Securing funding for shared kitchens and kitchen incubators can be a complex and ever-changing process, as economic cycles and shifting priorities in both government and private grantmaking influence the landscape. For kitchen operators, finding the right combination of funding sources is critical to ensuring not only the development of their facilities but also their long-term financial sustainability. This chapter explores a broad range of funding opportunities, from traditional loans and mission-driven investment funds to grants, community donations, and corporate sponsorships.
As the shared kitchen model gains wider recognition, many funding avenues have opened up to support these ventures. However, nearly half of shared kitchens surveyed in 2023 reported that they did not receive external grants, donations, or tax credit funding. Those that did largely relied on state, federal, and foundation grants, while others benefited from in-kind contributions and tax credits. In this chapter, you’ll learn about the various types of funding available, such as impact-driven grants for food systems, capital funds for economic development, and tax credits like New Market Tax Credits.
In this chapter, you’ll learn about the various types of funding available, such as impact-driven grants for food systems, capital funds for economic development, and tax credits like New Market Tax Credits. By understanding the different funding sources, their eligibility requirements, and how to tailor your kitchen’s mission to align with funding priorities, you’ll be better equipped to identify and pursue the right opportunities for your project. Whether you’re seeking capital for facility construction, operating support, or program development, this chapter will guide you through the strategies and resources needed to build a solid financial foundation for your shared kitchen.
Evaluating Funding Options
The specific sources you are eligible for will vary depending on your project’s mission and impact focus, the community where it will be located, and your personal and business financial circumstances. The latest edition of Michigan State University’s funding guide, Funding Sources For Food-Related Businesses, will help you further explore the various types of funding you may be eligible for. When evaluating potential funding programs, be careful not to let the funding priorities and requests for applications (RFAs) dictate your project and programs. Avoid chasing funding that causes you to expand your scope beyond what you can effectively manage.
Funding sources will also impact your cash flow differently depending on how they are dispersed. For example, many grants, particularly federal and state grants, work on a reimbursement basis. This means you will use your own capital first and then invoice the payments against the grant funds. This requires you to have cash flows upfront, and there is often a lag time before receiving payments through the funding office. Additionally, grants may require matching funds equal to a percentage of the grant amount.
All funding sources take time to cultivate, are competitive, and come with trade-offs. Ensure you understand your funding and reporting obligations and carefully consider the trade-offs between potential funding sources. In general, there is no such thing as free money. Whether you are cultivating private
donor relationships, fulfilling grant reporting obligations, or paying interest on a loan, be prepared to invest time and/or money to address and inform the funder’s expected outcomes and impacts in exchange for the capital you receive.
Impact Funding
If your project is a for-profit aimed at earning a return for the owners, your access to grant funds may be limited since many grants require that the organization have IRS 501c3 nonprofit status. However, do not be discouraged if you are considering a for-profit model; there are public and private funds that provide grants regardless of entity structure.
Whether seeking mission-driven investments or grants, funders will care about your social, economic, and/or environmental outcomes. Impact measurement is something grant funders will weigh heavily when deciding on your project. Review the Business Model Design chapter for further guidance about entity structures, clarifying your goals, and tracking your impact.
Mission-related funding for shared kitchens and food incubators comes from many sources, reflecting the wide range of positive impacts a kitchen can have on a community. Not every program will likely achieve all the potential outcomes listed below, nor be eligible for all the funding types, as discussed in the Business Model Design chapter. Look for funding programs that are closely aligned with your purpose. The most common sources of impact funding fall into a few main impact areas:
Grants
Foundation Grants
Many private and community foundations offer grants to support food systems work. Some are national, and others operate at the state or community level. Your local community foundation(s) and the family foundations they represent are a good place to start your search since they are focused on serving your community and may be more open to funding emerging nonprofits and new initiatives. Large corporations based in your area can also be a source of grants if they have corporate foundations or corporate giving campaigns focused on your region or impact area. Some foundations give grants on an invitation-only basis, meaning they do not accept grant applications from organizations they have not already reached out to as potential grantees. Networking and publicizing your work and its impact will help you connect with these funders in the future.
