Many entrepreneurs – social, triple bottom line or otherwise – do not avail themselves of all potential capital sources when seeking funding to grow or scale, limiting prospects to cash flow their initiatives. This seminar explores a range of options for funding: external in the marketplace, internal within an organization, new ideas and classics not to overlook.

1. Beyond Fundraising
Drew Tulchin
November 20, 2013
Twitter Hashtag - #4Glearn
Part
Of:
Sponsored by:

2. INTEGRATED PLANNING
Advising nonprofits in:
• Strategy
• Planning
• Organizational Development
Part
Of:
www.synthesispartnership.com
(617) 969-1881
info@synthesispartnership.com
Sponsored by:

3. Coming Soon
Part
Of:
Sponsored by:

4. Today’s Speakers
Drew Tulchin
Managing Partner
Social Enterprise Associates
Jamie Maloney
Community Developer, 4Good
Part
Of:
Founding Director of Nonprofit Webinars and Host:
Sam Frank, Synthesis Partnership
Sponsored by:

5. Webinar
Beyond Fundraising
Drew Tulchin
Managing Partner
Social Enterprise Associates
4Good
Nov. 20, 2013

6. Training Objectives
• How to leverage new capital, manage cash flow
• How to work with vendors, bankers and other
providers of capital
• How to get more money from sources you already have
• Have fun, learn and share

7. About Social Enterprise Associates
Consulting firm - Registered ‘B Corp’
Network of experts offering consulting & capital raising to
triple bottom line efforts- for people, profits, planet.
Registered ‘B Corporation’, recognized:
2011 'One of the Best for the World' small businesses
2012 Honoree NM Sustainable Business of the Year
Drew Tulchin, Managing Partner, MBA
•
•
•
•
Written >100 business / strategic plans
Efforts raised >$100 mil. in capital
Biz plan winner, Global Social Venture Comp; raised $1.2 mil. in social investment
Judge in national social enterprise & social business competitions

8. Consulting Examples
Solar Energy Loan Fund: Wrote business plan, financial
projections and located investors that led to $400 K in funding
SW Native Green Loan Fund: Structured term sheet that
recruited $1 million in impact investment
World Food Program: Devised five year plan for $400 million
private sector engagement strategy
Sea to Table: Coached entrepreneurs and orchestrated $1
million funding package from multiple sources
Restore the Earth Foundation: Developed investor pitch that
quantified social value of 10,000 acre wetland reforestation
Nemours Health Services: Assessed impact, measured SROI, cost
/ benefit, to diversify funding; create new funding proposal

9. Resources
Free publications: www.socialenterprise.net
Topic Examples:
• Surfing the Crowdfunding Wave
• Nonprofit Earned Income Strategies
• New Sources of Capital
• Integrating Social and Environmental Metrics

10. Getting Started
Group Brainstorm
List financial vehicles/channels
open to NGOs, small businesses

11. Framework
&
Structure

12. Definition of Terms
Financial Self-Sufficiency
• Measures degree which operating income covers adjusted operating exp
Project Profitability
• When operating income is greater than adjusted operating expenses
Capital
• Cash or assets used to generate income
Sustainability
• Present needs met without compromising ability for needs met in future
Earned Income
• Compensation from participation in a business, including wages, salary,
tips, commissions, and bonuses
12

13. More Terms
Risk capital
The wealth that a person allocates for investment in new or
speculative securities with high risk.
Loan
The act of giving money, property or other material goods to
a another party in exchange for future repayment of the principal
amount along with interest or other finance charges.
Savings
The amount left over when the cost of a person's consumer
expenditure is subtracted from the amount of disposable income
that he or she earns in a given period of time.
Venture capital
The money provided by investors to startup firms and small
businesses with perceived, long-term growth potential. It typically
entails high risk for the investor, but it has the potential for aboveaverage returns.

14. & Finally – Terms
Socially Responsible
Investment (SRI)
An investment strategy which integrates social, environmental
and/or ethical criteria into the processes of analysis, selection,
and choice of investment except for the financial criteria.
Socially motivated capital The money provided by investors to fund businesses or programs
that actively achieve social or environmental impact.
Mission related
investment
The investment of a foundation's endowment assets in
opportunities that align with its program goals.
Triple bottom line
A business oriented solution generates returns of financial
performance, social impact, and environmental sustainability
entrepreneurs, their organizations, and the industries in which
they operate.
And, now, the Quadruple Bottom Line – the 4th Dimension.

15. Quadruple Bottom Line
Source: www.npsp.sa.gov.au

16. Why go Beyond Fundraising?

17. Volume of Capital
Philanthropy
Investment
ANNUAL giving of all US
Foundations
DAILY transactions of the
financial markets (“Wall St.”)
$ 1 Trillion
$ 30 Billion
Which pot of money would you rather be drawing from?

18. Benefits of Beyond Fundraising
Do more with less
Less government $$
Twice as many NGOs as 10 years ago
Don’t leave money on the table
Build self-sufficiency
Be the dog or the tail?

