Seed funding is a critical tool in a philanthropist’s impact tool belt. By putting trust and financial support behind your partners’ innovative projects, you can leverage your freedom and risk capital to make a difference.
A seed funding grant is a small, initial investment in a new initiative or project. It can reinforce your relationship with an existing partner or attract a new one to your portfolio.
While seed grants are financial in nature, they are more than just funding. A seed grant gets you in at the ground level to watch a new idea or project blossom. It gives your nonprofit partner or entrepreneur the opportunity to test their project in preparation for larger grant applications from corporations, foundations, and government agencies. Meanwhile, a seed grant can diversify your foundation’s impact and audience, serving as an avenue to test out innovative solutions to today’s problems, without diverging from your organization’s strategic plan.
3 Ways To Set Up Your Seed Funding for Success
1) Recognize that philanthropic resources are by nature risk capital
Any time you make a philanthropic investment, you are taking an inherent risk. As with conventional investing, there is always the chance that you may not see a full return on investment. Furthermore, the returns you do see may come in the form of social or environmental good rather than financial returns. As a leader of your foundation, understand that you are able to take these calculated risks, and as with conventional investing, higher risks often bring higher impact and reward.
2) Take time to better understand your field of focus and your grantee partners
By developing a deeper knowledge of your issue areas and the organizations you’re working with, you’ll allow yourself to venture into the unknown with confidence. Prepare yourself by becoming familiar with:
- The people and organizations involved in this field
- What has worked and not worked in the past
- The barriers you or your grantee partners are facing
- Current trends and emerging thinking
- Present gaps
In doing so, you are more likely to make smart philanthropic decisions and will feel more assured about backing a new idea or partner.
3) Intentionally dedicate a portion of your grant portfolio to seed grants
Consider setting aside a pre-determined percentage of your grant budget to seed funding – whether 1, 5, 10, 15, or 20 percent of your portfolio – and establish a clear set of expectations around what types of returns you wish to see. This can include social or environmental impact instead of or in addition to financial returns. Whatever you decide, be clear with your foundation’s board that you’ve earmarked this fund for high-risk philanthropic investment. Moreover, make sure they understand the stakes and expectations.
Here are some questions that we adapted from our workshop at the 2022 Exponent Philanthropy Conference in Minneapolis to help you make your first seed grant. We hope this helps guide your initial seed funding decision-making and remember that we are here to support you along the way. You don’t have to go it alone!
Questions To Help You Make Your First Seed Grant
- What’s one impact you’d like to have in your field that you’re not already working on? For example, new research, a specific project, or a technology you’d like to see developed?
- Who’s an existing or prospective partner you’d be interested in working with on this project?
- What’s the best way to approach these potential partners? Are you open to their existing program ideas? Do you already have an idea in mind that you think they’d take on?
- How much budget could you allocate to this effort, understanding both the risks and rewards? Are you willing to help secure additional funding to see this project come to life?
- What timeframe are you prepared to work with to see results? Weeks? Months? Years? Are you inclined to talk with your partner to work this out? Or would you defer to their opinions?
- What specific outcomes and impacts do you hope to see? If the project is not immediately successful, are you interested in what your partner and foundation can learn? How will you capture and reflect on the learnings?
- Do you have ideas and expectations around how you’ll roll out the project and whom you’ll involve? Can you trust your grantee partner to execute it? How much flexibility are you willing to give your partner to run the program as they see fit?
- Do you have ideas for progress, timing, and communicating milestones? Will you work things out with your partner, or defer to their opinions?
- How soon could you and your partners start this project? What needs to happen to be ready for the roll-out?
- What would you need to see from this grant to convince your foundation board and staff to make more seed grants? Consider the potential successes and impact, as well as what you can learn from failure.
About the Authors
Howell Conservation Fund (HCF) is a registered 501(c)(3) that specializes in catalytic philanthropy, supporting nascent organizations and programs that address root causes of today’s most pressing environmental issues. Blackstone Ranch Institute has been offering seed grants to a variety of national and global environmental sustainability initiatives for the past 16 years.
Coaching Offer: For Exponent Philanthropy members, HCF and Blackstone Ranch are offering complimentary, one-hour consulting sessions to help develop your first seed grant. Please reach out to firstname.lastname@example.org for more information.