Grantmakers that fund food systems, community economic development, equitable development, asset
building, and entrepreneurial programs are numerous and constantly changing. To find current grants,
consult the following lists and directories:
- Search Candid, the Foundation Center’s comprehensive database of grants. Paid plans include background information about grantmakers and tools for organizing your grant prospects and proposals.
- Search for members of Sustainable Agriculture and Food Systems Funders (SAFSF).
- Review the list of funders on the North American Food Systems Network (NAFSN) website.
- Explore the Food Funder Directory by the Community Food Funders.
- If your project focuses on building opportunities for people with limited financial resources, research the foundations listed in the Asset Funder Network directory of members.
- If your project aims to contribute to community prosperity and sustainable development, you may find grantmaker prospects among the Funder’s Network members.
“It’s been extremely helpful for us to connect to resources and build relationships to find grants, such as online grant databases and local convening organizations. The Sacramento Promise Zone has been a wonderful resource for us. Some federal grants have staff members whose sole job is to work with potential grantees and help them refine their proposals. Take advantage of these resources! We had ongoing conversations with our regional EDA [U.S. Economic Development Administration – EDA] representative for six years before finally applying for and receiving a large grant. Building that relationship was instrumental in crafting our successful proposal.
We have been most successful with larger grants when we have applied with a coalition as part of a broader project. This does require splitting the funds, but I think grantors look more favorably on projects that have multiple partnerships.
As a nearly entirely grant-funded program, it’s important to look for a variety of different grants (foundations, local, state, and federal). We have always used a patchwork of different grant funding to support our program. I would love to get one grant to fully fund all our operations, but unfortunately, this is not a realistic expectation.
When applying for grant funding, it’s important to consider how you will collect reporting data and make this clear in your applications. We recently had a grant that, in addition to providing program support, required setting aside funding to work with an evaluation consultant who helped us refine our data collection processes. I believe this has helped us get other grants as we’ve been able to clearly explain how we will evaluate progress and show a track record of this.”
Jacob Sacks – Alchemist Kitchen
Learn more about how Alchemist Kitchen leveraged different funding sources in the Alchemist Kitchen Case Study.
Federal Grants and Tax Credits
Federal grants that may fund shared kitchen and incubator projects are generally administered by either the USDA or the U.S. Economic Development Administration (EDA), which is housed in the DOC. HUD and DHHS also have programs that may be potential sources of support for shared kitchen projects and programs. You can search for federal grants on the grants.gov website using keywords, eligible entities, agencies, and categories.
Federal grants are generally awarded competitively and involve a lengthy application process. They have specific eligibility criteria about who can apply and for what purpose, which varies from program to program, even within the same agency. Thoroughly research the grant on the grants.gov website and use webinars, FAQs, or staff contacts to help you understand the application process.
Tips for applying for federal grants:
- Leave plenty of time to register in the grants.gov system, obtain letters of support, and submit all necessary paperwork.
- Cultivate solid references and seek partnership and collaboration opportunities to strengthen your project and application.
- Solicit feedback on your proposal from those knowledgeable about the specific grant and grants in general, such as previous grant recipients and local nonprofit support organizations.
- Take time to understand the capacity needed for grant reporting and plan ahead for how you will track and report information to the grant office.
USDA Grants
The USDA has been the primary source of federal funding for shared kitchen projects. Several food incubators, shared kitchens, food hubs, and other related programs across the country have received funding from the USDA. There are several programs that kitchens may qualify for. However, the programs, available funding, and eligibility requirements can change, so you must verify the information provided. The USDA website has the most up-to-date and comprehensive information, but navigating it can be challenging. The USDA Local and Regional Food Systems Resource Guide provides overviews of USDA funding programs to help you identify grant possibilities. Again, since grants can change or be discontinued, always check the USDA website for the latest information on availability and application deadlines.
