Entrepreneurial Design for Extreme Affordability May 14, 2007 - PowerPoint PPT Presentation

Entrepreneurial Design for Extreme Affordability May 14, 2007

Goals • Provide an overview on the “funding/giving” landscape with a focus on foundations. (Do not address government funding.) • Delve more deeply into the funding opportunities and landscape for funding for Social Entrepreneurs. 2

Agenda Funding Landscape – Who gives and to what? – Foundations at a glance – Foundations inside the beast Alternatives Social Entrepreneur Funding Landscape Company Form – Nonprofit, for-profit, or hybrid 3

What I say today is going to change tomorrow 4

1997 5

Today “We hope that someday this institution will eclipse Google itself in overall world impact by ambitiously applying innovation and significant resources to the largest of the world's problems.” - Sergey Brin & Larry Page 6

Overview of Giving From 2005 Donor Sources Corporations Foundations 5% 12% Bequests 7% Individuals 76% 2005 Donor Sources $260.28 billion total $250.00 $199.07 Corporations $200.00 Foundations $150.00 $100.00 Bequests $30.00 $17.44 $50.00 $13.77 Individuals $0.00 Corporations Foundations Bequests Individuals 7 Source: Giving USA 2006, www.aafrc.org/gusa

Overview of Giving To 2005 Donor Recipients Religion - 36% $100.00 Education - 15% Health - 9% $80.00 Human Serv ices - 10% $60.00 Public-society benefit - 5% $93.18 Arts, culture, and humanities - 5% $40.00 Env ironment and animals - 3% $38.56 $20.00 International affairs - 3% $22.54 $25.36 $21.70 $16.15 $14.03 $13.51 $8.86 $6.39 Foundations - 8% $0.00 Unallocated giv ing - 6% 8 Source: Giving USA 2006, www.aafrc.org/gusa

Charity Gap “The vast majority of givers believe the bulk of their donations help those less fortunate than themselves. In fact, less than one-third of the money individuals gave to nonprofits in 2005 went to help the economically disadvantaged, according to a new study commissioned by Google.org, the philanthropic arm of Google.” 9 Source: Sandberg, “The Charity Gap,” Wall Street Journal, 4 Apr 2007

Individuals Giving Characteristics • Largest source of giving • Largest recipient religious • Limited funds to serve economically disadvantaged • Limited funds for international affairs 10

Foundation Type Foundation Type, 2005 100% 4,722 95% 707 2,607 90% 85% 80% Corporate Operating 75% Community Independent 70% 63,059 65% 60% 55% 50% 11 Source: Foundation Growth & Giving Estimates , The Foundation Center, 2007

Foundation Size Foundation Assets 44488 45000 40000 35000 30000 25000 20000 12907 15000 10000 2892 2240 5000 949 504 417 86 0 <$1M $1M- $5M- $10M- $25M- $50M- $100M- >$500M $5M $10M $25M $50M $100M $500M 12 Source: The Foundation Center, 2004

Foundation – Who Gives 2005 Top fifty foundations out of over 71,095 (.001%) gave $10.6 billion (29%) 13 Source: Foundation Growth & Giving Estimates , The Foundation Center, 2007

Foundation Guideline Snapshot Gates Open Society Hewlett • Children & Youth Accepting LOIs • Global Development • Economic Developmen • Education • Global Health Program • Education • Environment • United States • Governance • Performing Arts (education) • Health • Charitable Sector • Human Rights Not Accepting LOIs • Law & Justice • Global Development * Global Development • Media, Arts, & Culture • Philanthropy No RFPs are currently • Women • Population open 14

Foundation Characteristics  Small  Fragmented Power/$ lies in few largest   Closed  Specific restrictions Slow  15

Foundations – what to do? • Small - Find and tap less well-known • Fragmented - Time sink, plan for it • Power/$ lies in few largest - Unless you have connections or an “in” is it worth your time? • Closed - Network, network, network • Specific restrictions - Be flexible, without losing core • Slow - Think of alternatives in start-up phase 16

Snapshot of Wealth Growth 17 Source: Foundation Center, Forbes 2004

Evergreen Lodge 18 http://www.evergreenlodge.com/index.html

BearTooth Capital 19 http://www.beartoothcap.com/

Alternatives • Leverage Networks • Creative in start-up phase * Partner * Off-shoot * Fiscal agent * Sponsor • Think broad focus 20

Social Entrepreneur Funders Echoing Green • Start-up • Individuals/partners • 60K over 2 years Draper Richards • National/global start-up • 100K for 3 years Ashoka • Ashoka fellows – leading social entrepreneurs; average grant: living stipend for 3 years • Senior Fellows – networkers, advisors, advanced leaders • Global Fellows – international work • Social Investment Venture (SIV) Fellows – allocate capital for social 21 benefit

Social Entrepreneur Funders Schwab Foundation for Social Entrepreneurs Facilitates – No $: • Networking and alliances • Training and conferences Skoll • Second-round, mezzanine funding (at least 3 years operating history) • Grants and/or loans (renewable) Good Capital • Capital investment, advisory services, and networks • For-profit social enterprises eligible • At least 2 years operating history 22

Social Entrepreneur Funders Omidyar Network • For-profit: social impact integral to business model • Nonprofit: usually invest in general operating fund Areas of investment include: • Microfinance • Philanthropic markets • Open source • Participatory media • Transparency in government New Profit • Venture philanthropy fund providing multi-year financial & strategic support • Partnership with the Monitor Group 23

Social Entrepreneur Continuum START-UP MEZZANINE ESTABLISHED • Echoing Green • Skoll • Ashoka (Senior Fellows • Draper Richards • Ashoka (Fellows) Schwab Fellows Good Capital Omidyar Network Acumen Fund 24

Nonprofit For profit Hybrid ? 25

Additional Resources • SOCIAL EDGE http://www.socialedge.org/resources/edge-wiki/Funding • Good Capital http://www.goodcap.net • Foundation Center http://www.fdncenter.org • Lex Mundi Pro Bono Foundation http://www.lexmundiprobono.org • Center for Social Innovation http://www.gsb.stanford.edu/csi/ - http://www.ssireview.org/ 26