What is Venture Philanthropy?
Taking a Venture Capital Approach to Achieve Philanthropic Goals
Just as the for-profit economy has always developed innovations to meet its changing needs, so too is the nonprofit sector evolving. One such development that the nonprofit sector is adopting is ‘Venture Philanthropy,’ a practice that takes its name and principles from – you guessed it! – ‘Venture Capitalism.’ What is venture philanthropy? As venture philanthropists ourselves here at Social Venture Partners Arizona, we hope to help in explaining this growing practice.
Venture capitalism is a unique way of investing in a business. The investment occurs early in a business’s growth process; it happens after a product has been designed and brought to an initial market, but before the business has the capacity to satisfy their full potential. This investment in organizational capacity is what makes a leap to their next level possible. Venture philanthropy incorporates this same strategy but applies it to achieving philanthropic goals. An investment of venture philanthropy may be in a program or nonprofit organization serving a mission of a greater purpose for the community.
Several years ago, The Rockefeller Foundation, in conjunction with the Organization for Economic Co-Operation and Development (OECD), published an oft-cited paper on venture philanthropy. It helps provide more clarity to this nascent concept by listing qualities that venture philanthropists tend to share. One of these qualities is an “engagement style that is more hands-on, using extended interactions with and sometimes between grantees” (Garris). Another quality of venture philanthropy is an “engagement period that reflects the goal of systems changes, often five to ten years rather than one to two years.” At Social Venture Partners Arizona, we embody these qualities to provide expertise and funding to emerging and local nonprofits that are working to make children successful. We help ideas and visions blossom into concrete and sustainable solutions.
Since 1999, SVPAZ has contributed more than $4.3 million dollars and 35,000 consultation-hours for more than 100 nonprofits in our community.
At SVPAZ, our model is to take on a new Investee every year for up to a five-year partnership. In addition to funding, our Investees have our Partnership’s time and talent to be utilized for their specific needs. Central to our mission is transferring our Partners’ skills to Investees so that they are equipped with the requisite skills to flourish and we can gradually take a step back. This is another quality that’s consistent with venture capitalism. When we invested in Camelback High School, we supported changes to their culture by facilitating customer service training for their administrators by Ritz Carlton service experts, we hosted monthly dinners where students and Partners had the chance to converse and share life experiences, and we grew a peer-tutoring program that gave students experience and a source of income.
One of our current Investees is Linda Abril Educational Academy. Here, our Partners are working directly with teachers and students to plan, develop,and create an on-campus book lounge.
When it came time to physically assemble Linda Abril’s new bookshelves, our Partners worked side-by-side, a 50-step Ikea manual opened wide, with countless screws and bolts strewn nearby. When we say that we roll up our sleeves and get work done, we mean it (and yes – putting together Ikea shelves is our secret talent).
Our work with Feeding Matters is another example of how venture philanthropy can help an organization reach their ‘next level.’ Feeding Matters cares for the needs of families with a child suffering from pediatric feeding disorder (PFD); a condition associated with medical and nutritional dysfunction, which affects more than 2.3 million children in the United States alone. Their organization received five years of SVPAZ funding and strategic guidance, from 2011-2016. During our engagement, we helped them with re-branding (and the funding to implement it), provided their Executive Director with executive coaching on how to expand their capacity, and dove deeply into their finances. All of this led to an increase in annual operating budget from $72,500 to $1,200,000. Furthermore, their increase in capacity allowed them to facilitate a consensus paper declaring PFD as a stand-alone diagnosis and to begin hosting a medical consortium that’s now endorsed by the North American Society for Pediatric Gastroenterology, Hepatology and Nutrition. In their own words, “The funding, coupled with the (SVPAZ) Partner mentorship, really helped us to elevate our efforts from a grassroots parents group to international thought leaders.”
“Social Venture Partners Arizona has been a key contributor to the Valley through its innovative work and entrepreneurial spirit. SVPAZ has evolved throughout the years to address the pressing needs and provide constant support to the local nonprofit ecosystem,”
said Steve Seleznow, President and CEO of the Arizona Community Foundation.
As venture philanthropy evolves to address the changing needs of the nonprofit sector, so too has Social Venture Partners Arizona and our incredible team of Partners and staff. This venture capital approach to philanthropy enables us and others to provide expertise and funding to the organizations who need it the most, in order to impact the greatest change and make a true difference. Venture philanthropy is on the rise, and organizations like SVPAZ are equipped with the structure, know-how, and experience to meet a growing need in the Phoenix non-profit sector.
Garris, Rob. “8 Characteristics of Successful Venture Philanthropies.” The Rockefeller Foundation, 28 Mar. 2015, www.rockefellerfoundation.org/blog/8-characteristics-of-successful-venture- philanthropies/.