After researching potential grants, look for informational webinars, local information sessions, or representatives you can contact for further information. Check with your Food Business Resource Center (FBRC) and other state and local food and agriculture groups for additional information and training on USDA grant programs. Be sure you understand any match and reporting requirements to ensure you have the resources needed to fulfill your grant obligations.
Regional Food Business Centers
In 2023, USDA launched a new initiative that may provide additional funding opportunities well aligned with shared kitchens and food incubators. Through cooperative agreements with food systems institutions and organizations, twelve new RFBCs were established to support food and farm producers by providing localized assistance to access local and regional supply chains, including linking producers to wholesalers and distributors. These centers provide technical assistance needed to access new markets; access federal,
state, and local resources; and assist small- and midsized producers in overcoming barriers to market access, focusing on underserved farmers, ranchers, and food businesses.
USDA RFBCs have three main responsibilities:
- Coordination – The RFBCs act as regional hubs coordinating across geographic areas with USDA, other federal, state, and Tribal agencies with relevant resources, regional commissions, stakeholders, and the other Regional Food Centers. They engage with stakeholders and partners to develop and implement strategic and funding plans for serving the region through technical assistance and capacity building, emphasizing outreach to underserved communities and businesses.
- Technical Assistance – The RFBCs provide direct business technical assistance to small- and midsized food and farm businesses (producers, processors, aggregators, distributors, and other businesses within the food supply chain) and food value and supply chain coordination. Each RFBC will identify priority areas for postfarmgate technical assistance (e.g., aggregation/ distribution, specialty crop processing for institutions) for its region.
- Capacity Building – The RFBCs will begin to provide financial assistance through Business Builder grants of up to $100,000 to support projects focused on regional needs and businesses that are working towards expansion and other investments (with current support expected to be offered through 2028). Business Builder grants support farm and food businesses to strengthen business viability and overcome barriers to market access and expansion within their region. These grants may support staff time; business planning activities; business support software purchase, adoption, and implementation; value chain coordination activities and pilots; and other associated expenses as outlined in the RFA.
While the Business Builder grants are critical components for all 12 RFBCs, each Center takes a slightly different approach to how businesses can apply for a grant and how those grants will be disbursed (highlighted on their websites). In addition, each RFBC offers technical assistance that may help food and farm businesses with development and expansion. Therefore, it is crucial to connect with each Center directly about what funding and technical assistance are available and how to best proceed. Businesses interested in applying should directly contact the organization leading the Center for their region, subscribe to the newsletter (if available), and follow the Center in your region via their website. You can find an RFBC contact list and a map demonstrating the regional coverage of each RFBC on the USDA website found in the References.
Longstanding USDA Grants for Shared Kitchens
The USDA programs that have most commonly funded commercial kitchens, incubators, food hubs, and related business development projects (as of the date of this publication) are the Local Food Promotion Program (LFPP), the Farmers Market Promotion Program (FMPP), Rural Development programs such as Rural Business Development, and Community Food Program grants.
Each grant program, with its own unique eligibility criteria, offers a level of flexibility that allows different entity types, including nonprofit, producer, university, etc., to apply. Some even directly welcome forprofit businesses, farms, and producer cooperatives, in addition to nonprofit and public entities, giving you the power to choose the best funding option for your food-related business. It is worth mentioning that each of the following programs offers “planning” and “implementation” stage grants to assist with the programmatic phases one might encounter.
- Local Food Promotion Program (LFPP). The LFPP program provides funding for the development and expansion of local food enterprises and infrastructure, including shared kitchens and incubators. It offers planning grants that are commonly used for feasibility studies, needs assessments, and business plan development, as well as implementation grants for developing facilities. These grants have a matching funds requirement. USDA’s list of recently funded LFPP grants provides a picture of the projects they focus on.
- CitySeed Shared-Use Kitchen and Incubator in New Haven, CT, received funding in 2023 to support staff and systems to support entrepreneurial training, programming, and sharedkitchen access.
- Farmers Market Promotion Program (FMPP). FMPP funding is focused on marketing and promotional activities, capacity building, training, education, and technical assistance.
