In a world often defined by gaps in access to opportunity, funding, and networks, finding ways to get the right tools in the right hands can make all the difference in breathing life into an innovative, impactful idea. Every year, Echoing Green hosts an open call to find transformational leaders urgently committed to creating a more equitable and sustainable world. These are people who inhabit the issues, seeing promise and opportunity where others see unsolvable problems. They apply to our Fellowship with their ideas, looking to gain financial support and a community invested in their leadership and success.
Our application is designed to showcase the leadership potential of passionate, innovative people who are committed to tackling the issue over the course of their lifetime. Part of supporting early-stage entrepreneurs requires that we also understand what’s happening in the field. Each cycle we review our Fellowship application data to identify learnings, which help us understand the composition, motivation, and needs of our applicants. This annual analysis often reveals lessons we use to guide our efforts to promote equity in the social entrepreneurship field. By looking at our applicants’ responses in aggregate, we are often able to observe alignment between our applicants’ proposals and trends in philanthropy, regional needs, or surging social and political issues.
Read on for some observations from the 2018 applicant pool.
The Big Picture
Echoing Green received 2,419 applications proposing work in 155 countries from every continent except Antarctica. Applicants for the 2018 Fellowships can apply individually or as a two-person partnership; this year, a total of 2,847 individuals are represented in this dataset.
The proposed organizations use diverse methods–such as developing innovative technologies or community organizing–to address a variety of needs, including improving clean energy storage, ending police brutality, and transforming educational outcomes.
We ask applicants to identify who the intended beneficiaries of their proposed work will be. This year, the top five populations identified are economically disadvantaged (31%), general population (26%), youth (18%), women & girls (10%) and racial and/or ethnic minorities (8%), which largely mirrors population trends in previous years.
There has been a five-year upward trend in the number of organizations whose proposed work intends to reach Racial and/or Ethnic minorities. This shift is seen most predominantly in the United States with 17% of all U.S.-based applications reporting this population emphasis–up from 14% in 2017. In the overall pool, 8% of all applications’ work intends to reach racial and/or ethnic minorities, up from 7% last year.
Common hurdles to establishing a social impact-first organization include challenges accessing capital, achieving visibility, and even public understanding of the problem the organization seeks to address. Understanding the needs of early-stage leaders alongside the challenges their organizations face, such as hiring and fundraising, is critical to our work. Echoing Green’s Fellowship application asks questions designed to reveal key markers of progress and organizational development to aid our assessment of their organizations’ operating stage and the overarching support an applicant may need.
We examine several criteria to assess an organization’s stage, such as funds raised, time operating, and benchmarks of progress such as whether the organization has achieved proof of concept. Over the last several years, the proportion of applications with later-stage organizations has increased. While this is not a conclusive finding, it is worth exploring whether this shift reflects changing interest in the Echoing Green Fellowship or a broader trend in the growth and professionalization of the social entrepreneurship field. Considering stage, 37% of applications report having proof of concept for their organizations–meaning they are confident in the feasibility of their product or programs–compared to 17% of applications reporting being at the idea stage (regardless of operating time). We also notice a consistent increase in organizations operating for longer than two years; applications reporting more than two years of operating time has reached its highest point with 20.1% of applications.
We observe a diverse array of organizational milestones in this year’s applicant pool. A majority–62%–of our applicants have short-term operating plans, making it the most common achievement among our applicants. Other milestones achieved by the pool include having a written theory of change (43%), written a fundraising plan (37%), formed a board of directors (31%), and hired full-time staff (26%).
Sources of Funding
Having a strong idea is just one piece of the puzzle when it comes to making change; impact is also dependent on the fundraising ecosystem surrounding the entrepreneur and the field. To enhance our support to the field and increase the flow of capital between grantors and entrepreneurs, we seek to gain a more nuanced understanding of how early-stage organizations are currently funded.
We ask applicants to share their organization structure–from for-profit, nonprofit, hybrid, or undecided–to help us broadly gauge how they intend to fund their work. Given that for-profit organizations operate with earned revenue approaches and nonprofits tend to operate wwith philanthropic approaches, organization structure can be a useful signal of the type of capital an applicant intends to pursue, but our data reveals that the reality is more complicated.
Nonprofit structures comprise 39% of this year’s pool, while 29% have proposed for-profit structures, and 18% have proposed a hybrid structure, with the remaining 14% reporting uncertainty or a different structure.
Structure is not the sole indicator of the type of funds pursued or needed. The chart above illuminates the diversity of funding approaches pursued by this year’s applicant pool: 38% are pursuing funds from foundations, 37% are pursuing earned revenue, and 32% are pursuing investment.
