Over the last several years, social enterprise development in Colorado has been on the rise. In part, this is due to an increase in awareness of the need for, and potential of, revenue-generating activities to support mission-based programs of nonprofits. Several local social enterprise models are achieving success and national attention for their work creating jobs (economic opportunity) for those they serve. Capacity building programs supporting this type of activity have been funded by area foundations and businesses leading to an increase in training, technical assistance and consulting support for nonprofits wishing to explore social enterprise. Overall community interest in so-called double bottom-line options for social change has also increased through efforts such as the Unreasonable Institute, Colorado Impact Initiative, Social Enterprise Alliance Colorado Chapter, Impact Hub Boulder and many smaller-scale, independent efforts. Finally, interest in supporting social enterprises started by nonprofits has been increasing from grantmakers, individual donors and impact investors.
As foundations, community loan funds and others are entering the startup financing market, there has been a lack of data to show whether loans or Program-Related Investments (PRI) were appropriate mechanisms for funding startup social ventures run by nonprofits. There was also uncertainty as to whether these tools were desired by the nonprofits developing and launching new businesses. Anecdotally, the Colorado Nonprofit Social Enterprise Exchange (The Exchange) could offer that the majority of the 21 graduates of its Social Enterprise Cohort began the process wary of debt. Yet, during the social enterprise development process, and with some education around appropriate uses of debt instruments, became more comfortable with the idea leading several graduates to access startup PRI funding.
With this increasing interest in social enterprise both by nonprofits and funders/investors, and limited data to understand the current situation and potential opportunity of this market, a baseline study was in order. In the summer of 2016, The Exchange, in partnership with The Denver Foundation and an anonymous statewide funder conducted a survey of Colorado nonprofits on the subject of funding and financing for social enterprises and earned income activities. The intent was to:
Additionally, the funders of the study were interested in making this data available to other funders, impact investors, capacity builders, intermediaries and nonprofits across the state as they all explore how to best build financial products and services to support emerging and growing social ventures in Colorado.
The electronic survey was developed by the project partners and distributed across the state of Colorado by The Exchange team, as well as over forty funders, support organizations, consultants, clients and others contacted directly by The Exchange. Additionally, the survey was shared widely on Facebook, Twitter, LinkedIn and through emails to listservs and foundation grantees. One hundred and twenty nonprofits participated in the financing survey.
Click to download a PDF: 2016 Social Enterprise Financing Survey for Colorado – Fall 2016