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Venture Philanthropy
By
Walter Johnson
Presented to
Dr. Robert Buchanan
In partial fulfillment of
PA 555E
Contemporary Trends and Issues in Fundraising
November 11, 2003
Venture Philanthropy
Venture philanthropy appears to be the buzzword of the new millennium in the world of philanthropy. The term derives from venture capitalism, a process in which a small group of people invest money early in a company’s formation, becomes closely involved in start-up corporate operations, and receives financial rewards when the company goes public. In a nutshell, venture philanthropy applies the strategies of venture capitalist to the nonprofit community. ... Venture philanthropist (donor-investors) help charitable organizations in ways other than just financial contributions. ...
Venture philanthropy, unlike most private foundations that are funded by a single person or family, develops a giving organization comprised of individuals who hope to achieve a greater impact together than they could individually. ...
Venture philanthropy developed in the 1990’s in reaction to this apparent dilemma. ... This desire for long-term success and accountability led some to rethink the traditional philanthropic approaches, thus the birth of venture philanthropy. ...
(As found in Venture Philanthropy: The Black Sheep in Wolves Clothing by Lee Davis and Nicole Etchart, Co-Directors, NESsT)
While each of these categories has a different emphasis, the guiding principles for as previously stated are long-term success and accountability.
Accentuating the Positive
In general the business of charity traditionally has sent a proposal in triplicate and waits six months for a result if any; it appears that the venture philanthropist donors "can make a six-figure decision over lunch. ... Its a more hands-on approach than standard philanthropy: instead of merely requesting an annual report from grantees, for instance, a funder typically takes a spot on the charitys board, following the venture capital model. ...
Venture philanthropists are more likely to fund operating and infrastructure costs, such as computers, those old-school foundations are reluctant to pay for. ... But operational effectiveness is as important to the venture philanthropist as an innovative program.
(Venture Philanthropy Hopes to Tap New Wealth, by Peter Delevett, © 1999 American City Business Journals Inc.)
The attitudes that contribute to the success of venture capitalist and entrepreneurial enterprise appear to have nurtured some of the most remarkable social ventures in the country. In short, there are seven key characteristics that distinguish venture philanthropy from the classical approach:
· Multi-year financing: venture philanthropists provide longer-term, multi-year (and perhaps also larger scale) investments in nonprofits as opposed to single-year grant awards;
· Tailored financing: venture philanthropists use an "investment approach" (versus a "grantmaking approach") to determine not only the amount and duration of financial support, but the type of financing most appropriate for the nonprofits needs (i.
Approximate Word count = 1916
Approximate Pages = 7.7
(250 words per page double spaced)
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