Continuing our work with The Patterson Foundation, Sara Leonard Group is proud to be supporting four nonprofits selected to join the ongoing initiative Margin & Mission Ignition. Since 2015, Margin & Mission Ignition has given nonprofits the opportunity to explore, develop and execute earned-income strategies.
As part of the initiative, Sara Leonard Group will be working directly with four nonprofit participant organizations with 1:1 consulting support for their fundraising efforts.
“The Patterson Foundation’s commitment to not only offering world-class training opportunities for local nonprofits, but also offering wrap-around support to help them implement what they learn proves time and time again their commitment to improving as many lives as possible through the reach of established nonprofits,” Sara Leonard Group founder Sara Leonard said of the initiative.
For more information on The Patterson Foundation or the Margin & Mission Ignition initiative, please visit their website.
Successful social enterprise requires capital investment. I am honored to work with the organizations participating in The Patterson Foundation’s Margin Mission Ignitioninitiative. My role is to support their capital investment fundraising efforts. Social enterprise business planning is hard work and not coincidentally, raising the capital can be hard work, too. Once the business plan is complete, the hard work of implementation begins. At this critical moment organizations can be tempted to move on full speed ahead without thinking about their donor investors. Warning: this is a terrible idea.
Just like other types of fundraising, capital investment fundraising requires careful stewardship of donors. How should you steward them? I’m glad you asked! There are 3 major steps: Appreciate, Engage, and Listen.
Appreciate First, make sure they know they are appreciated. This starts with an accurate, well-crafted thank you letter. Be sure to spell the donor’s name right and use their preferred title. If it’s a business, ensure that the letter is addressed to the right person so it doesn’t get lost.
But don’t stop with the letter from the organization. Look for other ways to say thank you. For instance, if a board member helped secure the gift, ask that board member to write a personal note or send an e-mail directly to the donor. You can’t really thank someone too much.
Providing updates on your capital fundraising efforts is another way to appreciate donors. When you show progress toward your capital investment fundraising, you are reassuring the donor that their investment is being joined by others. For instance, the Margin Mission Ignitionorganizations had a stated goal and were fundraising to secure matching funds by a deadline. By providing timely updates, early investors got to share in the celebration.
Engage Second, keep them engaged. By the time you raise the gift, you’ve probably had multiple conversations with the donor about your earned income venture. Don’t go silent at that point. Update them on your business planning and implementation. They want to know that you are still making progress and likely can help in one way or another.
You can also engage donors by asking them to share their expertise. For instance, if they have a marketing background ask them to review the drafts of your new website. If they are an accountant ask for their help in creating your new accounting system. Donors like to be valued for more than just the checks they write us. Keep in mind though, only ask for their expertise if you’re willing to listen to their ideas.
When appropriate, invite donors to participate as customers. You could offer a coupon and make it comfortable for them to invite family and friends to join them. If your new enterprise includes a “soft opening,” invite donors to be a part of that. Ask for their honest critique of their experience.
Listen Third, listen. With each of these interactions suggested above, listen to how your investors respond and act accordingly. Some questions to consider:
Are they investment donors and might want to do that again? Then keep them in mind if you need additional capital investment or if you embark on another business plan.
Are they committed to your mission and would be likely to support other parts of your organization? Look for the next big thing that will intrigue them.
Do they like numbers? Keep them updated on the business plan and the adjustments you are making throughout implementation.
Are they more interested in the impact on your mission? Send them stories about how the proceeds change and save lives at your organization.
Here’s a bonus tip: as you appreciate, engage and listen – a picture is worth a thousand words. Keep the photos coming. Every communication doesn’t have to be a major design work of art. Spontaneous e-mails with photos attached can be very meaningful. When your donor investors visit you, be sure to snap and share photos. When the proceeds of your enterprise impact your mission, share photos. As an example, the photo above is from Margin Mission Ignition 2016 organization Florida Maritime Museum’s Folk School.
According to research by fundraising expert Penelope Burk, donors (and investors) are most interested in knowing that you put their money to work as they intended and don’t mind if you made some mistakes along the way as long as you can show that used those mistakes as learning opportunities. That is reassurance that their money is well spent. Taking the time to steward your social enterprise investors will be time well spent.
