Denison Venture Philanthropy Club is a club that’s devoted to just that… Venture Philanthropy. But what is this Venture Philanthropy thing we do? Our “Info” and “The $10000 Question” tabs have some information, but to get a full look at the idea we’ll have to go into a bit more detail.
It Started With Venture Capital
Venture Philanthropy gets its idea and namesake from Venture Capital. Venture Capital got its start after World War II in the 1950s, with the idea to take private equity and make an entire business plan out of it. The trade was a simple one: we, the venture capitalists give you, the noble start-up company, a couple million dollars, connections, and advice. You, the noble start-up company, give us, the venture capitalists, a generous share of your eventual profit. In the end, everyone comes out ahead…
…Or, at least most of the time. When Venture Capital took off, it was widely credited for starting Silicon Valley and the Internet Boom. By 1990, over $30 billion had been put into Venture Capital funding. But in the end, the system started collapsing as the internet bubble burst. Yet, the bubble still left many thriving internet venture-capital-funded companies, such as Google, Apple, and Facebook.
At the height of the venture capital boom, people saw that things were going well, and a couple of people wanted to see if this success could be duplicated in the non-profit world. Hence, venture philanthropy was founded with a new trade: we, the venture philanthropists give you, the noble non-profit organization, a couple thousand dollars, connections, and advice. You, the noble non-profit organization, use this money to actually help people.
This time, people come out ahead, but with the goal of social change rather than monetary profit.
More Than a Grant
Regular grant-making involves carefully choosing an effective non-profit organization, giving them a generous donation, and then moving along. Venture Philanthropy maintains the “investee mindset” of Venture Capital — instead of the moving along, a relationship is made between the investor and the investee organization.
This relationship provides continued support and shares experience. Venture Philanthropy is very hands-on and gets involved with the actual functioning of the non-profit. Rather than funding effective non-profits, the aim is to make non-profits more effective, so that future funding will do even more.
Another key part of the investment is an expectation of accountability. Non-profits and Venture Philanthropists both share barriers to accountability such as poorly understood problems, the difficulty of measuring outcomes, and a mismatch between those who fund you and those who help. However, Venture Philanthropy often keeps this in mind when figuring out how to track what they’re doing, and learn from failure.
For one example, consider Cleveland Social Venture Partners, which describes their model as follows:
Cleveland SVP is comprised of individuals with a wide range of expertise and experience in the fields of business and technology. These individuals, or “Partners,” contribute a minimum of $5000 per year for a minimum of 2 years. These funds are pooled and invested as grants to local nonprofit organizations. Once a grant is made, Cleveland SVP works in partnership with the nonprofit to improve their ability to deliver effective programs. Cleveland SVP, recognizing that nonprofit practitioners are the program experts, aims to complement this programmatic expertise with a set of skills that will help build organizational, management, and technology infrastructure, thereby enhancing a nonprofit’s ability to carry out its mission.
Another key idea of Venture Philanthropy is that of capacity building. Capacity building is the idea of increasing the organization’s ability to do more things over time. The basic concept is captured in the proverb: “Feed a man a fish, and he eats for a day. Teach a man to fish, and he eats for a lifetime”. Capacity building aims to get experience to smaller, understaffed non-profits to build their own organization — helping to get them the resources needed to do new things.
For instance, a non-profit could be spending their money and time going to FedEx Kinkos and printing a bunch of marketing fliers and passing them out. That’s fine. However, the same organization could be spending their money buying a printer so they can save on the transportation time and extra costs to Kinkos. Normally, the reason non-profits don’t buy their own printers is because they don’t have the funds available, but with a grant, they could — saving more costs in the long-run.
Now, organizations might have their own reason for not buying a printer. And perhaps an even more effective use of the funds would be setting up an online marketing plan to supplement the printed marketing plan, which could be automated to use even less time and money.
The actual details are worked out cooperatively with the Venture Philanthropy Club and the investee organization. Additionally, such an investee relationship is not particularly suited for every organization.
Author’s Note: This essay was originally posted on The Denison Venture Philanthropy Club Blog, a blog I co-write for, dedicated to discussing articles and ideas related to philanthropy and social change.
I now blog at EverydayUtilitarian.com. I hope you'll join me at my new blog! This page has been left as an archive.