Week 5 - Funding Social Ventures

It's interesting when solutions to problems fall right into your lap: this week, I was a bit panicked when it came to the funding aspect of my group's project. Over the last few weeks I've been discussing in my posts why the for-profit approach to social enterprises is preferable to nonprofits. However, after the Fitwits presentation and talking with my group it became clear that our tutoring center innovation could not be supported by a for-profit entity. After emailing Professor Zak I was a little more at ease because he reminded me about how high impact social ventures need not be self-sustainable. Following up on this, I read through this week's readings and was quite thankful that many had to do with funding social ventures. Based on this week's articles, as well as articles I found on the internet, a key idea I've embraced is the concept of diverse funding. Many nonprofits run into funding problems simply because they rely on one particular source too much. A lot of the times, this source is simple donations, but often it could be VC funding. VC funding, which for many nonprofits could be difficult to attain, may also come with caveats that completely reshape a given organization. In many cases, this is the inclusion of a particular VC's staff or a board spot for the VC/angel. A few weeks back we discussed how organizations often fail once they take "outsider money" because many times the original team is displaced. This is not to say, however, that VCs and donations aren't helpful. For our project, we're seriously considering these financing options because again, we want to have diverse funding sources available. But like Fitwits, another major source of funding we want to look at is grants - both from universities and other institutions. I've provided a link to a list from Social Earth, which gives "130 ways to fund your social venture." This is basically a list of organizations and resources that can help your venture out with funding, or provide a platform to meet other funding options. Hence, this week has been a reconciliation for me with the "idea" of a nonprofit: I still think that making these organizations more self-sustainable is the ultimate goal, but funding diversification is a simple key concept that I feel many nonprofits overlook. Frankly, a vast amount of businesses fail to diversify revenue sources, leading to their failure. For social ventures, both for=profit and nonprofit, we have to consider what we discussed in class that 80% fail while the 80% of the remaining successful 20% make it because they have a well-conceived business plan. And of course, no small part of the business plan is the diversification of funding resources.