- In 2023, Reunity Resources in Santa Fe, NM, was awarded capacity-building funds to leverage its fully equipped commercial kitchen and expand its value-added products for its farm stands into a year-round enterprise.
- Rural Development Loan and Grant Assistance. The Rural Development Department offers numerous grants for economic, community, and business development in areas with populations below 50,000 that are not contiguous to an urban area. Some of the most common ones are Rural Business Development (formerly Rural Enterprise Development) grants, Rural Microentrepreneur Assistance Programs, Community Facilities, and Value-Added Producer programs.
- Brookings Kitchen in Brookings, SD, received a Rural Business Development Grant to create a kitchen and implement technical assistance to support local entrepreneurs.
- Community Food Projects Competitive Grant Program (CFPCGP): Administered by the USDA’s National Institute of Food and Agriculture (NIFA), supports initiatives that address food and nutrition security in low-income communities by enhancing local food systems and promoting self-reliance. This program offers three types of grants, including Community Food Projects (CFP) for innovative long-term solutions to food and nutrition security and Planning Projects (PP), which complete project plans toward improving community food security. The program also funds Training and Technical Assistance (T&TA). The program aims to improve food access, support local food markets, and boost community self-reliance by fostering partnerships and addressing the unique food needs of various communities.
- Through its Ashland Community Kitchen Initiative, Mandela Marketplace Inc. was awarded $353,000 to support limited-resource food entrepreneurs and create food access points in unincorporated Alameda County, CA.
Department of Commerce/Economic Development Administration
The Economic Development Administration (EDA) is an agency within the Commerce Department. It funds projects that stimulate economic growth, improve competitiveness, invest in distressed communities, and create jobs. The EDA has a track record of funding incubators in all different sectors, from technology to biotech to manufacturing. The EDA’s list of funded projects provides an overview of their interests. EDA accepts applications from several different types of entities but may require projects to be developed in coordination with public agencies. See the grant requirements for further details. It’s important to note that grants generally require cost-sharing or matching funds.
- The West Community Economic Development Corporation in Denver, CO, was awarded $1.8 million to support the expansion of the Kitchen Network Park Hill incubator.
EDA grants are generally awarded throughout the year. However, applications often exceed funding allocations, so applying at the beginning of their cycle will give you the best chance of being awarded funds. EDA grants require coordination with your local economic development agency, so you will want to contact them early in the process to understand their eligibility and application requirements. Check the EDA website and grants.gov for current offerings.
Three primary EDA programs may fund incubator kitchen projects:
- Public Works Program: “EDA’s Public Works program helps distressed communities revitalize, expand, and upgrade their physical infrastructure. This program enables communities to attract new industry; encourage business expansion; diversify local economies; and generate or retain long-term, private-sector jobs and investment through the acquisition or development of land and infrastructure improvements needed for the successful establishment or expansion of industrial or commercial enterprises.”
- Planning and Local Technical Assistance Programs: These programs assist the development of economic development plans and studies “designed to build capacity and guide the economic prosperity and resiliency of an area or region,” with a focus on the creation and retention of highquality jobs.
- Economic Adjustment Program: “Assists state and local interests in designing and implementing strategies to adjust or bring about change to an economy. The program focuses on areas that have experienced or are under threat of serious structural damage to the underlying economic base.”
Additional Federal Funding
Projects may be eligible for funding from other federal agencies, depending on the target population, the partnerships involved, the project, and anticipated outcomes. The project may also qualify for funding from other agencies if the kitchen is a component of a larger project, such as a neighborhood redevelopment project, a multi-use building, or a healthy food access effort. HUD and DHHS are two of the main sources of this kind of funding.
Housing and Urban Development
While HUD does not have any programs tailored specifically to shared kitchens and food incubators, kitchen projects have received support from HUD as part of larger revitalization and affordable housing efforts. Examples of HUD funding that has been leveraged for kitchen projects include:
- Shared kitchens included in affordable housing mixed-use projects that receive funding from HUD
- Kitchens planned as part of Choice Neighborhoods projects
A collaboration that allows your kitchen to be embedded in a larger project can create synergies that reduce costs and expand the potential impacts to more stakeholders, thereby making both efforts more competitive for these grants. To cultivate these opportunities, you will want to build relationships with organizations and agencies involved in redevelopment or development projects in your area. Building these relationships and aligning your project goals can take time.
