Venture philanthropy originated in the mid-1990s in the United States and began spreading through Europe around 2002. It is largely modeled after venture capitalism, in which professional investors use third-party funds to help startup businesses get off their feet.

In a similar way, venture philanthropists use their influence and skills to provide charities or socially minded enterprises with financial and non-financial aid. Venture philanthropy is often undertaken by organizations, which lend support to anywhere from 3 to 15 charities or socially conscious businesses. Individuals, families, and institutions usually provide the organizations’ funds.

The venture philanthropy movement originally began as an alternative to traditional philanthropy, in which high-quality nonprofits are given capital and room to work as they see fit.

Meanwhile, venture philanthropists are much more highly involved. Beyond just donating significant amounts of money, they may hold positions as board members or offer skills-based donations, such as business planning or executive coaching.

According to a 2004 report by Venture Philanthropy Partners, small and local nonprofits often lack the support they need. They can, therefore, be significantly helped by venture philanthropy, which provides long-term financial support, strategic advice, and helpful professional connections.

Depending on the goal of the philanthropy, and the types of organizations supported, venture philanthropists often choose to give in different ways. While some organizations dole out non-returnable grants seen as investments with only social returns, others use various types of loans to help charities or social enterprises get started and continually grow. Once these loans are repaid, the money is reinvested in another organization or startup company.

Venture philanthropists also generally commit to multi-year support at a substantial level, with the goal of financial independence once funding ceases. Additionally, venture philanthropists aim to improve the long-term viability of their investees by funding core operating expenses, rather than individual projects or programs.

Finally, venture philanthropists highly emphasize results and good business practices. They generally hold their recipients to high accountability and management standards, and expect goals to be achieved. This highlighting of measurable outcomes is one of the more obvious similarities between venture philanthropy and venture capitalism.

Venture philanthropy allows donors to become highly invested while working with charities and social entrepreneurs. It also provides many organizations, especially small and local ones, with the long-term and varied assistance they need.

By providing an alternative to hands-off donations, venture philanthropy encourages people to actively change the world around them. It has possibly even substantially widened the range of people becoming philanthropists by appealing to a field of entrepreneurs whose experience and expertise can be valuable assets to charities and socially conscious startup businesses.

Venture philanthropy offers a unique and very often successful approach to improving our society and the world, and should therefore enjoy continued support.

– Katie Fullerton
Sources: Social Innovations Europe, Forbes, Slate, Venture Philanthropy Partners
Photo: Francis Moran

Venture philanthropy is a blend of capital and business advice to help entrepreneurial organizations achieve their ambitions for growth and development. They achieve this through three distinct characteristics. The first is an investment-minded approach where an organization supplies multi-year support to ambitious social ventures with tailored financing and sustainability and scalability. Second, they engage in an active partnership by building capacity and infrastructure and bringing non-financial resources to the ventures. And third, it is performance-based through milestones, transparency, social impact, and means of exit strategy.

The Asian Venture Philanthropy Network (AVPN) is an organization that promotes venture philanthropy across the Asia-Pacific region. The Asian Venture Philanthropy Network is interested in promoting philanthropy through broader philanthropic and social investment communities, with strategies tailored to the needs of the Network’s members. They are based in Singapore and are supported by grant funding, sponsors, and partner organizations. Their backers include organizations and individuals from the finance, business, and social sectors.

The AVPN is taking venture philanthropy and multiplying the impact of financial capital through advisory services and high engagement. The AVPN is a hub for news and events focused on venture philanthropy to develop shared learning and agreed-upon best practices. They are trying to develop active country groups throughout India, Hong Kong, Singapore, Japan, and mainland China.

They are working to undertake and develop field-building activities in Asia. The AVPN is modeled off of the European Venture Philanthropy Association (EVPA). The EVPA was originally conceived as a modest and informal association to stimulate productive discussion, capture good practice, and encourage new philanthropic funds. The AVPN’s vision for Asia is a philanthropy landscape that responds to the resource needs of high-potential social purpose organizations. They encourage and facilitate the development of venture philanthropy and social enterprise across the Asia-Pacific region.

– Caitlin Zusy
Source: AVPN