Philanthropy has always played an important role in American life, although it is a role that has been highly flexible as society’s needs and goals changed. During the middle part of the 20th century, wealthy donors were known to be the backbone of important cultural institutions like the arts, funding museums, performance spaces, and in some cases even entire companies of performers. Many did so as a business investment, but many also did so to make sure public cultural resources like local symphonies and community theater groups were able to keep going. At the same time, wealthy donors also quietly backed social programs, often with less fanfare than they received for their efforts in the arts and culture. Basic reading programs, grants, and scholarships were major vehicles for initiating change before the turn of the century. Now, the field has shifted, as a mixture of government support for key measures shifting and models for investment changing have introduced a new form of philanthropy, aptly called venture philanthropy.
What Is Venture Philanthropy? How Does It Work?
Venture philanthropy doesn’t have a rigid definition or a single method to its operation, although there are a few key characteristics that the operations revolve around. Instead, it’s a process that is named for its mechanism, much like venture capitalism. The shortest explanation for it is that investors who made their fortunes in the VC tech opportunities that have changed the business world over the last 30 years have transplanted that model to their philanthropic giving. That means a lot of different things to different people, just as it does with investment in return-bearing companies. Some venture giving projects are very hands-off, with investors financing NGOs and other institutions that have missions to initiate change without getting very involved in their day to day. Others bring the financing source into the organization in an advisory role, counting on their experience with both business and nonprofit giving to provide them with extra insight into accomplishing mission goals and bringing future philanthropic donors on board.
One thing that all venture philanthropy projects have in common is their goal of using the same principles found in tech sector investment protocols to put money directly into programs that are working on a focused change in key areas. For some, this might mean education reform. For others, it means ensuring high literacy rates worldwide, as well as access to the information technology resources needed to stay connected in a global world. The great thing about VP as an approach is that it lets donors put their money to work on the exact projects and initiatives they believe will make the world a better place.
Examples of Venture Philanthropy Organizations
Not every venture philanthropy organization is a nonprofit, which is one of the ways this movement distinguishes itself from past modes of giving for social change. One example of an organization that is doing philanthropic work while maintaining a status that allows it to make for-profit investments and political donations is the Emerson Collective. They partner with entrepreneurs and other experts, and their mission is to remove the barriers to opportunity that keep people from doing their best work on immigration reform, education, and other important topics. Another great example that is a little more in line with the organization of traditional NGOs and non-profits is Chicago Beyond, which focuses on scalability for social investments in Chicago. Their mission statement is to improve safety and education for young Chicagoans, so they can reach their full potential. Other organizational leaders in the field include:
- Susan Crown Exchange
- The Keywell Foundation
- The Draper Richards Kaplan Foundation
- The Robin Hood Foundation
Individual Philanthropists and VP Donors of Note
These new philanthropic institutions sometimes have their own mission statement, but some of them like the Draper Richards Kaplan Foundation make their business the financing of the organizations with those specific public investment goals, so they can incubate more change by helping smaller organizations reach their potential. Both approaches depend on key individuals who are willing to put their money into pressing social and public investment goals of the moment, though, so individual philanthropic donors are still a big part of venture philanthropy. Many of the top donors in this area are easy to spot because of their celebrity profile or their ability to create new organizations to reach their goals. One example would be the Microsoft founder and tech icon Bill Gates, who started the Bill and Melinda Gates Foundation with his wife to bring education reform to as many communities as possible.
Other important donors are less visible outside of philanthropic circles, but they are becoming more and more well-known with time. This group includes investment professionals and VC angel investors who have made their fortunes quietly and reinvested in communities that are important to them, like Mark Stevens, and they are changing the landscape even more quickly than their high profile celebrity counterparts through their sheer numbers and volume of donations.
Making Change Locally and Globally
The new wave of venture philanthropy isn’t actually new since many of its front-running institutions are actually over a decade old. What’s new is its popularity and rising position within the world of public investment, which has traditionally been a little slow to embrace change, bringing the innovative disruption that supercharges tech companies into a new realm.