The first step is to get to know your area’s existing and planned revitalization projects. Research any special designations your community or preferred neighborhood has, such as Promise Zones and Choice Neighborhoods, and get to know the organizations involved. Read your community’s economic development, community development, and comprehensive plans to see if they include incubators or local food in their visions and goals. Reach out to organizations and agencies that share your goals and become involved in revitalization efforts that align with your kitchen’s vision. This engagement will lay the foundation for collaboration and open doors for public-private partnerships that can leverage funding.
Health and Human Services
Kitchens are sometimes eligible for health-related funding when included in larger healthy community initiatives and healthy food access efforts. Projects increasing jobs for low-income people may be eligible for DHHS Office of Community Services Community Economic Development (CED) grants. The CED office also collaborates with the Department of Treasury and USDA to administer the Healthy Food Financing Initiative (HFFI), which has funded investments in local food retail in underserved areas across the country. Examples include a hybrid retail, accelerator, and revolving loan project by Mandela Marketplace in West Oakland, CA, and Eastern Market Corporation’s Farm to Freezer project and food incubator program.
Tax Credits
Tax credits are incentives designed to promote community investments by providing credits on federal and state taxes. The programs likely to be the most accessible to food-related projects are New Markets Tax Credits and Enterprise Zones. Like all federal and state programs, these programs and their available funding are subject to change over time. Consult the program websites for the most up-to-date information.
New Market Tax Credits
New Market Tax Credits (NMTC) aim to stimulate investment in areas with high poverty. “The NMTC program attracts capital to low-income communities by providing private investors with a federal tax credit for investments made in businesses or economic development projects located in some of the most distressed communities in the nation—census tracts where the individual poverty rate is at least 20% or where median family income does not exceed 80% of the area median.” To access NMTC, first identify your local community development financial institution (CDFI), a NMTC program allocatee, by using the map on their website. Use the search feature to find CDFIs in your community. CDFIs are mission-driven financial institutions that have been certified by the U.S. Department of the Treasury’s CDFI Fund to support underserved communities. They are discussed in more detail in the Mission-Driven Lenders section below.
- The Hatchery Chicago, a food business incubator in Chicago, IL, received one-third of its funds in NMTC for the construction of its $34 million, 67,000-square-foot kitchen incubator. The facility includes 54 private rental spaces, a shared kitchen, storage, a warehouse, and office facilities. It also hosts numerous services and events for food businesses, serving as a hub for Chicago’s food business community.
- Amped Kitchens, based in Los Angeles, CA, was funded through a combination of private investment and financing from BlueHub Capital, which provided $7.5 million in NMTC financing. This funding enabled Amped Kitchens to transform underutilized industrial buildings in Los Angeles and Chicago into shared kitchen spaces for food businesses. The NMTC financing helped cover the costs of building renovations, facility upgrades, and equipment, allowing Amped Kitchens to offer affordable, state-of-the-art production spaces to growing food businesses while supporting local job creation.
Enterprise Zones
Generally, Enterprise Zones offer tax incentives and credits to businesses located in an impoverished, distressed, or blighted area designated as an Enterprise Zone by the state. The programs vary by state, and not all states offer them or may refer to them by another name. Enterprise Zones can offer a variety of credits and exemptions from state business, sales, and utility taxes and may offer other incentives.
Credits may be offered for different purposes, such as job training, job creation, and rehabilitation of
vacant properties. For example, Colorado’s Enterprise Zone Vacant Commercial Building Rehabilitation
Tax Credit allows a business to earn a state income tax credit for 25% of rehabilitation costs (up to
program limits) for the rehabilitation of a commercial building that is at least 20 years old and has been
vacant for at least two years.
