Philanthropy ventures forth

By Todd Cohen

A new breed of “venture philanthropists” has emerged who contribute more than money by putting their entrepreneurial expertise and connections to work for groups they support.

“There’s been a sea change in the field over the last decade,” says Mario Morino, chairman of Venture Philanthropy Partners, a $35 million-asset venture-philanthropy group in Reston, Va.

As the delivery of social services has shifted to nonprofits from government, the aim of younger people who have accumulated wealth is to help nonprofits be more effective, he says.

And while money is important, he says, venture philanthropy’s critical contribution is providing hands-on, long-term assistance to nonprofits to build their internal operations, and connecting them to other donors and entrepreneurs.

The goal is to equip nonprofits with the strategic and management tools they need to be more accountable to supporters and constituents, and to become entrepreneurial “social enterprises” that can sustain themselves financially over the long-term.

Of 42 venture philanthropies with more than $400 million in capitalization, only four began their grantmaking before 1998, and two-thirds have been formed since Jan. 1, 1999, according to a new report by Venture Philanthropy Partners, which tracks venture philanthropy activity.

The biggest network of venture philanthropy groups is modeled on Social Venture Partners, a group formed in Seattle that has raised $5 million over four years from 290 investors, and invested in about 25 nonprofits.

That model, adopted by a federation of groups in about 20 cities, aims to apply business skills and thinking to philanthropy – and to stimulate and inspire individual philanthropy, says Paul Shoemaker, the Seattle group’s executive director.

“There was this kind of hole in the market and we are hopefully, little by little, starting to fill it in on the funding side,” he says. “And we see more nonprofits being entrepreneurial, either literally getting into social-enterprise, revenue-generating opportunities to create new revenue streams, or simply being more creative in how they use resources.”

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