Data-Driven Resource Mobilization
Data-Driven resource mobilization is key to making a social enterprise thrive.
My first professional role as a teacher solidified my interest in impact. As a Princeton in Asia fellow, I had the unique opportunity to teach English, namely essay writing and public speaking, to first-year university students in Hong Kong. As an English teacher, your focus is not only on being able to excel on their exams but also on having confidence as future leaders — social measures of impact and analytical measures.
Since returning to the States, I have spent the past several years working as a management consultant learning how to make businesses stronger and aid them in scaling. In our field, data-driven insights are key in making informed decisions. In addition, Republic’s venture associate fellowship program given me insight into how venture capitalists and impact investors examine deals.
The intersection of these experiences has provided a unique perspective as a part of the IDEX Fellowship program.
When I decided to become an IDEX fellow, I fell into the trap that many social entrepreneurs do: I romanticized the notion of what it means to live a life of impact. For all of my life, volunteering has been a large factor. From volunteering in nursing homes as an 8-year-old girl scout to emboldening high school students to build companies today, I have often been around the parts of the impact and social enterprise that allow one to participate in purely that final stage of impact, the direct connection with those you’re trying to help. However, this perspective leaves out the critical portion — what it takes to build, fuel, and run a social enterprise. Social entrepreneurs and intrapreneurs must also face key considerations such as measuring success, mobilizing resources, and building sustainable business models to create thriving businesses.
As IDEX fellows, we conducted three learning labs through which we consulted for various organizations. The labs included subjects such as human-centered design and monitoring and evaluation. In the third lab, we were faced with a new challenge: resource mobilization.
While exploring resource mobilization channels for this third learning lab, this dynamic of analytics in partnership with impact surfaced again. For this project, we partnered with Kyusa. Kyusa is an Uganda-based organization that envisions a Ugandan society where markets are thriving again. It has helped actualize many individual businesses, livelihoods, and dreams through its accelerator.
In the wake of COVID-19, many businesses, especially those of youth vendors, fell apart. Kyusa offers micro-grants to those in such circumstances to enable them to start their business without the stress of having to pay back a loan. In addition, the organization provides capacity building, leadership, and business development training to ensure that young entrepreneurs continue to grow their businesses. As IDEX fellows, our task was to aid Kyusa in exploring potential channels to fundraise to expand their business.
As we learned through our studies, in resource mobilization, resources are defined expansively:
- Human — skills, experiences, ideas
- Physical — facilities, equipment
- Social or Political — partnerships, goodwill, reputation, favorable policies
- Financial — unrestricted funding, access to credit, willingness to pay
- Natural advantages — location, good rains, good soils
- Other
While resource mobilization often focuses on generating funds, some so many other drivers can add value to an organization. Understanding the different considerations empowers social leaders to have more levers to pull as they build key connections and strengthen their repository of tools. Remembering this allows social enterprise leaders to get creative with how to highlight areas where people can give, even if they feel that their resources are limited.
Our resource mobilization lab similarly focused more on financial resources but even that has different considerations depending on the type of donor. Once we understood the different types of resources, we pivoted our focus to the types of donors.
By being strategic about how to appeal to different donor types, organizations can avoid blindly hoping and begging for investments and donations to come.
Through our lessons, we learned that there are several types of donors with specific considerations when they are choosing where to donate. What information or highlights speak to them in particular? Are they looking for emotional satisfaction? Financial return? Political clout? New connections? Understanding your specific audience allows for more targeted appeal.
The first step to appealing to different donors is identifying their why. Many nonprofits do not know why their donors donate. Beyond segmenting audiences into their groups, using the human-centric approach of directly having conversations with donors can help donors feel valued and heard and increase engagement.
Once organizations understand the why, they can be more effective by improving the quality of their messaging, not the quantity. Through market segmentation, organizations can restructure their email communications so that the information that is of most relevance to the target audience they are trying to reach is at the forefront of communications, whether that is through an email, a cold call, or another venue. Here, relevance is key. Sending generic messages is not only a turn-off to potential partners but can also demonstrate the organization is not interested in understanding its audience. Though market segmentation does not share everything there is to know behind what drives a donor’s “why”, analyzing multiple data points can help uncover patterns.
Once the audience is segmented, it becomes more feasible to show downers how they are personally being valued. Genuine appreciation and warmth help donors not only feel visible but also appreciated. Giving a face to the organization helps this interaction feel more connected than that of a faceless organization. Accordingly, it is key to foster such relationships. Open conversations can also lead to loyalty and partner retention, theory securing a more stable future for the social enterprise.
