Non-Profits Need Seed Money, Too. Here's Why.

When we started Incite, we asked ourselves these simple, but provoking questions: how could the world change if passionate albeit budding social entrepreneurs were given the early capital and support needed to get their ideas off the ground?

Additionally, could smaller grants be catalytic in a space where so many multi-billion dollar foundations dominate?  

Both of us have experienced firsthand how supportive early investors could transform the trajectory of a young startup team. We wanted to pay it forward, particularly for nonprofits.

And it makes sense given the sheer volume of money in charitable giving–in 2017, $410 billion went to charitable giving, versus $84 billion in venture capital. Unlike venture, philanthropic giving does not have to generate a financial return. In theory, we can and should take more “risks” on social entrepreneurs with potentially revolutionary ideas even (or especially) when they challenge existing theories of change.

With Incite Labs, we:

• sought social entrepreneurs who weren’t afraid to challenge conventional solutions;
• funded immediately after the nonprofit’s formation, often providing their first substantial grant;
• funded with no strings attached, with a general operating grant rather than stipulating how the funds could or could not be used. Rather than look for something that fit into a discrete program area, we empowered the entrepreneur to prove out why and how his/her plan of action could revolutionize the current state of affairs;
• provided as much hands-on support as our founders needed: joined advisory boards, coached through hiring processes, connected other funders and set early strategy and action plans.

Carbon180 and Paid Leave + U.S. (PL+US) are two examples of talented social entrepreneurs who came to Incite with incredible ideas, and whom we were able to help ramp to rapid impact.

In 2015, we partnered with Noah Deich and Giana Amador at Carbon180, because we believed in their mission to accelerate the commercialization of carbon removal solutions. Incite Labs supported Carbon180 with their first unrestricted annual grants. We offered strategic input regarding messaging, building a team and focusing on early wins.

Four years ago, carbon removal was considered a borderline fringe topic in the climate change conversation. Now, carbon removal is an accepted part of the climate solutions portfolio, a key part of the Green New Deal resolution and continues to garner legislative and investment support. In a transformative policy win last year, Carbon180 successfully pushed Congress to include carbon removal solutions in the 45Q legislation, the first major federal tax credits for carbon capture technology.

PL+US began in 2016 with executive director Katie Bethell’s clear mission: win high-quality paid family leave (PFL) for everyone–moms, dads, children...the whole family. For Katie, PFL had the opportunity to create economic security for many, and was more than a corporate HR policy for working mothers.

Incite has made unrestricted grants to PL+US since their first year to build their team and plans. We have also supported PL+US in strategy, marketing and hiring decisions, helping this small but nimble team move quickly. In three short years, PFL has become a topic of national conversation, with bipartisan support and state and federal-level policy progress. One of PL+US’s early wins is its campaign to pass ground-breaking PFL policies for hundreds of thousands of employees at companies like Starbucks and Walmart.  

We are proud to call Carbon180 and PL+US part of the Incite family. Both organizations scaled for impact remarkably quickly–true startup style. And each has fundamentally shifted an important national conversation. Consider that both nonprofits have teams of less than 10, and are not even 5 years old!

We are acutely aware that there are so many more organizations like these that need an initial boost.

We’ll be the first to admit that it’s a learning process...but this approach is working. We’re also learning that Incite Labs has a novel perspective in the philanthropic community. While the system of seeding new for-profit ventures is a well-oiled machine, few philanthropic funders make fast, small grants to new nonprofits outside of their program areas.

In fact, many large donors do the opposite; large donors take months or even years to develop an extremely rigid funding strategy which they then use to make a few, large grants to established organizations that fit within their existing understanding of the world. Additionally, grants can take additional months or years to be approved, and enforce grantees to stay within the traditional box of “programmatic spending.”

Think of it this way: what if the venture capital ecosystem only made large investments, took a long time to deploy funds, and then instructed entrepreneurs they could only spend on specific product development or marketing costs?

The modern model of giving must be changed if we hope to truly catalyze the next movers and shakers of the nonprofit world.

We see it happening like this:

• Donors earmark a portion of their annual gifting for “high beta” grants.
• These grants can be small. Often, $50-250K can be lifegiving for new social entrepreneurs, and made with a soft promise for multi-year support contingent on early progress.
• Grants should be unrestricted, to allow founders maximum flexibility in moving their new organization and pivoting strategy as needed towards impact.
• Grants should be made quickly, with a month or less of diligence, so that founders and their teams can get back to their important and hard work.
• And perhaps most importantly, they should have the flexibility to be made in areas related to, but not squarely within, existing program areas.
• Smaller capacity donors, those who do not have multi-billion dollar endowments or huge (if slower-moving) teams, have a particular opportunity to influence the nonprofit world with this type of grant-making.

It’s not often that we advocate for lessons from the for-profit realm to apply in the non-profit realm. But the creative flexibility that venture capital allows entrepreneurs in building world-changing companies offers inspiration for how we support nonprofits.

We must do better to support visionary social leaders and their young, transformative nonprofits. All it takes is a seed.

Matt and Swati

Incite.org