When we first pitched the idea of our church funding social startups, two long-time congregants pulled me aside. They firmly told me that they felt I was unwise to suggest that a church had a role in funding social startups, as the failure rate of startups was too great a risk to justify an investment from a church.
I recall my first response was “we have faith.” But I also fully heard the practicality and pragmatism of their concern, and indeed had already given it much consideration. Because the data does support that it’s difficult to sustain a nonprofit, even if one is able to clear the hurdle of a successful startup, which itself is no small task.
In fact, nonprofits fail at the same rate as for profit businesses and for similar reasons. Let’s look at those reasons (in bold), then follow that with a quick rationale for why I was so hopeful that the Innové model would beat the odds:
- They lack a well-trained, appropriate board of directors. Governance was something that none of the young social entrepreneurs we worked with had any experience in. For this reason, it was one of the topics that Innové included as a non-negotiable training topic. But not only did we make sure to instill the basics of governance, the relational and mentoring nature of the Innové was such that an early startup board coalesced more easily.
- They don’t understand the field and can’t compete in a tight marketplace. Two things are happening here. First, many in the nonprofit community are rightly driven by their compassion to help and make a difference. Yet, that might mean they act first and think later. Second, most are naive about the pressures that nonprofits operate within. They are under-resourced to begin with, then are forced to compete against other nonprofits for what little funding is available. But the Innové process ensures that a robust and vetted business plan is the foundation of each venture. The business plan ensues they fully understand the market and its variables, plus perhaps the unforeseen circumstances ahead of them.
- There is no business or strategic plan with clear program, fundraising, and organizational goals. This is closely related to the above and Innové helping to produce a strong business plan helps ameliorate this risk. But a pitch is involved in the Innové process as well. This helps push the entrepreneur toward clear language and easily to communicate goals.
- The smallest fail at a greater rate. While the social ventures launched via the Innové process are indeed small, they are launched surrounded by a caring and engaged congregation that allows them access to networks of support far beyond what is typical of a social startup.
- Leaders misjudge time requirements and try to do it all alone. As mentioned above, the social entrepreneurs launching via the Innové process are “less alone”, being that they are surrounded by a supportive community. Further, Innové coaches are also eager to help young social entrepreneurs build strong boards while also building infrastructure necessary to replicate themselves.
- They have poor business management practices. The Innové process coaches them up.
As you can tell, the Innové process is designed to address each of the bullet points above, helping young social entrepreneurs avoid the typical pitfalls associated with social startups. Rather it involves helping develop a detailed business / action plan with data-driven estimates or expenses and income, building a strong and effective board of directors, or establishing sound fiscal and management systems, Innové helps.
All this adds up to successful social ventures that are sustainable and scale. And that is good, as more high quality programs are delivered for our communities.