Applying the principles of private equity investing to achieve philanthropic goals
What is Venture Philanthropy?
Venture philanthropy applies approaches from venture capital and private equity investing to achieve philanthropic goals. The term, coined in 1969 by John D. Rockefeller, was first used to describe ‘an adventurous approach to funding unpopular social causes’. In philanthropic circles today, venture philanthropy is included in the spectrum of investing and seeks to create transformative social change by equipping non-profits and charities with the tools necessary to develop into efficient, high-performing, effective organizations.
Methods of Venture Philanthropy
There are five main methods organizations use to apply a venture philanthropy approach to working with non-profit organizations (Source: Social Innovator)
High Touch Engagement
Venture philanthropists often work very closely with non-profit and charitable organizations to provide hands-on support and expertise and enable these organizations to achieve their social impact goals. This support may come in the form of board membership, consultative services and more. By engaging closely, venture philanthropists gain a strong understanding of the type of impact an organization is poised to achieve, and how to maximize it.
Sustained support from venture philanthropists often ranges from three to five years and allow organizations to identify impact objectives and make significant strides to achieve them
This support comes in the form of strategic planning, data analysis, human resources support, legal counsel, and advisory services provided to the non-profit organization
To ensure the longevity and sustainability of an organization, venture philanthropists engage in capacity building in order to increase operational efficiency
Venture philanthropists measure the performance of non-profit and charitable organizations by identifying impact objectives, establishing metrics and determining whether impact achieved can be attributed to the organizations activities and inputs