19. Continuum of
Financial / Social Expectations
High
Philanthropy
donation
No expectation
of return
Social
Value
Creation
Expectations
PRI from a
foundation
~0-2%
year interest
Socially
responsible
investors debt
• Fewer obligations
• ~3-5% in dollars or
local currency (8-10%)
Banks debt
~10%
year interest
Venture
capitalist
• Ownership expect
• 20% returns a
year in equity
Low
Risk / Return Expectations
High

20. Places to Learn More
Best sources we like
Investopedia.com Dictionary:
a Forbes digital company provides a comprehensive
financial dictionary/glossary
The Dictionary of Sustainable Management:
an online dictionary constructed by the Presidio
Graduate School defines sustainability and
business-related terms
Glossary of Business Terms from Skoll Foundation:
a glossary of business terms relevant to social
entrepreneurship
Glossary from Nonprofit Good Practice Guide:
a glossary of terms and expressions that are
commonly utilized in the nonprofit sector

21. Income Statement

22. Income Statement
From Social Enterprise Associates Tip Sheet #12:
Nonprofit Earned Income Strategies: Where to Start
www.socialenterprise.net/assets/files/TipSheet12EarnedIncomeStrategies.pdf
• Is social enterprise a fit for your organization?
• What are steps in decision-making?
• Does this solution match the problem?

23. Incremental Steps
Step 1: Internal Organizational Assessment
•Does organization have sufficient staff capacity?
•Are there strong internal systems for new effort?
•Does organization have sufficient knowledge, expertise
in this area?
•Is there sufficient cash flow to take on new projects?

24. Incremental Steps
Step 2: Feasibility Study
•What are the organization’s goals for this undertaking
in terms of money and mission?
•What are the costs and revenues associated with this
new project?
•How operational will the organization do this ‘new
thing’?
•What organizational changes and adjustments need to
be made?

25. Incremental Steps
Step 3: Market Analysis
•How big is this opportunity?
•Who else is doing this?
•Who are the customers and what are they doing now
to satisfy this ‘need’?
•Is there space for us?

26. Incremental Steps
Step 4: Business Plan
•What is purpose of this social enterprise?
•What is value proposition (special sauce)?
•How will it make money?
•Who is the management team?

27. Incremental Steps
Step 5: Financial Projecting
•How much money is needed in year 1, 3 and 5?
•What type of financing is appropriate: donations,
equity, debt, partnerships, contracts?
•What are the key sources of revenue & major costs?
•When does this project break-even, if ever?
•What happens if expenses are 50% higher and/or
revenues 50% lower?

28. Incremental Steps
Step 6: Fundraising & Investment
•Who are targeted ‘investors’?
•What is value proposition for funders & investors?
•Why should they choose this project?
•How much ‘in the bank’ is needed to begin ops?

29. The Capital Pie
Where you are now  your existing universe
• How do you want to diversify (split the pie)?
• How do you want to grow the pie?
• What’s needed to be stable, increase revenue & manage cost?

30. Brainstorming List
NGO Earned Income Options

31. Brainstorming List
NGO Earned Income Options
•
•
•
•
•
•
•
•
•
•
•
Facility revenue
Program service fees
Events
Grants
Marketing partnerships
Sponsorships
Membership fees
Book publication
Earned interest
Capital gains
Bartering
•
•
•
•
•
•
•
•
•
•
Product sales
Consulting contract / service fee
Training, expertise
Honorariums, speakers
Licensing
Supporting organizations
Advertising
Awards, competitions
Teaching
Affiliate referrals – i.e. those
dxmn bracelets

32. Example Projects
Greyston Bakery
http://greyston.com/programs/
“We don’t hire people to bake brownies, we bake
brownies to hire people.”

33. Cash Flow

34. Internal Options for Capital
• Accounts Receivable
Money owed to you.
High net sales to A/R ratio =
faster collections
• Accounts Payable
Money you owe.
Increasing purchases to average
A/P amount = faster payments
• Leverage Existing Assets
Money earns money
From Social Enterprise Associates’ “Finding Money for Your
Business: Often Overlooked Options”
www.socialenterprise.net/assets/files/InvestorsCircle.pdf

35. Cash Turnover
Difference b/t your A/R and A/P
Keep your cash the longest
How?
ASK & TRY
Can you get paid before you do the work
Offer incentives for invoices paid as soon as possible
Negotiate w/ vendors to pay them later, slower

36. Crowdfunding
Are you a good fit?
1. Benefit from small amounts of capital up to $15,000
2. Have product pre-sales, particularly to finance making something
3. Early stage specific project
4. Willing to do own marketing; have outlet to reach people:
facebook, e-newsletter, etc.
5. Lack an existing payment processing mechanism online

37. Crowdfunding Websites
More than 4 million people pledged $734 million since 2009 launch
Average contribution $71, most common contribution $25
Successful campaigns average 40 days to fund
Average contribution $86, most common contribution $25
Common perception better for smaller projects
3rd largest crowdfunding site
Campaigns often focus on individuals: education, medical bills
37

