Eli Broad, a Los-Angeles based billionaire/philanthropist once said: “charity is just writing checks.” As the founder of The Broad Foundations, Broad runs his philanthropic foundation “like a for-profit business, not a charity.” In fact, he practices what is called venture philanthropy. “We don’t give it away, we invest it. And we want a return. Remember, I started work as a CPA, so that gave me fiscal discipline in everything I did in business. I guess some of it carries over to philanthropy,” he noted. So, what exactly is venture philanthropy? How is it different from individual contributions?
According to the National Venture Capital Association, Venture philanthropy “applies venture capital strategies, skills, and resources to charitable giving. It focuses on leadership, bold ideas, developing strong teams, active board involvement, and long-term investment. Traditional foundations and academics are closely following several organizations that are now applying venture philanthropy practices while working to build both for-profit and non-profit organizations.”
The Indiana University – Center for Philanthropy notes the following differences between venture philanthropy and traditional giving:
- Traditional foundations usually give “hands off” grants, while venture philanthropists expect consistent engagement with nonprofits, viewing their contributions as “long-term investments.”
- Traditional foundations usually provide one-time or multi-year grants, while venture philanthropists maintain a relationship with the nonprofit organization over a longer period of time, while providing strategic guidance.
- The aim of venture philanthropy is to “build organizational systems and capacity focused on achieving lasting outcomes for the clients they serve.”
Various venture philanthropy organizations have emerged in the last several years. Examples include:
REDF (also known as The Roberts Enterprise Development Fund): REDF is a San Francisco-based venture philanthropy organization that creates jobs and employment opportunities for people facing the greatest barriers to work. For more information: http://www.redf.org
Thrive Foundation for Youth: Based in Menlo Park, CA, Thrive Foundation for Youth operates like venture capitalists in the social sector, developing collaborative partnerships that blend creative thinking and knowledge to help deliver social impact at scale. For more information: http://www.thrivefoundation.org