1. Social Entrepreneurship Challenge
Good Morning!!
The Aaron L. Levitt
Social Entrepreneurship Challenge
“Be a Changemaker”
Workshop 3:
March 5, 2016

2. Welcome to Today’s Session
Funding and Financing Workshop March 2013
9/18/2018
Welcome to Today’s Session
Agenda:
Reporting Out: Each person/team is to present a succinct explanation of their social venture and logic model (maximum of five minutes per venture!!)
Funding, Financing, and New Enterprise Development
Revenues, Revenue Models, and Funding
Questions and Discussion
Dave
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

3. Funding and Financing Workshop March 2013
9/18/2018
Reporting Out
Each project has a maximum of five minutes to present a succinct explanation of the social venture and the key elements of its underlying logic model.
Dave
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

4. Funding, Financing, and Venture Development

5. Nonprofit Resource Considerations
Funding and Financing Workshop March 2013
9/18/2018
Nonprofit Resource Considerations
Consistent with Strategy
Program Stability
Capital Structure
Restriction
Transaction Cost
Scott
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

6. Understanding Resources
Funding and Financing Workshop March 2013
9/18/2018
Understanding Resources
Revenue
Capital
Scott
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

7. Funding and Financing Workshop March 2013
9/18/2018
Scott
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

8. A Different Perspective
Funding and Financing Workshop March 2013
9/18/2018
A Different Perspective
Revenue Type
Beneficiary
Restriction
Fee-for-service income
Individual
Tied to service
Foundation /Philanthropy dollars
Collective to groups
Temp Restricted/Unrestricted
Government/Philanthropy dollars
Society wide
Corporation dollars
Corporations and nonprofits
Unrestricted
From Dennis Young, Financing Nonprofits.
Scott
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

9. Funding and Financing Workshop March 2013
9/18/2018
Capital
Facilities
Working
Permanent
Social???
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

10. Means of Capital Grants Individuals Debt Tax Credits Equity ???
Angel’s
Crowdsourcing
Debt
Loans
Bonds
Tax Credits
Equity ???

11. Assessing Your Strategy
Funding and Financing Workshop March 2013
9/18/2018
Assessing Your Strategy
Budget costs and revenues
Record new and lapsed donors
Calculate ROI
Scott
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

12. Funding and Financing Workshop March 2013
9/18/2018
A Quick Question
What do you envision will be the source(s) of financial support for your venture?
Scott
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

13. Funding and Financing Workshop March 2013
9/18/2018
Capital Structure
The nature of the venture’s financial
Assets
Liabilities
Net assets
Need to understand in terms of:
Adequacy and alignment of assets you have and what you will need
Diversity and Liquidity (esp. restriction and fixedness)
Risk that is inherent in the capital structure you design
Trends and changes that may alter the above
Dave
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

14. Where Social Entrepreneurship Tends to Reside
Traditional Nonprofit
Nonprofit with Income-Generating Activities
Social Enterprise
Socially Responsible Business
Corporation Practicing Social Responsibility
Traditional For-Profit
Mission Motive
Stakeholders Accountability
Income Reinvested in Social Programs or Operational Costs
Profit-Making Motive
Shareholder Accountability
Profit Redistributed to Shareholders
David Renz: The Midwest Center for Nonprofit Leadership at UMKC

15. Form Should Follow… Environmental conditions Transaction Costs
Consumer behavior
Consumer potential
Market share
Transaction Costs
Capital Considerations
Markets
Capital Structure

16. The Opportunity Creation Process (CASE Model: Nash 2010)
Sparking Social Entrepreneurship
The Opportunity Creation Process (CASE Model: Nash 2010)
Opportunity Identification & Opportunity Creation
2017: David Renz: PA 5529 CSR & Social Entrepreneurship

17. Nonprofit Resource Considerations
Restriction
Unintended Consequence
Output Value
Cost-Benefit
Social Norms
Stability
Consistent with Strategy/Capacity

18. Scale and Capital: A VC Model
New Venture Needs
Human Capital
Strategy
Capacity Support
Scale
VCs provide support in addition to capital

19. Nonprofit vs For Profit
Philanthropy
Restrictions
Unsupported
Programmatic
Fund start-up VC
Unrestricted
Capacity support
Scaling
Fund > 3 years

20. Financing Solutions Strategy based Consistent with capital structure
Considerate of sustainability goals
Innovative – Beware of transaction cost

21. Some Key Revenue Model Considerations
Funding and Financing Workshop March 2013
9/18/2018
Some Key Revenue Model Considerations
Degree of Financial Independence (especially, associated with source)
Capital Structure
Nature of Assets
Funding Dynamics
How Resources Come In (Flow, Timing, etc.)
Dave
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

22. Funding and Financing Workshop March 2013
9/18/2018
Nature of Assets
Fixity of Asset Type
Level of
Restriction
Low
Medium
High
Unrestricted
Cash
Building
Temporary Restricted
Permanently
Restricted
Endowment
Dave
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

23. Funding and Financing Workshop March 2013
9/18/2018
Funding Dynamics
Reliability: Extent to which revenue source is consistent and predictable year to year.
Range from Low to Medium to High
Autonomy: Degree of restriction and/or enforceable conditions on the use of funds
Dave
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

24. Reliability and Autonomy
Funding and Financing Workshop March 2013
9/18/2018
Reliability and Autonomy
Level of Autonomy
Level of Reliability
Low
Medium
High
One-year government project grant
Unrestricted Bequest
Restricted endowment
Small regular contributions
Dave
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

25. Characteristics of Revenue Source Options
Funding and Financing Workshop March 2013
9/18/2018
Characteristics of Revenue Source Options
Who Pays?
How The Form of Revenue Comes In?
How Reliable?
How Autonomous?
Other Characteristics (Pro and Con)
Financial Independence
Impact on Capital Structure
Dave
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership

26. Your Venture’s Revenue Mix
Funding and Financing Workshop March 2013
9/18/2018
Your Venture’s Revenue Mix
Please take about ten minutes to identify the source(s) of funding and financing that your venture will need to rely on at its beginning stages of development and rate it/them on the worksheet.
Dave
Levitt Social Entrepreneurship Challenge: Midwest Center for Nonprofit Leadership