding, and access to, start-up and growth funding.

What types of social enterprise funding are available to new social entrepreneurs?

What funding should I consider as a nonprofit social enterprise? What about as a for-profit social enterprise?

How do I know I need funding for my social enterprise and what would I use it for?

But before looking for funding or approaching any of these funders, investors or options below, you will want to have a good social enterprise idea and a strong business plan

Quick note before we jump in: I know this isn't a complete list and will be adding resources as they come available and as YOU let me know. If an opportunity is missing from this list, please let me know and I'll add it. And bookmark this page so you can revisit it later and get funding for your social enterprise.

Are you looking for funding for your social enterprise? Click through for our list of social enterprise funding options!

Let's take a look at each of these options. 

*Note: Many of these funding options are related to the United States, although there are international opportunities included throughout. 

Are you looking for funding for your social enterprise? Click through for our list of social enterprise funding options!

Social Enterprise Funding: Savings/Self-Fund

What is it?

Your personal or organization's savings. This could be earned income from previous sales, savings from previous fiscal years set aside to start a social enterprise, or an individual's savings if you're a social entrepreneur.

How do you get it?

Save. But for real, there are tons of articles on advice for saving money, so we won't get into that here. Please do know that as a nonprofit organization, it's ok (and preferred!) to have money leftover at the end of the year to reinvest in your organization. Talk with your organization's Chief Financial Officer about how this money is saved and used, and brainstorm starting a social enterprise as one use for these funds.  

Are you looking for funding for your social enterprise? Click through for the list of social enterprise funding options!

Social Enterprise Funding: Friends and Family

What is it? 

Money, either as a loan or not, from a friend or family member. who wants to invest in your social enterprise. 

How do you get it?

Ask for their support. You may be surprised at who wants to help your social enterprise get off the ground or grow! The friend or family member may give you money without an expectation of repayment, or they may prefer to loan you money to be repaid at a later date. So - just be really clear about what your friend or family member is expecting - maybe even put the agreement in writing. You don't want to ruin any relationships by having a misunderstanding about money. 

Are you looking for funding for your social enterprise? Click through for the list of social enterprise funding options!

Social Enterprise Funding: Philanthropic Grants

What is it?

Funds from a foundation or other grant-giving institution. There is usually an application and review process before you receive funds, which may include submitting a theory of change and business plan. The funding may be tied to meeting specific outcomes, as reported through a grant report. 

How do you get it?

Complete the grant application for the funder. Most grants require that your organization is registered and in good standing as a 501(c)(3) nonprofit organization, or that you have a fiscal sponsor who is one. You'll want to make sure you meet the eligibility requirements and can actually deliver on the results you propose, before applying for the grant. A few foundations that have been associated with funding social enterprises in the past are:

John D. and Catherine T. MacArthur Foundation

The Chicago Community Trust

Calvert Foundation

St. Paul Foundation

McKnight Foundation

Northwest Area Foundation

Joyce Foundation

REDF 

VentureWell

Draper Richards Kaplan Foundation

Blue Ridge Labs

Manhattan Institute

Chinook Fund

Kauffman Foundation

Otto Bremer Foundation

The Jay & Rose Phillips Family Foundation

The Kresge Foundation

Blandin Foundation

Bush Foundation

p.s. Let me know of other funders and I'll list them here! Drop me a line. 

PRO TIP: When you visit event/fellowship or other websites related to social enterprise below, look for sponsors of those events. Those companies and organizations could also be potential funders of your social enterprise!

Are you looking for funding for your social enterprise? Click through for the list of social enterprise funding options!

Social Enterprise Funding: Social Enterprise Business Plan Competitions

What is it?

There are a number of business plan competitions you can enter for your social enterprise. Usually, you will complete an online application and submit your idea and/or a full business plan. Depending on the competition, there may be a number of rounds to narrow the applicants based on votes through social media, or expert judges votes. Not only are business plan competitions a great way to find potential funding, but also advisors, board members and other supporters who can help grow your social enterprise. 

How do you get it?

Win! Or there may be prizes if you're a runner up. A few examples of social enterprise business plan competitions:

McKinsey Venture Academy is a social enterprise competition for university students based in the UK and Ireland.

Harvard Business School New Venture Competition

Hult Prize

Net Impact has a number of Challenges, Competitions and Fellowships

University of Florida Big Idea Gator Business Plan Competition

Eureka! Road to Enterprise

Global Social Venture Competition

The Rise Fund: Under 30 Impact Challenge

PRO TIP: If you haven't written a business plan before, don't worry! We have a free business plan template in our #socent toolkit. Download our business plan template for free!

Are you looking for funding for your social enterprise? Click through for the list of social enterprise funding options!

Social Enterprise Funding: Fellowships and Accelerators

What is it?

A social enterprise fellowship or accelerator is a cohort or individual experience, usually including face-to-face learning time and often with online or virtual sessions, aimed at growing (accelerating the growth) of your social enterprise business. These can be roughly 6 months to 2 years in length, depending on the program, and are a great way to meet like-minded people who can be a sounding board for your social enterprise. Often times, the fellowship or accelerator will include a small amount of start-up funding, or the option to apply for funding.

How do you get it?

Complete an application and give it your best shot! Similar to grant funding applications, you will likely need to have a business plan and theory of change prepared as part of the application process. A few examples of social enterprise fellowships and accelerators are:

Echoing Green

Global Good Fund

REDF Accelerator

Kauffman Fellows

Ashoka

Civic Accelerator

Uncharted 

Blue Ridge Labs

Agora Partnerships Accelerator

Voqal Fellowship

Are you looking for funding for your social enterprise? Click through for the list of social enterprise funding options!