In 2016, I worked with five nonprofits engaged in The Patterson Foundation’s Margin Mission Ignition program. After completing a strenuous business planning process, it was time for these organizations to implement their plans. A key part of any social enterprise plan – and ultimately successful implementation – is raising investment capital.
It’s not uncommon for nonprofit organizations to pursue social enterprise activities to diversify their revenue. However, even organizations that have previously had great fundraising success, sometimes find challenges when trying to raise the investment capital needed to implement their social enterprise endeavor.
Fundraising for social enterprise investment capital is different than regular fundraising – but, not completely different. All types of fundraising share some basic principles.
You’ve likely been part of fundraising before, so let’s start with the similarities.
Cultivation Fundraising is about building relationships on behalf of your organization and cultivation is the biggest part of this. Sometimes when we are so excited about an idea (like our new social enterprise), our enthusiasm leads us to skip the cultivation step – a big mistake! To cultivate a potential investment capital prospect, a nonprofit must reach out and seek to build a relationship.
Listening The most critical skill in fundraising, both traditional and investment capital, is listening. When cultivating investors, our natural inclination is to “pitch” our idea by doing all of the talking. STOP TALKING and listen to your prospect (they are often filled with great ideas). The more we listen and learn from them, the more they will engage with our project.
Ask After all of that sharing and listening, surely the prospective investor knows we need their support, right? NO! Every successful investment invitation needs to include an ask. If you’re not specific in what you need, the prospect could either give you something you don’t need or nothing at all.
Shared Values (Mission) Investment capital donations have the very same core as all other donations: shared values. A social enterprise may have the strongest business plan, leadership, etc. but if the mission of the organization does not inspire the prospective investor of their shared values, no investment will ever take place.
See, you’re more prepared that you realize. Now, let’s talk about how raising investment capital and fundraising are DIFFERENT.
Non-Financial Support and Engagement Social enterprise investment donors don’t want to write a check and walk away. They want to participate and provide support beyond cash contributions. This participation varies by investor, so you have to pay attention (see Listening above) and respond to each donor accordingly. As you cultivate the relationship, think of how their expertise could bring value to your new venture – marketing, leadership, mentorship, coaching. Be careful not to see their desire for engagement as a threat to your plan. Instead, use it as an additional research opportunity and battle-tested resource.
Business Plan Required Donors who invest in social enterprise want to see that careful planning has gone into the project. Your organization must be ready to demonstrate how you conducted research that lead to thoughtful planning. As a general rule, a nonprofit should never embark on a social enterprise without careful planning. Knowing your investors will want to see that plan just reinforces the importance. Don’t take their questions (sometimes challenging) as lack of interest, they are looking to make a good investment.
Innovation Appealing Typically, donors who invest in social enterprise are attracted to innovation. While creating your business plan, take the time to highlight new ideas (and understand them thoroughly) so you can share them with potential investors. Some social enterprise ideas aren’t brand new but are new to your nonprofit. Make sure that you focus on that innovation.
Risk Tolerant Investment donors tolerate more risk than typical nonprofit donors — with innovation comes risk. Investors know that a venture may not succeed. They are often more comfortable with the risk than the nonprofit leadership. But when a project fails, the investor wants to see that you learned from it and take the time to make improvements going forward.
Performance Measurement Investment capital donors are interested in how things are going throughout the implementation of your social enterprise. Be sure to have a plan for communicating with donors once your enterprise is operational. Measure performance and communicate with investors. Don’t worry if all of your measurements aren’t exceeding expectations. But, be sure to include what adaptations are being made so they can see that their investment provided an opportunity for your organization to learn and improve.
While there are some new things to consider while raising capital for a social enterprise, you and your organization have completed some of the hardest parts through the research and plan development process. At the funding stage, everyone is excited about getting this new project started and you can use that excitement to make an impression on potential investors
I hope with the realization that you can build on what you already practice in fundraising in your organization, that you approach this with confidence.