The Missing Seed Funding for Non-profits

What I've learned about funding building my own non-profit.

The date is January 1st, 2022. The week before, I received a letter from the IRS that officially granted my project, Ribbit Network, 501(c)(3) not-for-profit status. I celebrated! It was a new year and I was more excited than ever to build out the project with an organizational model that reflected the values that the project was built upon.

In this company, there would be no uncomfortable decisions to appease the clamoring masses of shareholders demanding that the corporation honor its so-called fiduciary responsibility. No, we would make only the revenue needed to do the research and work I wanted to do alongside the support of the seemingly endless list of philanthropic funders I had been given by an advisor months before.

Context on the Plan

Some quick context on Ribbit. I founded Ribbit to fill a gap in the emissions monitoring ecosystem for the climate. There seems to be a real demand for solutions that can identify GHG emissions sources via real sensors (not estimates) by both policymakers and corporations alike. The need is a bit intuitive talking to leaders in the space but is also backed up by the enormous amount of money and effort being spent in both public and private sectors to do this same work with increasingly complex estimation techniques.

However, the issue is that there is significant research and engineering work needed to figure out how to deploy sensors at a low cost that can accurately measure these emissions. Having spent a long time working in for-profit, venture-scale companies, it was obvious to me that there was way too much technology/engineering risk for this to be funded by typical business investors. However, the work was also not well suited for academic labs, which often can’t focus on technology deployment issues (cost reduction, supply chain, etc) as these topics are not generally interesting enough for major journals to publish “science” papers on.

So the plan was something like this:

1. Set up Ribbit as a non-profit

2. Raise some seed funding for the non-profit to focus on the problem for a few years to validate the solution and solve some of the boring engineering challenges

3. Take the solved problem and form partnerships with gov. and corporations, creating sustainable revenue

Six Months Later…

It was the middle of the summer, and maybe it was just hot that day, but I specifically remember this feeling of “things don’t seem to be going according to plan”.

I was of two minds: by some metrics, things were going great. Ribbit had a growing community, we were doing lots of press and events, winning some small grants, and filling out lots of applications for others! However, we were also getting a pretty constant stream of rejection or just no answer at all from most big chunk funding (stuff that would allow myself or staff to work on the project full time).

The Conundrum

I was receiving a lot of rejections with one of two canned responses:

“Sorry, we only fund teams that already have at least 2 full-time paid staff”

“Sorry, we only fund organizations that already have a yearly operating budget of greater than $1 million.”

Pretty soon the list of funders I had not tried to apply to or email that would allow me to pay myself or any staff was down to zero.

I had also seen a lot of these:

We do not accept unsolicited applications or requests for funding.

A nice way of saying “Don’t call us, we’ll call you”.

I did mention that we were able to win a few small grants, but unfortunately, the application process for these was incredibly time-consuming. I was on average, spending about 15 hours per small grant proposal (<$250,000). Given our success rate was still pretty low, it was obvious that to pay staff through only small grants, I would have to become a full-time grant writer, leaving no time for the actual work I considered to be impactful.

Flash Forward to Now

We’ve had some creative ideas for how to generate recurring revenue for Ribbit based not on emissions or science research, but instead on STEAM education. This is fulfilling and interesting, but ultimately leaves the gap I founded Ribbit to solve unfilled.

The Missing Seed

From my perspective, I currently see this mystery with non-profits where there is no "seed" funding equivalent. New non-profits have to bootstrap through small grants or recurring revenue to the point in which big funders can take a look at them.

In hindsight, this explains why most non-profits are started by wealthy people (not me, I assure you haha).

That’s My Story

It’s possible that I’ve missed something or have taken the wrong strategy, or that Ribbit is just a bad idea in other people’s minds (I don’t think that’s the case obviously).

For now, I’ve started looking back to consulting work as the thing I will focus on for income (ps. You can hire me if you are interested).

Anyway, I think that’s a summary of my journey with non-profits over the past 1.5 years or so. I hope it was interesting or made you think, but whatever, the case, I want to hear from you :)

If you don’t have a specific thought on this, feel free to let me know what sort of content you want to see from me.

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