Not your mother’s nonprofit
How social entrepreneurs can bypass barriers and rapidly scale impact
Social entrepreneurs face a maze of barriers that can stop a brilliant idea in its tracks, from fundraising frustrations to capacity building stall-outs and scaling challenges. For those on the nonprofit path, the sector’s rules and structures can feel particularly daunting. Here’s a navigation secret: if you look beyond traditional models, possibilities for flexible solutions will open up.
Building an independent nonprofit often isn’t viable for social enterprises that don’t need a long-lasting organization or that need to move fast — it can take two years or more to wind up with an organization that’s capable of achieving its mission. And it isn’t necessary for those who lack the time or desire to dive into details. Options are out there.
Easy access to funding
Take the conundrum of access to funds. Social entrepreneurs may be able to get foundation funding for prototypes and pilots — but only if they have 501(c)(3) status and seasoned leadership. They may have a revenue-generating model that could attract impact investors — but only if they can leverage philanthropic capital to get it off the ground. They may qualify for government funding — but only if they can demonstrate capacity.
A common-sense solution is engaging a fiscal sponsor, an established nonprofit that shares its 501(c)(3) status with the projects it supports. This allows entrepreneurial teams to receive grants, or donations from family and friends, while ensuring tax deductibility for donors. It also provides the opportunity to test interest from foundation funders with early stage proof-of-concept work or a pilot project. Fiscal sponsors typically handle most of the back-office functions associated with managing funds received, such as grant management, accounting, and IRS compliance.
The fast track to impact
For entrepreneurs who are on the fast track to impact, there’s yet another option: a nonprofit accelerator or incubator. Like fiscal sponsors, these organizations “speak nonprofit” and know IRS regulations inside and out; the difference is they also have mastered the complexities of working with complex hybrid structures and blended growth models. And, like their cousins in the for-profit startup world, they provide access to mentoring and capacity-building support in critical areas like program design and fundraising. They work closely with founders to prototype, pilot and launch models designed to scale rapidly. Some also serve as long-term umbrella organizations for entrepreneurs who want to stay focused on programs, mission and vision without the distractions of running the administration and operations sides of an organization.
Four types of enterprises tend to benefit most from the accelerator/incubator approach:
Startups: Entrepreneurial teams with seed funding in hand that want extended expert support while they design, prototype, and begin to scale. For example, the Catch Together team sought out Multiplier when a family foundation agreed to fund the design and outreach phase of their project, which aims to build a nationwide network of next-generation fishermen who are strong advocates for sustainable fisheries and ocean stewardship.
Pop-ups: Projects with set beginning and end dates that want to maximize results without taking on the delays and management load that come with building a high-functioning organization. Bay Area Resilient by Design — a competitive year-long, nine-county challenge to develop community-based design initiatives addressing climate change and sea-level rise — tapped Multiplier to help the project ramp up quickly, expedite access to funding, build a cohesive leadership structure and team, convene diverse stakeholders, and foster the support of regional agencies and community leaders. (See the case study.)
Coalitions and network builders: Collaborative organizations that need a neutral, resource-rich home to get participants with diverse or competing stakeholders working toward a common goal. The umbrella organization can serve as a home for coalition or network staff and prevent perceptions of favoritism or control by any one stakeholder. The Conservation Alliance for Seafood Solutions, a global hub of 40 leading organizations working to improve the responsibility and sustainability of seafood supply chains, is a good illustration of the potential: The Alliance set an ambitious goal of ensuring that by 2030, at least 75% of global seafood production will be environmentally sustainable or making verifiable improvements, and that safeguards will be in place to ensure social responsibility. Drawing on Multiplier’s resources, the Alliance is now expanding its cross-sector partnerships to achieve that goal.
Hybrids: Offshoots of for-profit social enterprises formed to pursue pure social goods or test socially beneficial models using philanthropic funding. The incubator approach enables companies to launch charitable projects without having to run a separate nonprofit with complex compliance rules. Revolution Foods partnered with Multiplier to launch the Feeding Good Project, which is directly funding healthy and delicious meals for low-income and food-insecure households across the country through the pandemic.
There’s no reason for social entrepreneurs to be trapped in tradition, bogged down by building and running an independent organization when they should be laser-focused on achieving their mission. Nonprofit accelerators and incubators like Multiplier enable fast progress on testing ideas and moving toward impact — nothing against your mother’s nonprofit, but there are better options for ambitious social entrepreneurs.