Loans and Debt Capital
There are several different sources of debt financing that you can consider for funding your capital and start-up expenses. Traditional banks and credit unions may be an option depending on your organization type, your business’s financial circumstances, and the personal collateral you can provide. In addition to conventional business loans, other less commonly known lenders are mission-driven and may offer competitive loans for projects, especially those that fall outside traditional lending standards. These include CDFIs, revolving loan funds, and community-based and microfinance lenders. Crowdfunded loans, such as KIVA US, are also a potential source of community-based, no-interest loans.
Mission-Driven Lenders
Growing awareness of the importance of local food systems and healthy food access has spurred the development of food-focused financing funds at the state and regional levels. These are administered by various types of financing institutions, from foundations with revolving loan funds to community-based lending funds to CDFIs focused on underserved markets.
As discussed previously, community development financial institutions (CDFIs) are mission-driven financial institutions that take a market-based approach to supporting economically disadvantaged communities. CDFIs include credit unions, banks, loan funds, and venture capital funds that operate with a primary mission of serving low-income communities. CDFIs take many forms and are sometimes embedded in another organization. You likely have a business or commercial lender in your area that you might not have realized was a CDFI. The database listings by state on the cdfifund.gov website can help you find participating banks, credit unions, and lending programs in your area.
The number of CDFIs, their lending focus, and their requirements vary from state to state. Around the country, CDFIs have funded projects from expanding retail in food deserts to scaling local food production distribution. The Treasury Department has funded some of these through the CDFI Fund Healthy Food Financing Initiative, which provides funding to CDFIs that invest in businesses that offer healthy food options. An example of a CDFI program with a food focus is the Colorado Enterprise Fund’s Healthy Food Financing Initiative, which offers loans for up to 10 years with flexible underwriting to finance businesses that provide fresh, nutritious, and affordable food options in food deserts to increase access to nutritious food. To find your local CDFIs, search online for opportunities in your state or region.
RSF Social Finance is a mission-driven lender that offers a variety of loan types to meet the needs of established social enterprises and nonprofit organizations. Their lending focuses on sustainable agriculture and food systems, including healthy food access, equitable food systems, and regenerative agriculture. They also lend to workforce development and climate and environment projects, including renewable energy.
Microfinance/Microenterprise Lenders
Microfinance lenders, specializing in small loans for startup and growing businesses, may be an additional funding source if your capital needs are limited. Eligibility requirements vary but generally focus on lowincome, minority, and underserved businesses. They may be listed as microfinance organizations, or the funding may be a service offered by microenterprise organizations (which provide assistance and education to small, underserved businesses). Accion Opportunity Fund is an established microenterprise lender with offices nationwide that provides loans for food industry projects and businesses.
Private Lenders
Family and friends are often an initial source of funding for businesses, including for-profit shared kitchen projects. Mission-driven private investors, such as Slow Money members, may offer loans and equity investments in enterprises involved in sustainable food systems. Sellers and landlords in real estate transactions may also be willing to finance some of your real estate and capital costs.
There are several ways to structure these arrangements, so it is best to seek advice from a lawyer, accountant, and/or business advisor to understand your options. Be sure to record the terms of funding in writing and consider getting a lawyer to review your documents. These recommendations apply even when receiving funds from your closest supporters, family, or friends. Formalizing your agreement terms provides clarity for all parties and serves as a point of reference if questions or problems arise. Additionally, having a pitch deck, pro forma, and your business books buttoned up will be critical to starting a conversation about funding.
Commercial Lenders
Private and nonprofit kitchen businesses may wish to seek financing from traditional business lenders, such as commercial banks, in the form of business loans, mortgages, construction loans, lines of credit, and equipment financing.
Small Business Administration Loans
The Small Business Administration (SBA) has several different loan programs, including microloans, loans for new and expanding businesses, disaster loans, and real estate and equipment loans. These loans are issued by participating lenders, such as banks, and guaranteed by the SBA. For further information about the types and eligibility requirements, check out the SBA website or an approved lender.
