Key Term

What is Seed Funding?

Definition

Seed funding in charitable giving refers to initial financial support provided to new nonprofit organizations, social enterprises, or charitable initiatives to help them launch and establish their operations. This early-stage funding typically comes from foundations, philanthropists, or impact investors who believe in the organization's mission and want to help it grow from concept to reality.

Significance

Seed funding plays a crucial role in the charitable sector by enabling innovative solutions to social problems to take root and develop. Without this initial capital, many promising nonprofit organizations would never get off the ground. For donors, providing seed funding represents an opportunity to catalyze significant social change by supporting organizations at their earliest and often most critical stage. However, seed funding also carries higher risks since these organizations lack track records, making it essential for donors to carefully evaluate the potential impact and sustainability of their investments.