Gone are the days when a thank you letter or annual report would suffice for communicating with your supporters. Today’s donors want to know exactly whose lives they are impacting, and they want transparency of how their dollars are being used. Whether you are seeking impact investors or philanthropic donations, the key is to demonstrate the ROI your organization provides to the investor as a combination of financial and social returns. See Part 1 of this series to understand how potential investors and donors are evaluating your company against other charitable investments.
This post provides four steps and examples for attracting support through better reporting of donor-funded impact:
Measure impact in terms that your audience cares about. The simplest approach leverages the Impact Reporting and Investment Standards (IRIS) described in Part 1, Quantifying Social ROI.
Jolkona provides 1:1 proof of impact for each donation it receives.
However, your cause can lend itself to creative ways to measure impact beyond cold statistics. This can also help you name specific amounts that a donor or investor can provide, matched with a known impact that you can measure. For example, rather than simply asking for $25, $50, and $100-tier donations, frame your fundraising in terms of $30 to provide a fuel-efficient stove to a family or $260 to build and install a sanitary toilet in a family’s home. Jolkona Foundation works with NGOs to design feedback loops that provide proof of impact to donors. For example, a donor sponsoring a child’s education might receive Continue reading →
When starting this blog, I quickly realized that most social enterprises based on designed products fell short of their potential for actually solving the problem. Industrial designers and product designers get caught up in the physical object that will solve the physical problem. Without an understanding of the economics involved, their solutions face challenges in production, distribution and adoption.
KickStart brings well-designed inventions to Africa, and they have successfully helped over half a million people because they have built a complete solution based on solving the fundamental problem of poverty. The product that they distribute is only one fraction of the solution. Their five-step process includes:
Identify a business that their impoverished customer can start with an affordable upfront investment and achieve profitability within months.
Design a product that meets all of KickStart’s 10 design criteria, #1 of which is that the product must be part of a profitable business model (see Step 1 above).
Establish a supply chain based on private sector participants which will amplify the economic impact to the geography they are helping. KickStart believes in local businesses, starting with conducting most of their design in Kenya and selling through local shops.
Develop the market with sales and marketing. The first step to this was to name their product – MoneyMaker – to instantly communicate its value proposition to their target market. Although it would be tempting to name their products after what they do, which is pump water for irrigation of farmland, it would be much harder to convince a farmer to part with his money for a SuperDuperWaterPump than to show him that he will get his money back quickly by expanding his crop output with a MoneyMaker.
Measure and move along to solve another problem. KickStart has a quality that is extremely rare among social enterprises: an exit strategy. Although they have high sales and marketing costs today to develop the market (this is where most donated dollars go), they have designed their business model such that it will be a permanent, self-sustaining solution. Once their irrigation pumps are as ubiquitous as bicycles, the supply chain they have set up can continue producing and selling MoneyMakers without KickStart’s help and the profits that KickStart receives can be redirected to building the next business solution.
As of January, KickStart counts 614,600 people it has moved out of poverty and estimates MoneyMaker to reach its tipping point in Kenya in 2014.
What problem are you trying to solve? If you have designed a new invention for the base of the pyramid (BoP), have you considered the full business model around it? Is your business model a permanent solution or will your target market always be dependent on your company’s involvement to produce, distribute, and discover the invention? Consider studying the KickStart model for your social enterprise.