Originally published October 1, 2015.
It seems to be the social entrepreneur’s lament; the official anthem sung far and wide - I need money. Talk to pretty much any young social entrepreneur and at some point you’ll land on the subject of funding. Specifically, how do I get funding?
Unfortunately there’s no easy answer to that question. But don’t stop reading! There are in fact very concrete ways you can improve your chances of identifying potential funding sources and securing that cash.
In this article, Ryan Little, founder of CanadaHelps.org and StormFisher and project manager at the BMW Foundation shares his advice for securing funding for your social business.
In this article, you’ll learn how to tell your story and build relationships with funders to make your project a success. The first section will focus on fine-tuning your story and preparing your pitch. The second half will focus on how to identify funds and approach funders.
- Make sure to tell a story
- Find your angle
- Make it interesting, appealing and understandable
- A good pitch needs to follow a logical narrative
- Know what type of funding you're looking for
- Build relationships
- Learn to think like your funders
- Master the follow-up
Storytelling and Pitching
Tell a story
Once upon a time… Everybody likes to hear a story – it’s a fun way to communicate information and (hopefully) there’s something more emotional that resonates with those hearing the story. Potential funders are no different. (They are in fact people – don’t forget this.) Done well, your story tells where you came from and where you want to go. It communicates your message, values and even your company strategy.
Know your audience and tell your story in a way that speaks to them. The bottom line should always stay the same, but how you get there, or what you choose to emphasize, may change based on your audience. Tell the version of the story that interests them.
“You gotta keep in mind what’s interesting to you as an audience, not what’s fun to do as a writer. They can be very different.” – Emma Coats, Pixar Storyboard Artist
Find an angle
Even if you’re selling fair-trade paper clips, you need to find an angle that grabs people’s attention. Look beyond the surface and see where there might be an emotional connection for your users or funders. Once you’ve found it, start to build your angle around it. And don’t be afraid to show a bit of personality here.
Make it interesting, appealing and understandable
Remember, yours is not the first funding application people have seen – in fact, your potential funder probably looks at hundreds, if not thousands, of funding applications every year. Not to mention they also hear hundreds of pitches ever year. What does that mean? You’ve got to keep it interesting!! And that means grabbing their attention from the start. When pitching, here are some tips to keep in mind:
- Go for the wow factor. Tell them something they don’t know and wouldn’t expect.
- Show your passion for the cause. If you don’t believe in it, why should they?
- Be clear on what your vision is, even if it’s not explicit in the pitch. You want to communicate where you’re going, even if it’s not where you actually are right now. Especially in the case of social projects and businesses, you many not have reach your desirable social impact yet, but you want to be clear on what you social impact will be.
- Convey why what you’re doing is important and why it’s relevant.
- Before going in, apply the ‘Grandmother Test’. Are you explaining your initiative in a way that your grandmother would understand it? If not, go back to the drawing board and rework it until you’ve passed the test.
- Give an example of a challenge you faced and how you overcame it. Your funders need to trust you. A lot of people like the idea of being an entrepreneur, you need to prove you really are one.
- Show examples of win-win cases – everyone wants to be a winner and everyone likes a feel good story
- Take out the tech. Seriously, most of the time you’ll just confuse people. If people want to know the details of how it works, they’ll ask.
Make it hang together
A good pitch needs to follow a logical narrative. (Remember, it’s all part of the story.) The structure below should help you present information in a clear narrative. In fact, this can be excellent “homework” for anyone who wants to hone their message. With your own social business or project in mind, try filling in each section and viola, you’ll see your story come to life.
Background/Current Situation – set the scene, what is the status quo? How did we get there?
Trends, regulatory changes, changes in preferences/awareness – what structured, attitudes, etc are changing now that are creating opportunities and support for what you are doing? (Tip: even better if you can prove it – use a quote from a reputable newspaper or magazine - that way people know it’s an issue that more people care about.
The “pain” – what is not working and needs to change?
Your solution – What is the vision? How do you solve the pain/problem above?
Part II – Finding Funding and Relationship Building
Know the difference
First things first, know what type of funding you’re looking for. Also keep in mind what sort of funding you’re even able to apply for – i.e. does your legal status allow you to collect donations? Here’s a quick rundown of the funding types and their general characteristics:
Business relationship with benefits for both sides
Pure charity, tax- deductible
CSR or foundation budget
Some type of return on investment (ROI), whether it be financial or impact related.
