PSVP

What is Venture Philanthropy?

(Taken from the 2001 report “Venture Philanthropy” The Changing Landscape” published by the Morino Institute with Venture Philanthropy Partners. )

There is a wide difference of opinion about when and where the term “venture philanthropy” deserves to be applied. As the Edna McConnell Clark Foundation explained in replying to our survey, “The term (venture philanthropy) has lacked definition from the beginning, and it seems only to be getting more confusing. An overly precise sounding lexicon appears to be masking an enormous degree of ambiguity and need for learning. This has resulted in a great degree of uncertainty as to what comprises the field.”

Rather than engaging in the unproductive task of judging competing claims, it might be more fruitful to acknowledge that venture philanthropy has developed across a wide spectrum with a variety of different models. These range from multi-donor funds that adhere closely to the philosophies and practices of venture capitalists, to the foundations of wealthy individuals that, while new, actually operate in a fashion more similar to traditional grant-makers. They range from hands-off grant making to high levels of donor engagement that include, in a few instances, taking seats on the board of the nonprofit being funded. Essentially the models fall into three broad categories:

Venture-generated philanthropic funds. In this model, the resources being distributed from various funds or foundations were contributed from successful venture capital efforts. However, these philanthropic funds are not necessarily being disbursed or invested according to the principles that a venture capitalist would follow, which include a primary focus on strong leadership and commitment to providing strategic management assistance.

Venture-influenced philanthropic funds. This philanthropy is influenced by the success of venture capital practices and reflects at least some of the characteristics of venture capital. These include taking risk, measuring outcomes, and paying extra attention to organizational leadership. But these funds typically lack a significant strategic management assistance effort as well as the staff capacity to provide one.

Venture-parallel philanthropic funds. These are funds whose approach to philanthropy most closely parallels the behavior of venture capitalists, especially the high level of engagement reflected in matching financial investment with strategic management assistance. As in the case of Robin HOod Foundation, Entrepreneurs Fund, Roberts Enterprise Development Fund and Venture Philanthropy Partners, these fund anticipate making relatively fewer but larger investments and usually have larger staffs available to provide management assistance and capacity building.

This spectrum also suggests that there may be opportunities for more partnerships between venture philanthropy organizations, as well as between venture philanthropy and foundations - partnerships in which the venture philanthropy organization works with non profits to build their capacity, but a foundation steps in to fund the expanded programs and works to maintain funding for the enhanced capacity.

Watch a video about Venture Philanthropy

For more information about the SVP Movement and it’s role in venture philanthropy, click on the icon below to be redirected to our national affiliate site.