Grants, loans and angel funds too.
As we know a social enterprise, by definition, should generate at least 50% of its income through trading. However just like any other company, it may take a while before it gets to this point, and therefore there are a number of ways that a social enterprise can sustain itself before hitting that goal.
Some are able to bootstrap or fund their own social enterprise until that moment, which definitely provides you with a unique story to tell, but let us look at one of the advantages of being a social enterprise — access to a range of funds.
Due to the good that social enterprises mostly do, they can identify and often access a range of funds and tenders that usually non profits go for. These can come from local authorities, trusts and foundations, and usually come with a strict set of expectations and reporting guidelines.
They will be published to meet a certain need, and there will be a tender or application process where you will explain what you do and how you do it.
While the majority of these funds might fund only your social and environmental activities, it is up to you to be inventive in ensuring your social enterprise benefits from this funding, and that you continue on the path towards the 50/50 split.
You can even more proactive, and reach out to local commissioners or departments to see if they are willing to pay for your service or product without going through a longer tender process. Being a social enterprise, they are receptive to ideas, as long as you already have a good reputation in the community and they understand what a social enterprise is, of course!
On the flip side, you have all the funds that private companies can apply for, be it credit based such as loans or finance, or also commonly a capital investment.
If you’re thinking about access loans or finance then it’s important to look at all the organisations offering this, as you may be able to find preferable rates depending on the status of your company.
If you’d prefer to have a bit of advice with the money, then you can look out for coworking spaces, startup competitions, entrepreneur programs and similar who will provide funding in return for a stake in your company, and often a few other criteria too.
To be able to access these sorts of funds you often need to have some sort of pitch deck available, and have researched the potential your company has to make it big. It’s well worth having a lawyer look over the contract you might be signing too, and think about what restrictions you might want in that investment contract.
Pitching at a startup competition can often seem quite daunting, so just get out there and try a few times with no worry about the outcome. You’ll learn a lot about how to present, your name and company name will be out there and you can always reach out to funders later on.
Social enterprise funds
Last but also least, are funds specifically for social enterprises. It’s a growing pot of money but for now, nowhere near the amount in the other two funds. The best thing about these funds is they understand that you’re trying to balance people, planet and profit.
Therefore, there won’t be any awkward questions about why you wouldn’t want to maximise shareholder profits, or why you’re involved in filthy capitalism!!
Sometimes you’ll find them easily by search for social enterprise funds, but other times you will have to try other keywords such as impact, for good, purpose driven and similar phrases. Ultimately, you should join forces with other social entrepreneurs in your region and support each other in staying in the loop.
There are also some private companies offering discounts on services for social enterprise, for example AirBnB remove their 20% fee for any social enterprise or nonprofit experience. Keep any eye out for them, or simply drop them an e-mail and ask, the worst they can do is say no!
If you need help with your pitch deck, then get in touch via our website.