Seattle-based Social Venture Partners is helping to create a new model of “venture philanthropy,” offering nonprofits what venture capitalists offer businesses, Fortune reports in its June 12 issue.
The firm, launched in 1997 by Aldus founder Paul Brainerd, works as follows: donors contribute between $5,000 and $10,000 a year for a minimum of two years. The money goes into a fund that invests in a portfolio of local charities.
The donors give valuable expertise as well as money. Each funded charity has its own lead partner and oversight committee, all of whom are donors. These committees make sure charities have access not only to funds, but also strategy consultants, media advisors, tech experts and headhunters.
Venture philanthropy is spreading fast, especially in the west where venture capitalism is deeply ingrained in the business culture. Experts believe that several hundred venture philanthropies have been created in the last few years, accounting for about 5 percent of annual charitable grants nationwide.
Traditional philanthropists are often dubious about the venture model. Bruce Sievers, director of the $250 million Walter and Elise Haas Fund, told Fortune that not all problems can be solved with a commercial approach. Sometimes what nonprofits need is money, Sievers said, not misguided advice from somebody with no experience in the area.
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