Venture philanthropy
Encyclopedia
Venture philanthropy, also known as philanthrocapitalism, takes concepts and techniques from venture capital
finance and high technology business management and applies them to achieving philanthropic goals.
Venture philanthropy is characterized by:
There are three models for engaging in venture philanthropy. The first is traditional foundations practicing high-engagement grantmaking. The second is organizations which are funded by individuals, but all engagement is done by professional staff. Good examples of this type of venture philanthropy are the Robin Hood Foundation
in New York City
and Tipping Point Community
in the San Francisco Bay Area
. The third is the partnership model, in which partner investors both donate the financial capital and engage with the grantees. Most of these are pass-through funds (i.e. they do not have an endowment, but rather grant out all the money they are given annually). Examples of this model are the Silicon Valley Social Venture Fund in San Jose, California
and Full Circle Fund in San Francisco, California
.
Some other examples of venture philanthropy foundations include Social Venture Partners, Venture Philanthropy Partners
, The Children's Investment Fund Foundation
(CIFF), NewSchools Venture Fund, Grassroots Business Fund
, Acumen Fund
, and New Profit Inc.
Venture capital
Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
finance and high technology business management and applies them to achieving philanthropic goals.
Venture philanthropy is characterized by:
- Willingness to experiment and "try new approaches".
- Focus on measurable results: donors and grantees assess progress based on mutually determined benchmarks.
- Readiness to shift funds between organizations and goals based on tracking those measurable results.
- Giving financial, intellectual, and human capital.
- Funding on a multi-year basis - typically a minimum of 3 years, on average 5-7 years.
- Focus on capacity building, instead of programs or general operating expenses.
- High involvement by donors with their grantees. For example, some donors will take positions on the boards of the non-profitsNon-profit organizationNonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
they fund.
There are three models for engaging in venture philanthropy. The first is traditional foundations practicing high-engagement grantmaking. The second is organizations which are funded by individuals, but all engagement is done by professional staff. Good examples of this type of venture philanthropy are the Robin Hood Foundation
Robin Hood Foundation
The Robin Hood Foundation is a charitable organization, which attempts to alleviate problems caused by poverty in New York, United States.-History:Founded in 1988, Robin Hood was the brainchild of hedge fund manager Paul Tudor Jones...
in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
and Tipping Point Community
Tipping Point Community
Tipping Point Community is a grant-making organization that fights poverty in the San Francisco Bay Area. Founded by Daniel Lurie in 2005, Tipping Point finds the most effective non-profits addressing poverty in the community, funds them, and provides the management assistance necessary to ensure...
in the San Francisco Bay Area
San Francisco Bay Area
The San Francisco Bay Area, commonly known as the Bay Area, is a populated region that surrounds the San Francisco and San Pablo estuaries in Northern California. The region encompasses metropolitan areas of San Francisco, Oakland, and San Jose, along with smaller urban and rural areas...
. The third is the partnership model, in which partner investors both donate the financial capital and engage with the grantees. Most of these are pass-through funds (i.e. they do not have an endowment, but rather grant out all the money they are given annually). Examples of this model are the Silicon Valley Social Venture Fund in San Jose, California
San Jose, California
San Jose is the third-largest city in California, the tenth-largest in the U.S., and the county seat of Santa Clara County which is located at the southern end of San Francisco Bay...
and Full Circle Fund in San Francisco, California
San Francisco, California
San Francisco , officially the City and County of San Francisco, is the financial, cultural, and transportation center of the San Francisco Bay Area, a region of 7.15 million people which includes San Jose and Oakland...
.
Some other examples of venture philanthropy foundations include Social Venture Partners, Venture Philanthropy Partners
Venture Philanthropy Partners
Venture Philanthropy Partners is a high-engagement philanthropic organization based in the DC metro area. It was founded in 2000 by Mario Morino, Raul Fernandez, and Mark Warner to invest in high-performing nonprofits in the National Capital Region...
, The Children's Investment Fund Foundation
The Children's Investment Fund Foundation
The Children's Investment Fund Foundation UK is a large charitable organization in the United Kingdom.It was founded in 2002 by hedge fund manager Chris Hohn and his wife Jamie Cooper-Hohn....
(CIFF), NewSchools Venture Fund, Grassroots Business Fund
Grassroots Business Fund
The Grassroots Business Fund is a non-profit based in Washington, DC. It has field offices in Ghana, Kenya, and India. Their mission is to build and support high-impact enterprises that provide sustainable economic opportunities to thousands of people at the base of the economic pyramid...
, Acumen Fund
Acumen Fund
Acumen Fund is a non-profit global venture fund that uses entrepreneurial approaches to solve the problems of global poverty. Its aim is to help build financially sustainable and scalable organizations that deliver affordable critical goods and services that improve the lives of the poor...
, and New Profit Inc.