It has been nearly a year since we launched the TechSoup Growth Capital Campaign to scale and transform the resources and services we offer. We seek to expand the largest network of civil society organizations in the world, deepen our support to those we've served for decades, and nearly double the number of NGOs we serve.
We recognized a problem that needed solving. The 1.1 million civil society organizations we serve in the TechSoup Global Network, who know best what their communities need, struggle to access the technology and services they need in an increasingly digital world. As the challenges before them grow, digital transformation is not an option, it's a requirement.
We put together a strategic plan to work together as a connective bridge, linking civil society organizations to resources that can help them serve their communities more effectively. And we realized that we would need $11.5 million in investment capital to execute that plan.
In the first year of the campaign, we've raised over $8 million, 70 percent of our three-year goal. Investments in this campaign came from diverse sources and vehicles, from corporate partners like Microsoft and VMware, to leading impact investors like Nonprofit Finance Fund. Most meaningfully, we're thrilled that many of our early investors have been members of the nonprofit community we serve, who have decided to invest in TechSoup and our potential to grow together.
One component of the Growth Capital Campaign is our debt securities offering, our direct public offering, or DPO. The DPO is a community investment campaign embodying our belief that TechSoup should be financed by people and entities of all economic backgrounds who want to support our mission and help create an innovative, sustainable, and community‐funded approach to TechSoup's next level of growth. The DPO enables us to accept impact investments not just from wealthy individuals and philanthropic funders, but also from individuals and smaller organizations in our community with investment minimums as low as $50.
Our DPO is the first time the Securities and Exchange Commission has qualified a nonprofit to raise funds through a Reg A+ Tier 2 offering, which allows us to reach out to our stakeholders in all 50 states.
Some Things We've Learned
In 11 months, we've blazed new trails and tested new ways to raise growth capital. We've learned a lot along the way, and we're eager to share these lessons with you.
Be Prepared: It's a Long Road
Raising $11.5 million in impact investment is not a small undertaking for a nonprofit social enterprise like TechSoup. Our team spent close to two years researching, planning, and adjusting the campaign before finally launching it in November 2018. There were several challenges along the way that took some hard work to overcome. We're enabling virtually anyone to participate in our DPO by investing as little as $50, which required some creative thinking with advisors to figure out.
Focus on the Future
Throughout the campaign — from concept to implementation — TechSoup has benefited from strong executive and board leadership that articulated a clear and long-term vision for TechSoup. If you are entering uncharted territory, as we were with the DPO, it's critical to have that vision. For example, our decision to enable people to invest in the TechSoup DPO for as little as $50 was questioned by some who told us that offering minimums of less than $1,000 wasn't realistic. But with a clear focus on the future, we saw an opportunity to engage our stakeholders as investors — and have them invest side-by-side with TechSoup and civil society organizations everywhere to build our collective future. That decision has reaped incredible dividends by building community and strengthening relationships across the TechSoup network.
Partner with Experts
As a nonprofit social enterprise, TechSoup is an expert in connecting NGOs from around the world with technology and technical support. We're not experts in securities regulation or operating a crowdfunded investment campaign. We were fortunate early on to find terrific partners and professional advisors to help us think through and implement our strategy. Cutting Edge Capital guided us through the complexities of securities law and capital raise strategies for social enterprises. We also partnered with SVX and their online impact investing marketplace to help us automate the investment process and keep transaction costs down.
There Is No "One Size Fits All"
The strategy we chose for our Growth Capital Campaign and DPO was a good fit for TechSoup, but it wouldn't be the right fit for all nonprofits. Doing an impact investment–oriented campaign based on debt financing made sense for us. In part this was because we have an earned income strategy that allows us to grow revenue and increase operating efficiencies at the same time that we grow our social impact. That makes it possible for us to repay our investors over time with interest.
Even among crowdfunded investment campaigns, there are several different regulatory approaches. Which one you choose depends on how much capital you want to raise, whether you want to do a local or national campaign, and whether you want to reach out to stakeholders of all economic backgrounds, not just wealthy accredited investors. We chose a national campaign across all 50 states, which makes sense because we have stakeholders across the country. (Securities regulation makes it expensive and complicated to do a crowdfunded investment campaign that includes investors outside the U.S. Our international stakeholders will benefit from the campaign, as we deepen and widen the reach of what we offer nonprofits. But the Reg A+/ Tier 2 structure limits our outreach to those in the U.S. and Canada only.)
We also chose to make our offering available to all our stakeholders, not just wealthy individuals. We decided to make it easier for everyone to participate by creating entry points for investment that start at just $50, with returns that increase from 2 to 5 percent as investments rise to upward of $2,500 and $50,000. These were important priorities for TechSoup. But the approach we chose also increased the degree of difficulty and required that our offering be regulated by the SEC.
Create a Constant Feedback Loop
When our campaign was just a seed of an idea, we spent a lot of time speaking to colleagues, building networks of expertise, and seeking feedback early, often, and continually. This constant feedback has helped us surmount obstacles and create new opportunities. Our early investors have opened our eyes to the importance of investor education. It's not intuitive to most people what it means to invest in a nonprofit, and it takes a lot of education and communication to help people understand.
It's an Investment
We're constantly testing and learning ways to bring new stakeholders to our campaign, while at the same time ensuring that we maintain our mission, our focus, and consideration of all stakeholders. But we haven't lost sight of the central fact that stakeholders are investing in TechSoup's future. So the more information we can share with the investors, the more comfortable they will be.
Investors want to know how the funds we are raising will be used. We are sharing that we are investing in a cooperative technology platform, enabling corporate philanthropy in more locations around the world through validation services, and strengthening the reach of the largest civil society network in the world, the TechSoup Global Network. Whether it's these or other, long-term, strategic initiatives, stakeholders want to know how their investment will support TechSoup's growth and strengthen changemakers and civil society organizations around the world.
We Are Still Learning
We're eager to grow the number of TechSoup stakeholders who participate in our Growth Capital Campaign. We'd love for everyone to participate who has an interest in seeing civil society organizations grow their capacity to serve their communities and accomplish their missions with the help of technology. If you love what we do, join the movement. If you can help us engage your communities and networks, we'd love to connect.
There is so much more to share when it comes to what we're learning through our campaign. If this post whets your appetite for more, please join us at SOCAP on October 24, where we will lead a panel discussion, "From Stakeholders to Investors," on the campaign. Or join us November 12 for a special webinar on this topic, focused on helping nonprofits understand if impact investing makes sense as part of their diversification and fundraising strategy. The webinar will be co-hosted by TechSoup and Kiva.