What Happens When You Bring Social Entrepreneurship to Traditional Fundraising?

I think many of us could use a ball like that lying around….

The mission — help convince a very wealthy woman and her family foundation to become a donor to our organization. Now picture me — a naive, young woman of color with a middle-middle class upbringing, non-worldly (unless you count visiting family in India) in a fancy restaurant on the Main Line in Philadelphia sitting for lunch with two women who looked like everyone else in the restaurant. One was my boss and the other was the donor we were seeking money from.

Our donor prospect was phenomenally nice and down-to-earth. Since it was part of my job, I think I did well in conveying our mission through examples and heart. But I sucked at the rest of it. I would pretend to relate and knowingly smile when they talked about the boarding schools their kids went to, or the important rich-people names that were being dropped. Thanks to growing up playing tennis and the college I went to, I could “drop” something. I of course, by default, was a subject matter expert on exotic India and Indian restaurants so that was a plus. Also, this lunch meeting taught me that even though a fancy sandwich sounds amazing — DON’T DO IT. We ended up succeeding in our mission to get an investment from this family. But that experience many years ago, helped me realize that fundraising & development wasn’t where I was meant to land.

Don’t get me wrong. It’s a great skill to understand and hone and I admire those who do it well. It’s also still essential for the non-profit space.

I learned then that fundraising was largely about relationships, about matching donors/investors interests with what an organization was doing. For that reason, it has clear and valuable parallels to sales and marketing that would serve me later.

But at the time, I felt like the craft lacked opportunities for creativity, and I was clearly an alien or felt like one amidst folks that spoke a similar language together.

On a fundamental level, I also had/have a problem with fundraising because though a grant or a quick donation of cash can get you started, you are consistently reliant on fundraising to stay afloat. Not only that, your organization will need to spend more and more time and resources on successful fundraising. The orientation of the organization might also start getting co-opted by what high net worth donors and foundations prioritize versus what your organization truly wants to prioritize. I have heard a contrasting perspective that when organizations have huge pools of money, there can be less interest in improving and evolving. On the flip side, social entrepreneurs like Charles Best who runs an awesome venture called DonorsChoose.org talks about how more money enables them to innovate and experiment with new approaches to advance their mission. And I love the idea of having some wiggle room to be creative. I’ll let you all decide if the constant hustle for cash is beneficial or not….

If most of us can agree that financial sustainability is critical to most ventures, the larger question becomes — is fundraising as a business model essential and working in its current form, or should it be re-imagined? If so, how?

I am clearly not the expert to answer these questions (though I like to bring them up:), but I can point to creative business models being tested by social entrepreneurs within this burgeoning field of social enterprise/social business.

A few newish revenue engine models include:

  • Cross subsidization or Differential pricing — The revenue generated from some customers go towards subsidizing others. The Aravind Eye Care System has used this model coupled with a McDonald’s-like fast food approach to providing eye care that has transformed the way people think about providing quality care. More here.
  • Microphilanthropy — Crowdfunding model that enables donors to specifically support the projects they are interested in, while opting-in to support the organization as a whole. Donorschoose.org led by Charles Best uses this model to fund individual projects for teachers who lack the funding in their school or classroom to do so. More here.
  • Employment generation— Goods and services are sold at a market rate but jobs are created and income is generated by target populations, communities that may not traditionally have access to those opportunities. Samasource offers training and work in the digital space for those who would normally not have access, like those living in poverty to improve their livelihoods. More here.
  • Good ol’ fashioned fundraising w/ a transparent twist — Everyday donors fund the work. Big donors fund the organization. I made up the name for this because I’ve only seen it with one Org so far (feel free to point out others). Charity Water supports projects that improve and provide access to clean water the world over. But they do it by being super transparent in communicating that the money of individual donors goes directly to support projects, and they rely on big funders/major gifts/angel investors to fund running the actual organization. More here.

Ultimately, the model one chooses should be a thoughtful one that keeps in mind those individuals/communities (read: customers) being served and how. Key to that is an approach that puts sustainability and impact at the forefront without compromising your mission. A deeper and intresting exploration on that here.

Even though I may still never want to move back into the non profit fundraising world, I’m grateful for what I’ve learned through exposure to it. I’m heartened to see that it is indeed possible to get creative, yes even with financial sustainability, for social impact.

Full disclosure: part of the online social entrepreneurship class I’m taking w/ Acumen involves sharing about what you learn. So I figured I shared it here in case it resonates with others, and because blog posts are often like talking to yourself digitally anyway. I’m ok with it. :)