Social Enterprise Funding: Crowdfunding

What is it?

Crowdfunding is sourcing small amounts ($1-$500 typically) of funds from MANY people, usually in a short period of time. Your crowdfunding contributors pledge the amount they are comfortable with, and usually have the option to choose from a variety of thank you gifts based on their contribution level. Crowdfunding campaigns have been very popular recently, including in the social enterprise sector. It's not only a way of finding funding, but also finding supporters and customers to grow your social enterprise. You'll want to use a crowdfunding campaign strategy when launching a new product, or taking on a new endeavor that requires cash up front (buying a new large piece of equipment in order to be more efficient, for example).

How do you get it?

There are tons of resources online about how to successfully fund a crowdfunding campaign, so here, we'll just talk about a few of the options:

Kickstarter is one of the most well known crowdfunding platforms. This is an all-or-nothing platform, so if you aren't fully funding at the end of the timeframe, you don't receive the funding. It's focused on creative projects so consider that before joining. 

There's a newer crowdfunding platform JUST FOR SOCIAL ENTREPRENEURS called StartSomeGood. And Crowdfund 360 can help you develop the plan to achieve your crowdfunding goals.

Other popular crowdfunding platforms are IndiegogoGoFundMe and Crowdrise. All are fairly similar, but read through their individual websites to see which is the best for you. 

Another platform that's gaining traction is Patreon. While this isn't the same style as other crowdfunding, it is an interesting way for individuals to contribute support on a monthly basis, in exchange for rewards. We set up a Patreon page for Social Good Impact earlier this year - You can become a Patreon member here! Plus, if you're interested in creating a Patreon page for your social enterprise, click here to earn bonuses up to $500!

Are you looking for funding for your social enterprise? Click through for the list of social enterprise funding options!

Social Enterprise Funding: Community Development Financial Institutions (CDFI) Fund Loans 

What is it?

According to CDFIfund.gov, "Community Development Financial Institutions, or CDFIs, are mission-driven financial institutions that have been certified by the U.S. Department of the Treasury’s CDFI Fund. CDFIs include credit unions, banks, loan funds, and venture capital funds that operate with a primary mission of serving low-income communities."

How do you get it?

Search the database to find where CDFI Funds have been distributed in your state. Then apply for a loan with one of the awardee organizations. A couple examples are the Nonprofit Finance Fund and Nonprofits Assistance Fund

Are you looking for funding for your social enterprise? Click through for the list of social enterprise funding options!

Social Enterprise Funding: Bank Loans

What is it?

A loan from a banking institution that you pay back over a period of time, and pay interest on the amount of the loan. The banker may need collateral (something to ensure you're able to pay back the loan, if you default) in order to approve your loan. You may want to get a loan for a large purchase, like a piece of equipment, to start or grow your social enterprise. 

How do you get it?

Apply for a loan with a bank you trust. If possible, find a nonprofit bank, like a credit union

Are you looking for funding for your social enterprise? Click through for the list of social enterprise funding options!

Social Enterprise Funding: Bank Line of Credit

What is it?

Similar to a bank loan, but more flexible. Think of this like your credit card. Your credit card has a maximum limit you can spend, and you receive your statement each month to pay off. A Line of Credit (LOC) is can be helpful if your business has cash flow issues, A/R lag time, or needs for short-term cash, with the intent to pay back right away. 

How do you get it?

Similar to a bank loan, apply for the line of credit with a bank you trust. If possible, find a nonprofit bank, like a credit union

Are you looking for funding for your social enterprise? Click through for the list of social enterprise funding options!

Social Enterprise Funding: Impact Investing, Angel Investors and Venture Capital

What is it?

Impact investing is a newer term and a big buzz phrase in social enterprise right now. According to GIIN, impact investing is basically "investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return."

Angel investors are usually affluent individuals who have money (capital) for your social enterprise to start-up, usually in exchange for convertible debt (debt that will be converted to equity later) or ownership equity (equity in your social enterprise now).

On the other hand, a venture capitalist is an investor who either provides start-up or growth loan capital or equity capital.

How do you get it?

The GIIN's Investors' Council has a large list of impact investors.

Investor's Circle has opportunities for impact investing in select US states.

Interested in impact investing for yourself? Search Impact Base's online database to get started. 

Social Enterprise Funding: Non-traditional and other ideas

Your church or faith-based group may have a budget for local missions, and could support your social enterprise efforts. 

A local rotary or other business networking group may have opportunities for annual grants or loans for start-up of your venture. 

Host an event! Ticket sales, silent or live auctions, and raffles can be a great way to generate cash. Don't forget - you can sell your social enterprise product at the event too! With events, be cautious about how much time you spend on it, or it could be a losing battle.

As with any of the options mentioned here, make sure you're following your local laws on fundraising, taxes, etc.

What else? How have you funded your social enterprise start-up and growth? What has worked well and what hasn't? Let me know in the comments below!


ABOUT THE AUTHOR: BETH PALM, MBA

Hi there! I'm Beth. I'm here to equip social entrepreneurs and change makers like you with the tools to change the world. As a jack-of-all-trades nonprofiteer and recognized social enterprise expert, I've walked the talk in this emerging industry. With over a decade of experience launching and managing social enterprises, I want to share my best tools, resources and knowledge with you.

I'd love to hear from you! Find me on FacebookTwitterInstagram and Pinterest