Prepare for funding: Define your intentions
Part 1: Let’s talk about your purpose.
By Tanya Wong
Funding has always been competitive in the impact sector. So how do you set yourself up to impress potential investors or lenders? This four-part series will show you.
Securing funding is a critical challenge for many social and environmental impact organisations. But it’s something many aren’t proactive about – leaving organisations scrambling at the eleventh hour or missing out on the opportunity altogether.
If you’re looking for financing, it pays to be prepared. When you understand your organisation’s purpose, operations, finances, and risks you can have informed conversations with funders and more easily find a long-term partner that really ‘gets’ you – and create long-term growth and lasting social and environmental change.
This four-part article series will take you through the different elements you need to consider if you’re looking for finance for your purpose-driven organisation now – or considering it for the future.
What to think about first
There are multiple funding avenues available, and not all of them are going to be right for your organisation.
The main options include:
- Grants from government and philanthropic organisations
- Debt in the form of loans
- Equity
- Crowdfunding – which can be for grants, debt or equity
The first step is to learn about these options and understand who is providing the different types of funding. Attend a pitch night, read up on grant eligibility criteria and talk to other organisations inside and outside of your sector. Speak to organisations of a similar size or maturity to yours and find out as much as you can about their fundraising experience. This will help you narrow down your options so you’re not spending time on solutions that won’t be a good fit.
Remember – a funder isn’t just a one-time transaction, it’s a long-term commitment. That’s why it’s important to consider the long-term implications of whoever you’re working with. At Sefa we think of it as a partnership – we’re here to help you develop to your full potential and fulfil your purpose - whether that’s helping people or the planet. And you’re welcome to talk to our clients to understand their experience of being a borrower with us.
Tell us about your purpose
Funding conversations can be scary, but knowing what investors are looking for can help you feel more confident.
There are a couple of things we want to know first when we’re talking to potential borrowers:
1. Why your organisation exists and what you’re trying to achieve.
It doesn’t matter if you’ve been around for a month or a decade – you should have clarity on your organisation’s purpose and the problems it solves. To be successful, you need to show a clearly defined intention and a specific environmental issue or group of people you’re focused on. If you’re not sure how to explain this, try defining the problems first, then outline your solution.
2. How your activities will lead to your desired outcomes and impact.
Once we understand what you’re trying to achieve, the next thing we look at is how you are going to get there. And how the activities you need funding for directly relate to your intention. If you’re in a popular space, explain how you’re different from everyone else. A theory of change can be helpful, but if you don’t have this, don’t worry – we just want to hear the thinking behind it. (You can find an example of a theory of change from our work with First Steps Count)
It’s about stepping back and looking at the bigger picture. A clear intention and aligned activities give us the information we need to identify the best funding options for your organisation.
Tender Funerals is one example of a client we worked with who was very deliberate in their intention to fill a gap in the market. By offering affordable, personalised and culturally appropriate funeral services in a community-based setting, Tender Funerals had a clear intention to provide an alternative to commercial funeral providers.
At Sefa, our solutions are tailored – because every organisation is different and has different financial needs. If a loan is appropriate for you, we help you figure out how much you can afford to borrow, and how you can make repayments without either jeopardising your financial integrity or putting yourself under a lot of financial stress. If you’d like to find out more about how we can help you strengthen your organisation, get in touch today.
Now it’s time to delve deeper into your organisation’s operations and what makes you different – we’ll cover this in part two.