Ready, Fire, Aim! - Mihail's Public Blog: Venture philanthropy

Thursday, August 15, 2002

Venture philanthropy

The Internet generation is bringing the principles of venture capital to philanthropy. It's innovative--but is it effective? questions David Whitford in The New Shape of Philanthropy, Business 2.0, 6/02

Launched in 1997 by software entrepreneur Paul Brainerd, founder of Aldus Corp., SVP [Social Venture Partners] is a pioneer in the hot new arena of venture philanthropy. Essentially, outfits like SVP try to be for nonprofits what venture capitalists are for businesses: funders, yes, but also strategy consultants, media advisors, tech experts, headhunters--whatever it takes to build more effective organizations....The VC metaphor isn't perfect. There's never an IPO, for one thing, and the question of what constitutes an appropriate exit strategy hasn't really been worked out. Still, the metaphor resonates with SVP's target demographic....

The site for the Silicon Valley Social Venture Fund (SV2) includes some good resources and reports. For example,

Venture Philanthropy Partners (Washington, DC) - is an initiative of the Morino Institute to take advantage of unprecedented wealth creation of the New Economy and an Internet-enabled transformation in organizational effectiveness by establishing a new philanthropic fund to improve services to youth living in low-income areas in the region. Their site includes some excellent documents and speeches, including Venture Philanthropy: Landscape and Expectations.

Geoffrey Colvin writes in Business 2.0 (12/01 issue) in The Gift of Arrogance:

"It remains too early to demonstrate that venture philanthropy results in more effective outcomes or more powerful social change in ways that distinguish it from traditional philanthropy."

...One, the attitude most becoming to a giver is humility. And two, as Tom Reis of the Kellogg Foundation says--and as a few new philanthropists might even agree--giving money effectively can actually be harder than making it.

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