top of page

FUNDING OPPORTUNITIES FOR CO-OPERATIVES AND SOCIAL ENTERPRISES

By: Laurianne Ling & Ben Racionzer


Finding funding for social enterprises


Like any other business, Social Enterprises and Co-operatives need funding. Today we’re going to have a look at what kinds of funding you should be looking out for and where to look.



Types of funding


Grant funding ~ is when grant money is given to a social enterprise by charities, philanthropic donors, or the government with no expectation of being repaid. Grant funding is usually attached to a set of project goals. This can be more or less specific. Social Enterprises can apply for funding by finding a donor that is suitable and writing a proposal. Proposal writing and grant applications are an entire field of expertise and we won’t go into it here, but you can expect to write several proposals before any are accepted. Grant funding can be key to the operation of a social enterprise, but overreliance on grant funding can be detrimental to the goals of the social enterprise in the long run. Check out the links at the bottom of the page for great places to find grant funds to which you can apply.


Angel Investors ~ are wealthy individuals interested in making investments, these individuals are usually entrepreneurs themselves and might expect high returns on their investment. A business seeking an angel investor might need a great pitch in the right circles. Networking is key to finding this kind of investor. If you can secure an investor, you might find that this suits your kind of business. Look into our article here on ways to network successfully.


Seed Funding ~ firms are companies that invest small amounts of early-stage capital in start-ups. Unlike with Angel Investing, there are a host of social enterprises being funded by seed funding. Seed funding usually starts in the early, developmental stages. The advantages of seed funding are that not only are you getting much-needed capital, but you are also getting advice and assistance. The disadvantage is that these investors expect a return on their investment and at times are more focused on returns instead of being mindful of the process, like any other investor.


Venture capital ~ funding is when companies pool together and invest large amounts of money in emerging businesses. The disadvantage of acquiring venture capital funding is either finding investors or then having to convince them to invest in not any business but a social enterprise at that.


Impact investing ~ is a new form of funding that is developing, it is defined as “investments made into companies, organizations, and funds with the intention to generate social and environmental impact alongside a financial return” according to Global Impact Investing Network. This field has emerged due to people realising that producing goods and services with social value can be profitable.


Social impact bonds ~ are a type of Loan made with an investor. The investor pays for a project and should certain agreed-upon criteria be met, the investor will receive a return on their investment. Social impact bonds are complex instruments that at times require multiple stakeholders from different sectors. You should have a good social impact measurement system in order to attract any investment through social impact bonds.


Sweat equity-bootstrapping ~ is a cash-strapped entrepreneurs’ contribution to their business or project. Sweat equity is usually physical labour, mental effort, and time. In most cases, the people in start-ups accept salaries that are below the average market value. Sweat equity is usually rewarded in equity shares, the shares are given in return for the time and labour instead of money. Most start-ups probably do this already, but it’s important to remember to reward yourself in shares in the business if that suits your business model.


Convertible debenture ~ is long-term debt that turns into stock after a specific period, it is an unsecured bond, there is no collateral linked to the debt. A convertible debenture can be transformed into equity shares after a specific period. There are three types of convertible debentures: fully, partial, and non-convertible debenture.


Funding opportunities


Firstly visit Good Finance provides many resources and a good diagnostic tool to determine what the right kind of funding for you is.

-


Listed below are just a few funding opportunities specific to social enterprises



RSF Social Finance


Grants Online


Grants Online is a funding information service. It provides information on grant funding opportunities from the European Union, UK Government Agencies, the Lottery as well as Grant-making Trusts and Foundations.



Resonance


Resonance helps social enterprises raise capital from investors who share their values. They can help you in several ways, including investment readiness and/or deal arranging.



You can also check our funding opportunities blog out here:

Recent Posts

See All

Comments


bottom of page