“If only we had the money…”
How many times have you heard that phrase during a nonprofit meeting? If only we had the money, we could launch this new program or service, upgrade our technology, or renovate our facility.
These types of initiatives are difficult to fund through the annual campaign, and grants can be difficult to secure. What your small nonprofit really needs in this case is a one-time infusion of capital. One of the more overlooked and misunderstood sources of such funding is an angel investor.
What Is an Angel Investor?
In the business world, an angel investor provides financial support to a startup because they believe in the product, the business model, and/or the people behind the company. Driven by return on investment, they typically provide funding in exchange for ownership equity or a percentage of profits.
In the small nonprofit world, an angel investor provides funding for a specific initiative. Angel investors often remain anonymous and are driven by passion for the mission and the potential impact of their gift.
The name “angel” investor conjures images of a donor who will appear out of thin air, blank check in hand, to unexpectedly fund a nonprofit’s new initiative. In reality, an angel investor is usually a major donor who can be approached strategically with a specific goal in mind.
What Angel Investors Want to Know
The key to appealing to an angel investor is understanding what’s most important to them and preparing accordingly. For example:
What challenge or problem will your new initiative solve? What’s the biggest priority? What’s the goal?
Is the initiative sustainable? In other words, how will your small nonprofit sustain positive change long after the investment has been made?
How can the impact be measured?
What’s the strategic plan for implementation and ongoing operation?
How will the new initiative be marketed?
Much like angel investors who support businesses, angel investors who support nonprofits seek transparency, accountability, and trustworthiness. They expect you to have the standard, foundational elements of a nonprofit in place, like your mission statement, business plan, fundraising strategy, donor database, etc.
They also tend to appreciate the entrepreneurial spirit in terms of bold, innovative ideas. Bring a realistic idea to an angel investor that will get them excited but is still realistic. Show how passionate and dedicated you are about fulfilling your organization’s mission!
Don’t Ask, Don’t Get
Most importantly, don’t be afraid to ask an angel investor for their support! Use the information in your donor database to find major donors who would be most likely to support your new initiative.
Be prepared to steward those relationships. Angel investor gifts don’t happen overnight, so engage and learn as much as possible. Tweak your approach if necessary to ensure you’re speaking directly to the passions and interests of the angel investor!
Remember, angel investors make things happen for small nonprofits in a big way. Research, prepare, plan, and ask. You may be surprised by how much support you receive!