So how did all of this learning factor into our resource mobilization learning lab? In partnership with my team, we researched funding strategies optimize for Kyusa’s unique value proposition. We considered the organization’s value proposition, what types of audience their current program pitch may appeal to, and how to best structure and highlight messaging for those key audiences.
However, one key piece was missing. Because Kyusa is a newer organization, they had not yet collected information that validated the claims that they were making on their impact. Yes, they had anecdotes and alumni who spoke highly of their organization but, without numbers and past milestones to track where they had built and scaled impact, investors and donors were essentially asked to just believe in claimed efficiencies.
Without underlying data, any individual or group that is donating or investing in a social enterprise is being asked to take on significantly more risk.
Comparatively, when applying for larger sources of funding such as through the United Nations Development Program, stories must be supplemented numerically for successful applicants. If, for example, an organization UNDP provides a grant of $10,000 USD, more successful applicants can share how the money will be allocated specifically as well as how the money can be scaled over time. Can the social enterprise turn $10,000 of a grant investment into $100,000 of value for the impacted end users? How can historical data indicate how the investment is growing in value over time?
Organizations that can pair this numerical approach with the cultural and social insight are stand-apart in their ability to mobilize resources.
Data is the key to a strong foundation in any sustainable social enterprise. It is important in both building a business and in measuring impact, especially to set an organization up for the desire outcomes and impact.
Despite the importance of data, it is often not leveraged to the degree that it could be. Factors such as a lack of digitized data, inability to track key metrics, ineffective data tracking/ visualization, and lack of skilled data analysts lead to solely qualitative information gathering. While qualitative data is still highly important, as we see in human-centric design, it serves more to color in a story rather than to fully create one in isolation. Quantitative analysis, in turn, serves as the core out of which organizations can better understand the impact that they are having and how they can best take hold of their essential competencies.
In 2017, the United Nations Development Program published a report that analyzed and assessed some of the issues in building a data ecosystem mapping. The report, titled “Data ecosystems for sustainable development”, aimed to highlight what data was available to measure the United Nations Sustainable Development Goals. In addition, it sought to evaluate what sort of institutional upgrading was needed in its target countries nationally. in order to track progress towards the 2030 SDGs in target countries such as Senegal and Mongolia. The report highlighted that the gaps in the target countries are similar to those aforementioned such as lack of data analysts and ineffective data tracking.
In order to resolve some of the key inefficiencies in data, the UNDP report recommended the development and adoption of a data standard, improvement of data infrastructure by incorporating big data tech into SDG monitoring frameworks, establishing data-producing government agencies, and creating coordinated efforts between government and non-government organizations to share findings and coordinate solutions. This data emphasis is key in the new world of social enterprise.
At the intersection of venture capital and social impact is impact investing. In addition to creating more relevance for different donors, a stronger data architecture can also draw the interest of impact investors.
In order to maximize the impact that social enterprises can have, and maximize the funds that social enterprises can acquire, keeping key performance indicators as the foundation of tracking impact is key.
What makes an investor decide to invest? Comparatively to venture capital, impact investors have a more holistic definition of value — financial ROI as well as impact ROI.
People looking to both make a return on investment and make a socially responsible investment consider:
- Financially motivated investments
- Socially responsible investments
- Market rate
- Evidence-based impact
- Per dollar return
While other donors may be more fully focus on the impact ROI, by creating a business case that appeals to impact investors, social enterprise leaders will have a strong framework upon which to approach other donors.
Accordingly, social enterprises should ask themselves the same questions that impact investors will in order to better orient themselves toward optimal funding pathways.
Evaluation Criteria
- Investment Thesis and Financials
- Does this start-up fit with our investment areas?
- Does their hypothesis align with our analyses of market trends?
- How will our investment capital be used?
- Are the company’s financial projections realistic and interesting?
2. Market Opportunity
- Is there a compelling customer problem?
- What is the total addressable market?
- Is the market growing?
- Is there evidence of market traction?
- Is there go-to-market strategy compelling?
3. Product
- Do they have the capabilities to build the product/ service?
- How differentiated is this product/service?
- Can this product compete in the market?
- What are the major product milestones?
- What are the potential risks to the business?
4. Founder(s) and Team
- What positive early traction has the company achieved?
- What motivates the founders?
- What makes the team uniquely qualified to solve the problem?
- Do the Founders understand the financials and key metrics of their business?
- Does the team embody the values of our firm?
As we turn toward a data-driven future, successful social enterprises will embody the following principles.
- Impact focused as well as data-focused
- Demonstrate an understanding of the unique needs of the focus regions, audience, and cultures and have an eye for tailoring their product accordingly
- Have a demonstrated track record in their target space
