Venture philanthropy allows individuals to make charitable donations, but differs from more traditional forms of philanthropy. Though a risky investment, venture philanthropy has the potential to produce returns far greater than those of more typical philanthropic endeavors. When successful, venture philanthropy combines charitable investment with the excitement of an emerging organization’s growth.
Rather than simply donating funds to non-profit organizations, venture philanthropists lend their expertise and capital to what Social Innovator calls “start-up, growth and risk-taking social ventures.” Once defined by John D. Rockefeller as “an adventurous approach to funding unpopular social causes,” venture philanthropy has become an increasingly popular way for corporations and individuals to use their wealth and experience to address some of the world’s most pressing social problems.
Today, venture philanthropy can be recognized by the six characteristics listed below, adapted from Social Innovator.
1. High engagement: Contrary to traditional philanthropists, venture philanthropists remain involved with the organizations they support, helping them to implement strategies and reach their stated goals.
2. Tailored Financing: Venture philanthropists use various methods of funding, including non-returnable grants and loans, to provide organizations with the appropriate amount and type of financial support.
3. Multi-year support: Venture philanthropists do not make a single charitable donation, instead providing funding over a period of years until the organization can sustain itself without such funding.
4. Non-financial support: Venture philanthropists lend their business knowledge and resources to the organizations they support, providing them with services such as marketing and human resource advice.
5. Organizational capacity building: Venture philanthropists seek to expand organizations’ overall impact rather than lending funds to a single initiative or project.
6. Performance measurement: Venture philanthropists look for the same returns desired in the corporate world, paying close attention to measurable outcomes.
While not everyone has the financial resources to back an entire organization, small strategic investments can greatly affect organizations’ outcomes. When large groups of people are mobilized to invest in organizations they support, their funding and efforts often lead to great success and social change.
– Katie Bandera
Source: Social Innovator, Denver Post
Photo: North Star Fund