Most social ventures don't get stuck because of a bad idea. They get stuck because they started from the wrong end: a logo, a website and a registered nonprofit, before they checked exactly whom they are helping and whether it really works.
Since 2012 we at Alumot have established more than 60 social ventures across the country, and over 10 of them have gone on to independence as leading nonprofits in their fields. In this guide we have laid out the stages in the order they work in the field, from the first idea to a venture that is operating and growing.
What exactly is a social venture?
A social venture is an initiative whose main goal is to solve a social or environmental problem. It can operate as a nonprofit, as a social business or as a venture within an existing nonprofit, but its test is always the same: what has changed in the lives of the people it was meant to help.
A social venture does not have to start big. Many of the meaningful ventures in Israel began with one person who saw a need in their immediate surroundings, tried something small, and learned from the experience.
Stage 1: Start with the problem, not the solution
The natural tendency is to fall in love with the solution: an app, a workshop, a center. But a good venture starts with the problem. Try to put into one sentence who your target audience is and what problem you are solving for them. If that sentence is hard to write, that is the first thing to work on.
Three questions before you continue
- Whom does it help? Not "society" and not "everyone", but a specific person you can describe.
- What changes in their life if the venture happens? This is the question every donor and partner will ask later on.
- What already exists on the ground? Maybe someone is already doing this, and maybe it is better to join them than to start from scratch.
Stage 2: Test the idea in the field, on a small scale
You can test the most important question this week, for free: does what you are offering really help someone? You don't need a budget, a nonprofit or a website to test it.
- Talk to ten people from your target audience. Don't present them with a slide deck; ask and listen.
- Do once, on a small scale, what you dream of doing on a large scale: one meeting, one workshop, one connection between people.
- Write down what you learned: what worked, what surprised you, who asked to come again.
A small trial like this is called a pilot. A good pilot is limited in time, includes a small number of participants, and asks one clear question. We expanded on this in the article How to test a social idea without a budget.
Stage 3: Define what will count as success
From the very first pilot it is worth deciding what you will measure. It does not have to be complicated: how many people took part, how many came back a second time, and what they say has changed for them. These simple figures are the basis for every conversation with a donor, a foundation or a partner.
It helps to think of it as a chain: what you do (activity), what comes out of it right away (how many people, how many sessions), and what changes over time (employment, health, a sense of belonging). Foundations are interested mainly in the last link, so it is worth documenting it from the start.
Stage 4: Find people to think with
You don't have to set out on social entrepreneurship alone. Identify what knowledge is missing, and fill it with people: team partners, volunteers, organizations already working with the same audience, and mentors who have already been down this road.
At Alumot, mentoring is provided by volunteers with experience in social entrepreneurship and business development. They bring knowledge, questions and connections to the table, and work with the entrepreneurs on what needs to happen now.
It is also worth thinking about cross-sector partnerships: a local authority that knows the audience, a business that can contribute knowledge or space, another organization that complements what you do. A good partnership saves years of building from scratch.
Stage 5: Choose a structure that fits the venture
At some point the venture needs an organizational home: someone to receive the money, sign agreements and insure the activity. There are several ways to do this, and each has its advantages and its costs.
- Founding a new nonprofit: full independence, but also a board, reporting to the Registrar of Nonprofits and ongoing management. A Section 46 approval, which allows donors to receive a tax credit, is granted only to an institution that is already operating, so it takes time.
- A public benefit company (chalatz): a framework similar to a nonprofit in the structure of a company, suited mainly to larger bodies.
- A social business: suits a venture that can earn income from selling a product or service. A business cannot receive tax-deductible donations.
- A venture within an existing nonprofit: the venture receives a ready-made organizational, financial and legal infrastructure, and can start operating and fundraising from the very beginning.
There is no single right answer. A venture that is still testing itself will usually benefit from an existing framework, while a venture that has grown and is established can consider independence. We expanded on the benefit for donors in the article Section 46: everything you need to know about tax-deductible donations in Israel.
Stage 6: Raise your first money
The first money almost always comes from close by: friends, family, community, people who saw the pilot. Only later do the larger players arrive. These are the main sources:
- Donations from private individuals, usually from your inner circle and then from the next circle out.
- Crowdfunding, which is especially suitable when there is a clear story and an audience that knows the venture.
- Philanthropic foundations, which look for ventures with first results and a clear plan.
- Calls for proposals from government ministries, local authorities and foundations.
- Partnerships with businesses, in money, knowledge or services.
- Earned income, when the venture sells a product or service.
Before every approach it is worth preparing a project card: one page that explains what the problem is, what you do, what you have already achieved, and how much money you need and why. And one question will come up at almost every meeting with a donor: is the donation tax-deductible?
Stage 7: Expand what works
When the pilot works, the temptation to grow fast arrives. But not everything that worked on a small scale will work on a large scale. Before expanding it is worth writing down the model: what exactly you do, who does it, how much it costs per participant, and what must happen for it to work in another city or with another team as well.
This is also the stage at which you build the long-term business model: where the money will come from in the third and fifth years, and not only in the first year. And that is exactly the conversation worth having with an experienced mentor.
Five common mistakes social entrepreneurs make
- Waiting. For a budget, for a nonprofit, for a logo. Most of the important things can be tested without any of these.
- Founding a nonprofit before testing the idea. It takes time and energy, and sometimes it turns out the idea needs to change.
- Trying to solve everything. A venture that helps everyone usually doesn't truly help anyone. A defined audience and one problem are better.
- Working alone. Entrepreneurs who find people to think with early on move faster and make fewer mistakes.
- Not documenting. Without data from the field it is very hard to raise money and convince partners.
How can Alumot help?
Alumot is the home for social startups. We accept entrepreneurs from the idea stage, with no need for prior fundraising or proof of feasibility, as well as ventures that are already operating and looking for an organizational home.
The venture is established inside Alumot and receives a full framework: financial management, receiving tax-deductible donations in Israel and abroad, insurance, basic legal advice, professional mentoring and a community of entrepreneurs. That way the entrepreneurs focus on the venture and on social change, not on bureaucracy. You can read all the details and the admission process on the I Have a Venture page.
Frequently asked questions
Do you need money to start a social venture?
Not at the first stage. Conversations with your target audience, a small pilot and documenting what you learned cost almost nothing, and they are what will enable you to raise money later on.
Do you have to found a nonprofit?
No. You can operate as a social business, or establish the venture within an existing nonprofit. At Alumot, for example, the venture is established inside the nonprofit and receives all of its infrastructure with no need to found a nonprofit.
How long does it take to start a social venture?
It depends on the venture. You can start a first pilot within weeks. Founding a new nonprofit and obtaining its approvals takes much longer, which is why many ventures start within an existing framework.
What is the difference between a social venture and a social startup?
The terms overlap to a large extent. When people say social startup, they usually mean a venture with an innovative solution, sometimes a technological one, that aims to grow and reach many people. In both cases the goal is social change.
Can you approach Alumot when you only have an idea?
Yes. Alumot accepts entrepreneurs at early stages too, even before a pilot, subject to the recommendation of the nonprofit's CEO. Even an idea that doesn't have a name yet is a beginning.
Have an idea and want to think it through together? Tell us about your venture.