This year’s applicant pool has already raised a total of $136m. Approximately $57m of these funds come from Grants, while Donations and Equity each represent just under $20m of the total funds raised. The remaining funds are split between earned revenue and convertible debt, both of which are approximately $10m, and self-funding, in-kind donations and loans each at or below $7.5m.
These data show that applicants pursue funds across the spectrum of possible sources regardless of corporate form. This underscores the importance of funders’ and investors’ work to design fair, inclusive processes as they determine who and what to fund–especially as the field works to expand funding opportunities at the early end of the startup continuum. In recent years, Echoing Green has hosted conversations with entrepreneurs and funders alike to discuss what needs to be done to meet promising entrepreneurs where they are while also evolving our shared understanding of what’s working–and what isn’t–in the funding landscape. As entrepreneurs explore the full spectrum of organizational structures, we see a concurrent opportunity for dialogue and collaboration among these leaders to understand funding options beyond the list included in the chart above. As we have reported before, funding and time to iterate can make or break an early-stage organization; the field benefits when grantors and entrepreneurs can clearly communicate and understand each other’s needs from the same table.
Disparities in Funding
Well-designed, innovative, impactful ideas can come from anywhere, but early-stage leaders often face barriers to funding based on factors such as where they work, if their model is disruptive to existing industries, as well as gender, racial, and ethnic biases.
Across all organizations regardless of stage, region, or leadership teams, we observe that 53% of applicant organizations have not raised any funds for their work. This includes those who are at the idea stage and those who have been in operations for more than 6 months. The remaining 47% of the pool has, on average, raised approximately $179,000. This average is heavily skewed by a concentration of funds at the highest end of the spectrum with 10% of the applicant pool responsible for 85% of all funds raised.
The differences in funds raised also varies by region. Among the full pool, applications received from South America and Asia are most likely to have raised funds (54% and 53%, respectively). Organizations proposing work in Africa were least likely to have reported receiving financial support, with 41% reporting having raised funds.
As we have mentioned in previous years, we also note differences in funds raised based on applicants’ reported racial and ethnic identity.
The data points to disparities in the likelihood of receiving funds along race, ethnicity, and region. Disparities in funds raised are also evident when we review the average amount of funds raised within each ethnicity.
Over the last five years, we have observed an increase in the average funds raised by female applicants to our Fellowship. In 2018, individual female applicants reported raising $104,000 on average compared to an average of $94,000 raised by individual male applicants–the first time female applicants reported higher average funds raised than male applicants over the last five years. (Since 2012, individual female applicants have raised $72,000 compared to $77,000 raised by individual males.)
The clearest picture of fundraising disparities emerges when we consider region, race and ethnicity, and gender together. We compared self-reported fundraising data of applicants working in the U.S. considering gender and racial and ethnic identity to illustrate how these disparities operate in tandem. For U.S. applicants who have raised funds: self-identified black women report an average of $79,000 raised compared to $119,000 by black men and $171,000 raised by white women compared to $117,000 raised by white men.
Gender Gap in Organization Leadership
As a seed funder in the social entrepreneurship field, our decisions around who to fund must be made in the context of the world our applicants operate in. While the data in social entrepreneurship gender representation is better than other male-dominated industries, there is still some ways to go to improve. As a seed-stage funder and one on-ramp into the social entrepreneurship space, we are cautiously optimistic by recent trends in our data.
Similar to observing for funding disparities, we also consider the composition of our applicant’s leadership teams with an emphasis on observing levels of female leadership in the pool.
This year we notice a trend towards parity between female and male applicants to our Fellowship. This trend is consistent across all of our Fellowships, but we observe less progress in the applicant pools for our Black Male Achievement and Climate Fellowships specifically. This year’s pool has the highest proportion of applications with one or more leaders who identify as female we’ve seen since 2012.
Taking into account individual applicants and partnerships, 49% of applications report at least one female leader. This is highest in our Global Fellowship, where 51% of applicants report female leadership, while the Climate and Black Male Achievement Fellowships each have 43% female leadership.
With observations like these and others in the field in hand, Echoing Green will continue our efforts to promote equity in the social entrepreneurship field, particularly promoting our applicants’ and Fellows’ good work and collaborating with our partners in the field to increase the funding options available to early-stage leaders.
We are excited to continue the dialogue about what we’re learning from our applicants and the global social entrepreneurship community. We look forward to sharing more insights informed in part by this data in the coming months. If you have questions or comments about our observations or their possible implications for the field or your work, leave them below!
This post was edited on 4/11/2018.