Not all shared kitchens will be eligible for SBA loans, particularly if the bank views the kitchen as a passive income business based solely on rentals. To qualify, you may have to prove that you work in the kitchen and play an active role in the business. Additionally, some shared kitchens have had difficulty getting loans for the kitchen buildout or tenant improvements, especially when they do not own the property.
Various online resources and business advisors, such as the SBA’s Small Business Development Centers (SBDCs), can assist you in understanding the terms of SBA loans, how to prepare an application, and whether collateral is likely to be required. When considering a loan, investigate the interest rate carefully to ensure you understand the terms and any potential rate increases that may occur over time.
If you are starting a new business, your personal credit rating and personal assets may be factored into the lender’s underwriting decision. If you only need a small loan or have circumstances that make it hard to obtain a traditional loan, look into local microfinance agencies as well.
Venture Capital and Angel Investors
A growing industry of mission-driven investors is opening up opportunities for for-profit kitchens and related food companies. Investors and investment funds generally provide capital to a company in exchange for a stake in the company; however, some mission-driven funds also offer debt, equity, flexible capital, and grant funding.
If your kitchen demonstrates strong profitability or expansion potential, it can attract the interest of conventional investors who are focused exclusively on the bottom line. Real estate developers and investors looking to build their portfolios in your market could also be potential partners. To access this type of funding, you must provide documentation exhibiting a strong return on investment, solid unit economics, and repeatable operational management.
Mission-driven investors are distinguished from conventional investors by their interest in getting an impact return and a financial return on their investment. This is sometimes called a double (social and financial) or triple (social, financial, and environmental) bottom-line investing approach. Some missiondriven investors are also more “patient” in their investing approach, meaning they are willing to wait longer to see their financial return on projects. Regardless of their impact goals, investors are looking for a return on their investment, so your project must generate sufficient profits to provide a return (or make debt payments in the case of loans) to be attractive to investors. According to the 2023 Shared Kitchen Operator Survey , most shared kitchens either break even (42%) or make money (37%), while a smaller proportion report losing money (20%).
Investor networks and angel groups make it easier for food and community development projects to gain exposure to potential investors. Many of these groups are networks of individual investors that make independent investments in companies based on pitches. Accredited investors who provide capital to startups are often called “angel investors.” Always ask angel investors what and when the last few investments they made were to get an idea of the types of projects or companies they invest in and their current level of available capital. It is common to find individuals who say they invest but rarely write checks. Knowing this early on can save you time and heartache.
There are also venture capital funds that make equity investments in companies. For example, the Foodshed Investors has an explicit mission to enable mission-driven, for- and nonprofit entrepreneurs to create healthy, nutritious, and accessible food; build robust regional food systems, particularly for the benefit of underserved communities; reinvigorate rural economies via sustainable agriculture and quality jobs; and make progress toward a stable climate, healthy soil, and humanely treated animals.
Examples of mission-driven investor networks include Slow Money, a national organization with regional chapters made up of individual accredited investors focused on sustainable agriculture, and the Community Development Venture Capital Alliance, a network of Community Development Venture Capital Funds.
Your community may also have social impact accelerators and local investment pitch events that put your project in front of potential investors. Consider attending a pitch class or using online resources to hone your pitch and prepare for questions. Practice, practice, practice before pitching to a real potential funder. Investors have limited time and resources, so make every second of your story (and their return) count. The Nasdaq Entrepreneurial Center has a free downloadable toolkit for entrepreneurs pitching their business, with tips on content and delivery.
Securing investment can be an exciting vote of confidence in your project. However, accepting investor money can also pressure your business to reach profitability milestones, influencing how you do business. Giving up equity can also shift the balance of decision-making power within your company. Before accepting an investment from an individual or fund, do your homework and understand the trade-offs compared to other types of funding. Be sure to seek counsel from an experienced lawyer and/or business advisor who can help you understand and negotiate the terms of investment.
Sponsorships and Capital Campaigns
Fundraising can be important in launching a nonprofit or impact-focused kitchen project. There are a variety of avenues for raising these funds from community members and supporters. For-profit projects can raise funds from the community through crowdfunding. However, to receive tax-deductible donations, your organization will need to be registered as a nonprofit organization with the IRS or be sponsored by another nonprofit, often called an umbrella organization.
