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Lean Impact by Eric Ries, Ann Mei Chang

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Chapter ElevenFinancing Innovation

Maybe by now you’re convinced that Lean Impact is exactly what you need to radically increase your impact and scale, and thereby fulfill your social mission. Then the reality starts to sink in. How is this even possible? Everyone on your team is running flat out either trying to raise more money or deliver on the commitments that were made to secure the funds you already have. You’re not alone.

The structure and availability of funding is by far the greatest barrier to social innovation. Donors, governments, and investors all have their own ideas, strategies, and agendas. Whether they are right or wrong, they hold the purse strings, and thus power and influence over what gets done. Their desire for tangible results can be at odds with what is required for long‐term growth and impact. And, the divergent interests of trustees or constituents can drive funding priorities that are siloed, splintered, or otherwise misdirected.

Beyond the question of what gets funded is how initiatives get funded. In the private sector, investors perform due diligence on a company then place a bet in the form of debt or equity with few strings attached. If results are not delivered, any further funding may be withheld. But companies are otherwise given wide latitude to take risks, modify their products and services, and pivot based on what they learn. In contrast to investments, grants are often micromanaged – detailing activities, deliverables, “overhead” rates, ...

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