38. Crowdfunding Websites
Tell a story; stand out. In 2012, Indiegogo campaigns
with videos raised 114% more than those without.
Cultivate donors & share. In 2012, 14% of Indiegogo
campaigns had a single contributor refer more
people to the campaign than the campaign owner
Most give small amounts. 85% of backers give less
than $50
Give something meaningful. Make the perk
something people want: gift, memento, product
38

39. Who’s done crowdfunding?
Kickstarter’s most funded projects:
Food: Windowfarms
Fashion: 10-Year Hoodie
Technology: Affordable 3-D Printer

40. Example Projects
Espanola Community Market is coop in NM (and a client). Open
to general public; features foods made or grown locally
Gofundme campaign to raise money for staff, longer hours,
more inventory

41. Kickstarter success: Lucky Penny Farm raised
funds for equipment to expand product offerings.
Most gave $65 to $250. Project totaled $11,850
(above $10,700 goal).
For…
Backers Received:
$15
A Facebook thank you
$25
Bar of goat milk soap
$65
Luck Penny t-shirt
$100
New Product Sample
$250
Plate of goat milk cheeses
$1000
Farm outing
$2500
Cheese pairing with 10 guests
$3500
Presentation by owner

42. Direct Public Offerings
“Crowdfunding meets fundraising”
Laws vary by state
Anyone can invest
Best for small-to-medium sized companies & CO-Ops
Made to unlimited # of accredited AND unaccredited investors
Directly to investors (no middleman)

43. DPO Examples
Thanks to:
Cutting Edge Capital

44. Balance Sheet

45. Balance Sheet
Assets = Liabilities + Equity
Build credit over time
Leverage
Put what you own to work
Treasury Management

46. Alternative Sources of Capital
Practice what you preach to clients - build assets:
• Community partners
overlooked as donors
• ‘Upselling,’ ‘cross-selling’
existing relationships
• Fee for service: training, TA,
consulting
• Individual donors: high net
worth, community wide,
program alumni
• Build relationships over time
• In-kind value
• Impact, social, faith-based
investors; foundations’
PRIs/MRIs
• Off balance sheet
transactions
• Crowdfunding

47. How to Work With Banks?
1. Understand what financiers’ value and how
they make decisions
2. Establish long-term networks
3. Build credit history, credit score over time
4. Formalize and report on the organization
5. Have back-up plans (contingencies)

48. Financing 2 Cents
Foundational thoughts:
• YOU must be credit-worthy
• Organization needs to document why worth an investment
• If you aren’t willing to put skin in game, why should an investor?
• Be realistic, know market based risk costs
Options:
• Go to funders earlier than later, when you have $
• Self finance: bootstrap, leverage assets. Watch credit card debt
• Friends, Family, Fools – put it in writing with real docs
• Peer to Peer Lending – cool new options but caveat emptor

49. The 5 C's of Credit
Collateral
Capital
Capacity
Conditions
A
complete &
attractive
loan package
Character
49

50. The 5 C's of Credit - Defined
I
Capacity
II
Capital
III
Collateral
(or guarantee)



Most important by bank to consider loan application
Personal credit score diagnose how well you manage your finances
Financial statements to evaluate financial health of your entity


For a bank to know how much invested in your entity
Written & verbal credit information sharing reflects level of
responsibility of the organization and its leaders



Often necessary to secure debt
Independent appraisal can estimate value of collateral
U.S. Small Business Association Guarantees increase opportunity


Reasons you are asking for a loan
Written explanation of conditions state how you will use money



Most subjective factor
Provide biographical summaries of key managers and advisors
Get to know your lenders
IV
Conditions
V
Character
50

51. Leverage Existing Assets
Treasury Management
Defined: Administer financial assets and holdings
Goal: Optimize liquidity, make sound investments, manage excess
cash, and reduce financial risks
Use $ to make $ (even when interest rates low):
1. Talk to your banker. Know by NAME
2. Use your cash to maximize $
3. Leverage your assets when you have them (i.e. line of credit)

52. Peer-to-Peer Lending
Ebay, for debt
Borrowers request loans, amounts
vary by site, range $2 K to $25 K
Lenders invest as little as $25
Facilitated by website for fees
This is DEBT, it must be PAID BACK

53. Peer-to-Peer Lending
• Loans funded to date: $2.2 billion
• Interest paid to investors to date: $192 million
• 1,880,000 member lenders
• $583,000,000 in personal loans funded
•
•
•
•
Direct loans
First loan max $5,000 (up to $50 K)
0% interest, repay w/in 24 months
Share your story

54. Resources
Global Impact Investing Network (GIIN)
Aspen Network of Development Entrepreneurs
Impact Investment Exchange Asia
IdeaEncore
Social Venture Network
SoCap, PRI Makers, SRI in the Rockies, HUB Ventures

55. Let’s Sum Up
Recap, Review
Tips & Tricks
Resources: William James Foundation, Skoll
Social Edge, SoCap, BID Network, Soc. Ent.
Alliance, competitions, SSIR, ClearlySo & more
Free publications: www.socialenterprise.net

56. Thank you!
Questions?
Answers?
Drew Tulchin
Social Enterprise Associates
www.socialenterprise.net
drew@socialenterprise.net