Community Fundraising and Capital Campaigns
Established organizations may wish to launch fundraising or capital campaigns for their kitchen projects. Because of the marketing demands of these efforts, it can be challenging for new organizations without established reputations and donor lists to raise substantial funds. However, new organizations can build thriving donor bases with time and considerable effort in relationship-building and outreach.
New organizations launching kitchen projects may find it challenging to raise money before they have a kitchen that becomes the tangible symbol of their vision. This is especially true in communities unfamiliar with the concept of shared kitchens and incubators. These communities may need more explanation of the hurdles food entrepreneurs face and examples of similar kitchens.
In addition to strong messaging, look for opportunities to engage with the community in ways that demonstrate the value of your project. If you do not have funds to open a kitchen yet, consider organizing events and offering business incubation services that support clients and show progress to potential donors. Once construction has started, use social media to document the process and keep supporters engaged.
Before creating a capital campaign, be sure you understand the full cost of constructing your kitchen and have sufficient contingency funds for cost overruns and unexpected expenses so you can complete your project. Line up commitments from several big donors in advance to give your capital campaign a strong start and build momentum.
Sponsorships
Offering sponsorships and naming rights are additional tools for raising more significant pledges for kitchen incubator projects. Sponsorships can attract sizable gifts from entities and high-net-worth individuals seeking to build community goodwill through association with your project.
Sponsorship Tips:
- Create renewable sponsorships of three to five years and avoid giving permanent naming rights, as this can reduce future revenues.
- Create various sponsorship opportunities at different price points to attract more sponsors.
- Brainstorm all the potential areas for sponsorships. This could include different physical spaces in the incubator (conference room, kitchen, etc.) and intangibles such as programs, events, and publications.
- Craft a sponsorship program that offers multiple acknowledgment opportunities throughout the year and gives your sponsors ways to deepen their relationship with your project.
- Look for sponsors beyond the big-name corporations in your community. Brainstorm businesses interested in supporting or garnering business from your clients, such as banks, lawyers, accountants, and kitchen supply stores. Consider corporations and agencies that are missionaligned with your project or want to demonstrate their commitment to the local community or your client population in a public way. Offer them opportunities for public acknowledgment of their inkind contributions.
In-Kind Donations of Goods and Services
When looking for contributions, it is good to consider opportunities for in-kind donations. In-kind donations can be gifts of goods (such as equipment, furniture, electronics, food, etc.) or services such as design, marketing, legal, or accounting. Creating a list of potential in-kind contributions ahead of time will help your team cultivate these opportunities and avoid donations that are not useful to you.
Equipment is often a top focus of donation efforts, but services can also be valuable. Kitchen projects sometimes solicit equipment donations from equipment vendors and manufacturers to showcase their products. Some kitchen projects gladly accept used equipment donations from institutional kitchens that may be closing or upgrading, while others opt only for new equipment to avoid potential repair hassles.
When thinking about in-kind donations, do not overlook your personal network of friends and family who are invested in your vision and want to see you succeed.
Final Thoughts
Finding the right funding strategy is essential for making your kitchen vision a reality. Whether through grants, loans, sponsorships, or community fundraising, each funding source comes with its own challenges and opportunities. Carefully considering the trade-offs and aligning your funding strategy with your kitchen’s mission will set you up for success. By securing the right mix of financial support, you’ll be well on your way to building a kitchen that not only serves your community but thrives financially.
The next chapter explores Regulatory Compliance , a critical area that every shared kitchen must navigate. This chapter provides a detailed overview of the key regulatory bodies you will encounter, from local health departments to federal agencies like the USDA and the Food and Drug Administration (FDA). You’ll also learn how to secure the necessary food production licenses, ensure compliance with the Americans with Disabilities Act (ADA), and work effectively with regulatory agencies to avoid costly delays and setbacks. By understanding the regulatory landscape, you’ll be better prepared to keep your kitchen running smoothly and fully compliant with all legal requirements.
