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Nonprofits typically rely on donors and grants, which keeps them busy sustaining what they’re already doing rather than trying out new tacks. But a growing movement wants to see more nonprofits pitching ideas to potential backers, pursuing money-making ventures aimed at addressing social problems and seeking investment in ways a startup might.
If a coalition of philanthropic leaders have their way, more San Diego nonprofits will be heading into the shark tank.
There’s a growing movement to build a stronger social entrepreneurship ecosystem in San Diego. Supporters envision more nonprofits pitching ideas to potential backers, pursuing money-making ventures aimed at addressing social problems and seeking investment in ways a startup company might. The goal is to foster a lesser reliance on big donors and government grants and more sustainable, innovative approaches to tackling causes.
Think Girl Scout cookies, Goodwill stores or Kitchens for Good, a local example. The roughly year-old nonprofit prepares students for food industry jobs with cooking and catering gigs.
Kitchens for Good founder Chuck Samuelson, who spent decades in the food industry, said paid jobs cover two-thirds of the southeastern San Diego nonprofit’s budget, giving the group more flexibility and even credibility with donors.
“The social enterprise model, with the fact that it has sustainability and revenue built into it, is a much stronger model and it’s a much stronger story to tell to people who are giving their money,” Samuelson said.
The model also opens up revenue streams and outside investment that can help nonprofits test more comprehensive solutions to complicated problems.
Nonprofits typically rely heavily on donors and government grants, which keeps them busy sustaining what they’re already doing rather than trying out new tacks.
Social entrepreneurship opens nonprofits up to new opportunities that could help do more good and better address systemic problems, said BH Kim, a former San Diego Foundation vice president leading Impact Without Borders, a group of social entrepreneurship evangelists.
“These social entrepreneurs are really going to start looking at more root causes of the problems rather than treat the symptoms,” Kim said.
A patchwork of local groups, including Kim’s, is rallying to set the stage for more enterprising nonprofits and cause-oriented businesses. Impact Without Bordersis hosting labs to help social entrepreneurs polish their ideas and working with Mission Edge, a nonprofit that helps other groups with front office needs, on a program to help nonprofits launch revenue-generating enterprises. Another group, the San Diego Impact Investors Network, is trying establish funding opportunities specifically aimed at mission-focused businesses and nonprofits. They’re hoping to draw $100 million in so-called impact investment to the region by 2025.
“Our interest has really been to bring that entrepreneurial spirit to the nonprofit environment, and to have that spirit you need the tools,” San Diego Foundation CEO Kathlyn Mead said.
Last month, the San Diego Foundation hired Fab Lab director Katie Rast, who’s got years of experience working with makers and entrepreneurs. She’s pulling together experts who can guide nonprofits through months-long training programs she hopes to kick off later this year.
The San Diego Foundation program, social entrepreneurship labs and the effort to create more funding options all aim to address a contradiction in the San Diego startup world: Philanthropists and foundations often say they can’t find strong funding prospects in San Diego while startups say they can’t find folks willing to write checks.
Nancy Sasaki, executive director of the Alliance Healthcare Foundation, has heard the complaints from both sides.
Last year, the Alliance Healthcare board encouraged groups separately raising those complaints to work together to address them. It awarded three $25,000 grants in part to encourage Impact Without Borders, Mission Edge and San Diego Impact Investors Network to collaborate on solving that conundrum.
They hope Impact Without Borders and Mission Edge can help get social enterprises ready to obtain grants or loans, and that the San Diego Impact Investors Network can create opportunities to present those concepts to funders through pitch events and a loan program.
The San Diego Foundation has also committed to making those connections.
“We talk about San Diego being this innovative place but it’s not all put together,” Sasaki said. “I would love to see that ecosystem put together, to see us figure out how to create that pipeline.”
Sasaski’s foundation has been among the local funders at the forefront of social entrepreneurship in other ways, too.
Since 2010, the Alliance Healthcare Foundation has asked nonprofits to pitch inventive programs, and handed out grants and loans to support them.
They’ve backed the creation of a social services database and helped Vista-based Solutions for Change expand an that supplies jobs for the group’s homeless clients and revenue from produce the group sells to North County school districts.
One of group’s most recent grants went to Escondido-based Interfaith Community Services, which plans to use $1 million in seed money to build a North County recovery and wellness center.
Greg Anglea, executive director at Interfaith Community Services, said his organization and North County police have long noted a gap in services for homeless and low-income people in the area suffering from alcohol and drug addiction.
Anglea said many end up in jail or emergency rooms rather than receiving the detox, recovery services and short-term medical care.
But building those services is difficult with more traditional funding streams even despite the hospitals’ willingness to ink contracts that help pay the bills. Governments can be hesitant to fund projects that haven’t been tested yet, and new programs like Interfaith’s often require hefty upfront investments rather than grants or donations more likely to flow after they’re up and running.
So last fall, Anglea and four other competitors presented their pitches to a panel of experts assembled by Alliance Healthcare. They asked tough questions and later called Anglea to say his project was getting funded.
“From a nonprofit perspective, to be invested in in this way is transformational,” Anglea said.