This post covers a little-used yet very effective method of increasing funding for small yet high-impact ventures. The secret is combining funding from both non-profit donors and for-profit investors. This of course applies only to impact-driven ventures and only at early stages. The mystery is, exactly how do you do this while remaining both legal and honest?
I should tell you that I’ve been doing this kind of thing for over a decade, as well as observing others, and am very careful to separate what is non-profit from what is for-profit. Please take note, that this blog post is strictly educational in nature, to let you know broadly what is possible. In order to create a plan that fits your venture, be sure to obtain professional guidance.
I’ll illustrate the method by describing plans financing of the Jericho Center of Medical Diplomacy. It’s an example of a Vision Mastery in Action project. In other words, this is an example of the kind of thinking that a Vision Master employs to move a great vision forward in reality. I’ll give you just enough detail below to hopefully fascinate you and to help you understand the separation of for-profit and non-profit funding.
What is the Jericho Center of Medical Diplomacy?
I founded a nonprofit organization in 2020 called The Jericho Center of Medical Diplomacy. Its mission is to promote peace through medical diplomacy in the Middle East. Our first multi-year initiative is around breast cancer, the number one cancer globally and a scourge to women in that part of the world. There is an enormously high death rate for women in Arabic-speaking countries due to late diagnosis, late treatment and incomplete treatment. This is a systemic issue, not a political one. This is evident from the fact that the high mortality from breast cancer is the same in politically-unified areas such as the Kindom of Jordan and politically fractured areas such as the West Bank.
One of the things we learned at the C3 US and Arab Healthcare and Business Summit was that you could put mammogram equipment everywhere, and women still don’t use it. What does it tell you about the about the prognosis? About the diagnosis? How do we start?
Our approach addresses this enormous health issue while advancing peace by fostering medical collaboration between nations, enabling knowledge transfer, and respecting cultural norms. The Jericho Center addresses the three major issues (late diagnosis, late treatment and incomplete treatment with three initiatives:
- Culturally and economically acceptable screening method (using simple breath testing, not mammography);
- Guidance and financing for quick treatment, especially where cross-cultural and cross-border issues are barriers;
- Emotional, social and logistical support for extended out-patient treatment (like chemo therapy and radiation therapy) — by means of a convalescent center called the Healing Oasis.
You can learn much more at https://TheJerichoCenter.org.
Developing the Jericho Center requires the cooperation of Israeli, Palestinian, Jordanian, and American experts to make it real and work. And also requires a unique, high level of attention to functional architecture and sustainable engineering strategies to make key components of the Jericho Center of Medical Diplomacy — for example, its Healing Oasis and its breath-testing screening system — to be functionally self-sufficient, to the greatest degree possible.
In the early stages of this initiative, we are encouraged by the cooperation and acceptance for our mission from Isreal and Arab-speaking countries. It has revealed other more in-depth areas of potential collaboration, exactly our intent.
Creating a New Reality for Medicine and Peace
My initial inspiration for this idea was Israel would lead the charge with the USA and Europe as additional sources of expertise and technology, and so Israel could be a major source for medical expertise for the region. This has nothing to do with political issues; it’s just the reality of where the expertise exists. Medical diplomacy in action is the concept of exporting medical care to reduce conflict because it’s one of the few areas where collaboration is possible – not political but medical collaboration.
Collaboration on high-need common-purpose projects in a conflict region comes BEFORE sustainable peace agreements, not after.
So this creates a significant challenge to the Vision Master, that would be me in this case. And to the other individuals helping, such as the leading architect, is a Vision Master in his own right. And the top specialists in screening and cancer care would also be Vision Masters in their own right. In an upcoming blog, we will discuss the challenges of a Vision Master leading a team of Vision Masters.
What is the financing method used that combines for-profit and non-profit?
In summary form, two methods are used side-by-side. The underlying technology is financed through for-profit ventures. This will include breath-testing technology, self-sufficient solar power generation, and self-sufficient water generation, and low-cost construction components using local materials such as limestone readily available in the area. These technologies can be licensed to the public-facing agency. They can also be marketed to other regions creating a worldwide market.
For-profit impact-driven ventures very often have long-timelines with little desire for a near-term liquidity event (sale of the company or public offering.) This requires a unique breed of patient impact investors. You may make headway with these investors by offering revenue participation (aka revenue royalty) financing rather than convertible debt or stock. You can adjust revenue participation to meet the exact financial expectations of the investor without needing a liquidity event, and without burdening the venture with debt. You can learn more about revenue participation in my book The Road Less Traveled available at no charge on the https://Intelliversity.org site.
The public-facing services are provided by a non-profit agency, in this case, the Jericho Center of Medical Diplomacy. The Jericho Center operates as a division of Empowerment Works, Inc., a 501(c)3 non-profit in the U.S. It will have local subsidiaries in the Middle East, who are non-profit NGOs (non-government organizations.) This non-profit public-facing agency is financed through a mix of fees for services, donations (from high-net-worth individuals, families, and family foundations, and government grants.) As with non-profit hospitals, larger one-time donations are used for major construction and for funding an endowment, whose earnings pay for operations. As we have also found with non-profit hospitals, a part of the endowment is provided by grateful patients and their families. In sum, the non-profit public-facing agency is financing in a manner already practiced by non-profit hospitals.
What Are The Three Lessons?
What are the three lessons Vision Masters, the founders and CEOs of companies, can learn from our project led by Intelliversity and its circle of friends?
Lesson One: Successful high-impact projects financing has both nonprofit and for-profit components. The reason for the for-profit features is that that gives us access to more financial resources, mainly investors who want to make a profit. We’re not entirely dependent on foundations to make donations. The methods of combining for-profit and nonprofit elements are well known, but the Vision Master needs to become a master of that kind of combination.
Lesson Two: we have to know how to select the for-profit investors so that they are tolerant of, and even more critical, enthusiastic backers of the impact that we want to make so that they may be necessary for them to be a little more patient with their results, financially or with the kinds of people that we bring on. We are evaluating our success both on a financial basis and on an impact basis. So we have to learn how to select and pitch to so-called impact investors.
Lesson Three: We have to learn how to pitch to and select donors for the nonprofit side. Though not looking for a killing in the stock market, donors may very definitely be interested in returning the principle invested back to the foundation over a long period so that they’re not depleting their capital. In the US, this is allowed, but you have to know how to do it. That doesn’t mean the donor is a profit-making entity, but it does mean that we can return the capital eventually from the nonprofit’s side of the operation. That’s called a PRI, a program-related investment provided by family foundations typically. So we have to learn how to pitch and how to structure the nonprofit push.
There is a great deal more to say about these methods. I welcome the opportunity to speak by teleconference or phone. Make an appointment at https://intelliversity.org/connect.
Key Takeaways:
- When growing a high-impact venture, you’ve got to master combining elements of for-profit and non-profit financing, to get the best of both types of businesses
- If you play the game well, you can attract both investors AND non-profit donors, thus doubling the sources of funds available to you.
- When pitching to an impact investor, you’ve got to learn a different way of pitching that offers both measurable impact and long-term profit.
- When pitching to a non-profit donor, you’ve got to learn how to return donated funds to their foundation, without their losing the tax benefits of a non-profit donation.
- Managing Vision Masters is a challenge. You may be called on to manage a team of Vision Masters.