Entrepreneurial Design for ExtremeAffordability

May 14, 2007

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Goals• Provide an overview on the “funding/giving”

landscape with a focus on foundations. (Do notaddress government funding.)

• Delve more deeply into the fundingopportunities and landscape for funding forSocial Entrepreneurs.

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AgendaFunding 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

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What I say today is going tochange tomorrow

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1997

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Today

- Sergey Brin & Larry Page

“We hope that someday this institutionwill eclipse Google itself in overall worldimpact by ambitiously applyinginnovation and significant resources tothe largest of the world's problems.”

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Overview of Giving From2005 Donor Sources

Bequests

7%

Individuals

76%

Foundations

12%

Corporations

5%

2005 Donor Sources

$260.28 billion total

$13.77 $30.00 $17.44

$199.07

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

Corporations

Foundations

Bequests

Individuals

Corporations

Foundations

Bequests

Individuals

Source: Giving USA 2006, www.aafrc.org/gusa

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Overview of Giving To

$93.18

$38.56$22.54 $25.36

$14.03 $13.51 $8.86 $6.39$21.70 $16.15

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

2005 Donor Recipients

Religion - 36%

Education - 15%

Health - 9%

Human Services - 10%

Public-society benefit - 5%

Arts, culture, and humanities - 5%

Environment and animals - 3%

International affairs - 3%

Foundations - 8%

Unallocated giving - 6%

Source: Giving USA 2006, www.aafrc.org/gusa

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Charity Gap

“The vast majority of givers believe the bulk of theirdonations help those less fortunate thanthemselves. In fact, less than one-third of themoney individuals gave to nonprofits in 2005 wentto help the economically disadvantaged, accordingto a new study commissioned by Google.org, thephilanthropic arm of Google.”

Source: Sandberg, “The Charity Gap,” Wall Street Journal, 4 Apr 2007

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Individuals GivingCharacteristics

• Largest source of giving

• Largest recipient religious

• Limited funds to serve economicallydisadvantaged

• Limited funds for international affairs

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Foundation TypeFoundation Type, 2005

63,059

2,607

707

4,722

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

Corporate

Operating

Community

Independent

Source: Foundation Growth & Giving Estimates, The Foundation Center, 2007

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Foundation Size

Source: The Foundation Center, 2004

44488

12907

2892 2240949 504 417 86

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

<$1M $1M-

$5M

$5M-

$10M

$10M-

$25M

$25M-

$50M

$50M-

$100M

$100M-

$500M

>$500M

Foundation Assets

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Foundation – Who Gives

2005Top fifty foundations out of over 71,095

(.001%) gave $10.6 billion (29%)

Source: Foundation Growth & Giving Estimates, The Foundation Center, 2007

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HewlettAccepting LOIs• Education• Environment• Performing Arts

Not Accepting LOIs• Global Development• Philanthropy• Population

Gates

• Global Development• Global Health Program• United States

(education)• Charitable Sector

* Global Development No RFPs are currently

open

Open Society

Foundation Guideline Snapshot

• Children & Youth• Economic Development• Education• Governance• Health• Human Rights• Law & Justice• Media, Arts, & Culture• Women

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

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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

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Snapshot of Wealth Growth

Source: Foundation Center, Forbes 2004

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Evergreen Lodge

http://www.evergreenlodge.com/index.html

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BearTooth Capital

http://www.beartoothcap.com/

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Alternatives• Leverage Networks

• Creative in start-up phase* Partner* Off-shoot* Fiscal agent* Sponsor

• Think broad focus

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Social Entrepreneur FundersEchoing 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: livingstipend for 3 years

• Senior Fellows – networkers,advisors, advanced leaders

• Global Fellows – international work• Social Investment Venture (SIV)

Fellows – allocate capital for socialbenefit

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Social Entrepreneur Funders

Schwab Foundation for Social EntrepreneursFacilitates – 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

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Social Entrepreneur Funders

Omidyar Network• For-profit: social impact integral to business model• Nonprofit: usually invest in general operating fundAreas 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

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Social Entrepreneur Continuum

START-UP MEZZANINE ESTABLISHED

• Echoing Green• Draper Richards• Ashoka (Fellows)

• Skoll • Ashoka (Senior Fellows)

Schwab FellowsGood Capital

Omidyar NetworkAcumen Fund

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NonprofitFor profit

Hybrid

?

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Additional Resources• SOCIAL EDGE

http://www.socialedge.org/resources/edge-wiki/Funding

• Good Capitalhttp://www.goodcap.net

• Foundation Centerhttp://www.fdncenter.org

• Lex Mundi Pro Bono Foundationhttp://www.lexmundiprobono.org

• Center for Social Innovationhttp://www.gsb.stanford.edu/csi/ - http://www.ssireview.org/