Funding & Social Enterprise: Three Considerations

All organizations were, at some point, at a start up stage and likely had to explore the question of funding. What model aligns with the organization and where could they find the capital to get their organization up and running? For social enterprise organizations, this question brings with it a unique set of challenges but also some possible advantages too. This article covers three important considerations related to funding your social enterprise.

1. Do you need external funding for your social enterprise organization or project?

This is an important place to begin. Social enterprise typically includes considerations of financial sustainability and, though there is a good purpose driving the organization, this is balanced by built-in planning for ongoing financial sustainability. If this is not built-in, you may be more in a traditional non-profit organization area. Many social enterprise start-ups have launched on a small shoestring budget and, through reinvestment of profits, grown as their success dictates. The global microfinance phenomena is a perfect example of this. While everyone wants a robust, resilient and scalable social enterprise, the early stages are an excellent indicator of how you can grow, as well as how fast. If a program or organizational plan can be adapted to pilot on a small scale with minimal funding, it is a responsible way to test the waters and establish proof of concept.

2. Localized Funding Sources

These smaller funding pools can come from local municipalities, economic and community development organizations, community foundations or larger non-profits with local chapters. These sources of funding are often appealing for non-profit organizations that have specific asks with direct benefit to the community. These funding sources are becoming more aware of social enterprise models and it is an appealing part of an ask. If you can demonstrate the path by which a grant of a few thousand dollars will be turned into more money with greater social impact than the original investment, this is appealing to grant committees. Localized funding sources are also maximizing their impact, so the potential for longevity in social enterprise models is often more appealing than an ask for a specific, one-off program that begins and ends with the grant funds.

SENCO is currently offering traction grants at this localized level, specifically for piloting, testing and experimenting with your social enterprise idea. These are open to both organizations and individuals and more can be found in the Opportunities section of our website: senco.io

3. Large Scale Funding Sources

For organizations looking to take a big leap through external funding, larger granting organizations come to mind, such as the Ontario Trillium Foundation, the United Way and the Government of Ontario’s Social Enterprise Demonstration Fund. There are also a variety of large private or family foundations that are increasingly interested in the social enterprise model. All of these sources of funding are weighing the factors that make social enterprise a unique and viable outlet for investment. Social enterprise organizations can also qualify for reduced interest loans or more traditional funding routes with benefits based on the fact that they are responsibly pursuing a social purpose.

Funding will largely depend on the stage an idea is at and, truthfully, if it is needed or not. With large, global examples of social enterprise making news, it can be easy to forget that starting small is perfectly alright and perhaps also the best way to pressure test an idea.