What comes to mind when you see the term venture philanthropy? The term is becoming omnipresent in the world of nonprofit development; abounding in today’s discussions, particularly among professionals involved in the high-tech, venture capital and foundation worlds.
The term refers to the pedagogy of a new generation of individuals who are engaged in philanthropic efforts.
The future of nonprofit organizational success does not rely on the age old adage that the more money you throw at a problem, the better, but should turn to what the rest of us are turning to – innovation in addition to scaling an organization to the point that it can sustain itself.
The term venture philanthropy is becoming more prevalent and it deals with applying the techniques of venture capitalists in funding nonprofits and other socially focused organizations. Traditionally, nonprofits have relied on the grant-giving efforts to fund their mission, but using the aforementioned new way of thinking, nonprofits that employ a more proactive approach to securing funding may be the wave of the future.
As is the case with venture capitalists, venture philanthropists should become instrumental in choosing new leaders for the organizations they support. This is definitely easier said than done because it has been commonplace for nonprofits to see executive positions as a “tertiary expense,” over-looking the fact that investing in strong and succinct leadership is an opportunity for advancement.
Though there are many similarities between the goals of a business that obtains venture capital and with its nonprofit siblings, one would be remiss if they did not take in to consideration the vast difference of the two types of organizations. For one thing, a nonprofit tends to grow much more slowly than, say, an Internet start-up company and in doing so, investors may need to moderate their speed of investment to mirror when changing their focus from financial gain to social change.
In addition, the practice of venture philanthropy makes greater sense because neither grant givers nor recipients have a clear idea or specific plans for growth as it relates to the funds that are being exchanged despite successes being harder to measure. Ultimately, the goal of both parties will be to ensure that the agency is self-sufficient so that more effort can be attributed to the agency’s mission.
With this being said, with attributes to this new type of funding efforts, there is a danger with respect to putting too much emphasis to managing inputs, which are easier to measure than output and concentrating donations to funding efforts that can be easily measured, such as the number of clients served, especially when that may not be the most effective way of providing assistance.
The key for those who subscribe to venture philanthropy is to find a happy median between measurable inputs and outputs, so they not only secure the right amount of funding to be able to effectively monitor you organization’s programs, but they don’t become overwhelmed with the red tape of monetary procurement.