$87,000 is raised through crowdfunding every hour. DING DING DING! But slow down, before you go running off to film your campaign video – do your research. It’s not as easy as it sounds and in fact, there’s LOTS of competition fighting over relatively little funding.
General tip: The obvious funding sources will be the places that get the most requests. Think beyond national governments, EU funding and the like and cast your net a little wider.
Find the right fit
Now that you’re sure what kind of funding you want, take it step a further. Start by assembling and maintaining a list of potential sources of funding. It doesn’t need to be fancy – a simple excel will do.
- Once you’ve gatheres potential sources, check that your project is actually a good fit for each specific funding source. Look if they support projects like yours in terms of: Area of Interest, Geography, Grant Size, Organization Type, and project Stage. If you don’t fit – move on. There’s no point in applying for funding that you’re clearly not eligible for. Do your research, and save everyone a lot of extra time and work.
- Look where else the donor is giving and for what sort of projects – ask yourself, do you see yourself fitting into their portfolio? If not, it might be a hard sell. How to do this? Look at the foundation and corporations annual reports to see how much money is being given and to whom. (This info can usually be found online with a little Googling.)
- Look at the language and tone used by both the donor AND the recipient organization and try to emulate it. You want to present yourself in a way that’s aligned to their mission and message.
- Use the “Good Neighbor” Ask yourself, can you make a case for how your project can complement one of the ones already being funded? Can you argue that together, you could really maximize impact?
Even though it might seem like you’re dealing with institutions (governments, corporations, foundations); remember, behind them is a person! So when there’s the option – make contact IN PERSON. If that doesn’t work, try the phone. And only then, when there’s no other option, use email. In our digital day in age, there’s still something to be said for face-to-face conversations, especially when you’re discussing sticky subjects like money and funding. Invest in and cultivate relationships with your potential funders – even if they pass this time around, they may support your next project. PLUS don’t just see $$$ when looking at them, they’re also valuable mentors, sparring partners and can provide other interesting contacts for you. To meet people, find out about what events are happening and stop by from time to time. (And if you need to polish up on your networking skills – go here.)
Think like your funders
Your funders are investors, no matter how they measure return or what they hope to get out of it. They need to feel confident that their money is going to be spent in the right way. According to the venture capital firm Kleiner Perkins Claufield & Byers, there are four filters of risk assessment:
Can it be built?
How hard is it to build it?
Can someone else easily build it once you’ve done the heavy lifting? (Not necessarily a bad thing.)
Who else is doing it?
How are you doing it differently?
Does it meet a real need?
Will anyone use it? (A good way to find out is to apply the “Sidewalk Test”. Stop 20 random strangers on the street and explain them your idea in 30 seconds or less. If they understand it and would be willing to pay for it, you’ve got yourself a market.)
How good is the team
Is it the right team? (aka - diversify!)
What is the capital intensity?
Is the ask enough/too much?
Will follow-up funding be needed?
Ask yourself these questions before sending off any funding applications or meeting any funders. Know your strengths and weaknesses, do you research and don’t let yourself be caught off guard.
Focus on the finances
Now that you’ve put the legwork, fine-tuned your story, identified funding sources and started building relationships, now comes the moment you’ve been preparing for. The ask. Getting the ask right is one of the main filters for funders, so make sure you’re asking for the right amount. Asking for too little is as bad as asking for too much.
- Be prepared to discuss who else you are seeking funds from.
- Expect that funders will talk to each other about your project, it’s a small (social finance) world and people are well-connected. That said, make sure your story is consistent.
- Pay attention to the restrictions – do you meet the requirements?
- Show how the funds will be used. Transparency is king.
- Pay attention to the project trap - many donors do not want to fund overhead costs (i.e. staff costs, rent, IT, etc.). They want to fund the PROJECT. Therefore make sure you’re selling the vision and the impact – not just the nitty-gritty. A good balance is to delegate 15-20% of the ask to overhead costs and with the remaining rest going into the project.
You got lucky and hit gold? Awesome! Now make sure you know your reporting requirements and timelines, you don’t want to miss a deadline and risk losing that hard-earned cash. Follow up and of course, say thank you!
A huge thank you to Ryan for giving this hugely informative presentation and for Ashoka PEP IT4Change for making it happen! Thanks for allowing us to share it with all the other changers out there!