Stanford Center for Philanthropy and Civil Society (PACS) hosted a thoughtful discussion last week on funding avenues social entrepreneurs can pursue to support and grow their ventures.A panel of five speakers representing unique sectors shared perspectives on non-profit grants, impact investing, venture capitalist investing, program-related investments, and perspectives from being a social entrepreneur in the field.
The panel discussion was followed by a brief Q&A and then breakout groups to further discuss nuances of various funding models. Below are a few key points made by each speaker.
Kim Meredith, Executive Director of PACS (moderator)
Kim welcomed guests and outlined four initiatives related to social innovation that the Center supports. These include:
4 Initiatives by PACS for Social Innovation:
- A project studying the connections between technology, philanthropy, and policy that including an interesting series entitled ReCoding Good
- A study of metrics and evaluation in the non-profit sector
- A project on impact investing
- A study of the process of continuous innovation in small and large social sectors.
Kim then introduced the panel made of diverse players and perspectives in the social impact field.
Jenny Shilling Stein, Co-Founder and Executive Director of the Draper Richards Kaplan Foundation.
Jenny provided insight on how her organization selects social innovators to receive funding from the Draper Richards Kaplan Foundation, which focuses on funding early-stage high-impact nonprofit organizations. She emphasized that her organization believes that great people make great change and that much of the evaluation has to do with the leader. Her team pays close attention to characteristics of the leader, past experience in leadership and management, and the ability to maintain great judgment, especially in challenging situations.
The Foundation also takes into account the impact of the model and how the social initiative will address deep needs.
Susan Phinney Silver, Program-Related Investment Officer at the David and Lucille Packard Foundation.
Susan provided a unique perspective on program-related investment—a funding model that enables foundations to invest in philanthropic projects where the return on investment is not the primary outcome sought. She highlighted that although the space of social entrepreneur investment may feel fairly new, foundations such as the Packard Foundation have been engaging in PRI’s for the past 15 years.
She emphasized that it is key for a social innovator to study the areas of focus of various foundations. However compelling a new social venture may be, if it is not aligned with the goals and mission of the foundation, it could be a hard sell.
A few areas of focus of the Packard Foundation include land conservation, kids and education, climate change, and reproductive rights. She said her organization looks for a strong programmatic focus with on impact-related outcomes. She also mentioned that part of the assessment in granting a PRI is what the funding will mean for the venture and whether it has the potential of attracting other forms of funding as well.Innov8Social addressed program-related investment last year, in connection with the L3C legal structure aimed at streamlining the process of granting PRI’s.
Liz Rockett, Vice President of Imprint Capital.
Liz’s area of focus at Imprint Capital–an impact investment firm–is health practice and improvement of domestic healthcare. She mentioned that she has noticed a trend in the five years the firm has been in existence. Namely, she has seen a rise in the number of private wealth looking to enter the impact investment market.
Also dubbed “patient capital” impact investment is a funding model that anticipates a modest rate of return as a social venture focuses on impact and scalability.
Michael Dorsey, Managing Partner at the Westley Group.
The Westley Group is a venture capital firm that specializes in investment in cleantech companies. Prior to his role at Westley, Dorsey was co-led the Bay Area Equity Fund that successfully funded cleantech ventures including Tesla, PowerLight, and SolarCity.
Michael reassured the audience that there is money available for driven, focused social innovators. He cited universities such as Stanford and Duke that have campaigned to raise billions of dollars on funding that can support interdisciplinary approaches to technology, impact, and innovation.
In answering how social innovators can raise funds, Michael emphasized the importance of matching the donor with the need—if there’s a real need—and an excellent team.
Sunita Mohanty, Business Development at Lumosity.
Sunita provided a perspective from the field. She shared her experience of being part of a social impact startup that did not proceed forward. She has since parlayed her skill set in finance, strategy, and education into a business development and strategic partnerships role at Lumosity—an online platform and app that leverages neuroscience to create games and exercises that improve core cognitive abilities.She noted that for a social venture, early stage funding can be a mixed blessing. While providing capital and stability it can also lead a startup to pursuing more angles of their venture instead of focusing on perfecting a main strategy.
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