Emerging social organizations should look to tech companies for ways to raise money

Tech companies know how to raise money. Nonprofits and emerging social enterprises should take their cue as a potential way to raise funds. If you know anything about the technology industry, you know that they are great at raising investment capital.

So my question to you is, do you have to rely only on the old methods and models of raising money for your new social enterprise? Or, can you think outside the box and see how to raise capital, take your foot off the perpetual philanthropic fundraising pedal, and then shift to focus on programmatic goals?

The mentality

When looking to fund your starting social sector organization, you need to have a clear fundraising mindset. The most successful tech companies that raise millions of dollars early on are looking for a specific amount of money. In addition, they are also clear about the objectives they seek to achieve with that money.

Having this type of thinking is vitally important and is a mind shift from traditional philanthropic fundraising. You see, most nonprofit executives view their fundraising as an ongoing part of their operation. It happens every day and at the same time they seek to execute their programs.

In the tech industry, a company will raise its start-up capital and then focus on getting the job done. They put all their energy into achieving goals and proving to their followers that they have what it takes to make it happen. Then, when they have achieved those goals, they enter the next stage of fundraising.

Imagine being able to run a fundraising campaign, raise the capital, and then put that work aside and focus solely on the programs!

Investment in Talent

Tech companies aren’t afraid to invest money in talent. If you are looking to set up a new non-profit or social business, you need not fear such an investment. Here’s the deal, you want the best people on your team. For you to be successful, you must hire the best program manager. You want the best marketer to bring your brand to the masses.

But with that, you need to be prepared to explain it to your sponsors. I have written several times in the past about the pushback nonprofits receive from funders and the payment of their staff. That’s because the social sector has done a terrible job of communicating and explaining why it makes sense to pay for top talent.

By investing in talent, you get a team of professionals who will make it happen. Your investment goals will be met if you have the right talent to work with you. That requires competitive money.

impact demo

The days of a funder giving to his pet charity with little expectation of results are long gone, as they should be. Funders today want to see results and impact. They want results. Technology and the low cost of obtaining tools to analyze the data have caused more funders (including general donors of donations) to want to put their money where they can see tangible results.

You have to get the data. Everything in the world today is measurable. Don’t think it isn’t. Be prepared to present your sponsors with the metrics and data they need to know you’ve been successful. And, when you enter a second or third round of fundraising for another goal or project, they will be more willing to support your vision.

Where to look for financing

Traditionally, nonprofits have turned to major donors, institutional funders, and the government to raise money. Although crowdfunding has been around for a long time, technology has allowed the social sector to become more creative about how to raise funds.

But beyond that, if you’re thinking about fundraising for your new social enterprise, then you need to think differently about your fundraising.

• Angel investors can support your first stage financing for operational and program development.
• A single institutional funder or a handful of large funders can get a significant chunk of your initial goals off the ground.
• Venture philanthropists are looking for the most innovative and pioneering organizations to fund.
• A deep-pocketed co-founder may support you with all or a large part of your fundraising. You can have the idea and the programmatic piece and your co-founder can help finance it during the initial stage.

Whatever you do, if you’re looking to start a new social enterprise or nonprofit, don’t just think of the traditional fundraising plan as the way to success. I encourage you to look to the tech industry as a model for getting that seed round and beyond the capital you’ll need to be successful.