Abridged excerpt from book “51 Questions on Social Entrepreneurship

Funding Social Enterprise

How does funding social enterprise work? The first thing you need to decide is whether it will be a nonprofit or for-profit enterprise.

You likely know that nonprofit organizations can be social enterprises, too. This usually means that they have a business model, are generating revenues, and are at least partially sustainable. Nonprofits that are charities often receive the majority of their operating budget through donations and foundations and aren’t generally considered to be social enterprises. Initially deciding whether you are a for-profit or nonprofit is critical in knowing which kinds of funding sources are available.

Funding Social Enterprise, Nonprofits

Grant Space (www.grantspace.org), a useful online resource from the Foundation Center, outlines the following funding sources for nonprofit social enterprises:

  • Fees for goods and/or services
  • Individual donations and major gifts
  • Bequests
  • Corporate contributions
  • Foundation grants
  • Government grants and contracts
  • Interest from investments
  • Loans/program-related investments (PRIs)
  • Tax revenue
  • Membership dues and fees
  • Sales

Funding Social Enterprise, For-profit

But what if you are not a nonprofit? What if you are an entrepreneur launching a for-profit social impact startup? Your options are a bit different. Namely, you can look to:

  • Friends and family
  • Crowdfunding for donation
  • Crowdfunding for investment
  • Impact investors
  • Small business loans
  • Awards/prizes from hackathons, contests, pitch events
  • Foundation investment through program-related investments (PRIs)
  • Sales

You can choose to form either a nonprofit or for-profit. Whichever one you choose fundamentally defines how you will raise funds.

 


image of "51 Questions on Social Entrepreneurship"

This is an abridged excerpt from the book, “51 Questions on Social Entrepreneurship” by Neetal Parekh. You can learn more and buy the entire book—which is told as a story of three aspiring social entrepreneurs and which dives into key aspects of social entrepreneurship including defining the space, legal structures, securing funding, and measuring impact at 51questions.com

What should we write about next?

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.