I've just returned from a

by francine Hardaway on February 3, 2004

I’ve just returned from a board meeting of Social Venture Partners International, the national (and soon to be international) network of affiliates that grew out of a group of former Microsoft executives’ desire to become knowledgeable philanthropists. Young and rich (not to put too fine a point on it), these people wanted to make a difference in their communities, and not just write a check.
Out of their entrepreneurial experience (their successful day jobs) came the concept of “venture philanthropy,” –charitable giving that treats not-for-profits like businesses and funds them as venture capitalists would. Social Venture Partners pools the $5000 annual contributions of its partners into a “venture fund” that is “invested” by an investment committee of partners. Those partners invest the funds, but they also call upon other partners to be part of volunteer teams to work with the investees on strategic planning, marketing, HR, accounting, and technology issues that can be lumped together as “capacity building” for the investees.
The investees must show progress, or they don’t receive another grant for the following year, but in the best case scenario we commit to a three-year phased investment, working to help the organization reach sustainability. In a for-profit business that would mean supporting itself through sales to customers, but in this case it’s often developing the non-profit so it can seek further support from foundations and corporate donors who have deeper pockets than we do. We’re kind of the “angel round.”
SVP started in Seattle in 1996-7, and by 1999 my good friend Jerry Hirsch had heard about it and decided he loved the concept and it ought to be in Arizona. He put the arm on a bunch of his friends, myself included, and we launched an Arizona chapter in the same year. SVP Seattle told us it took twenty-five partners to have enough money to make meaningful contributions, and therefore twenty-five partners were the go-no go gating factor. Bless Jerry and his passion and conviction; we made it. Oh, and bless his foundation, too, the Lodestar Foundation, which was funded to create new concepts in delivering social services and solving social problems.
I’ve been involved since the get-go, and ironically, I think the major value of Social Venture Partners to me lies not in the money it gives away (it’s tough to measure outcomes meaningfully when you’re looking at slow social change), but the consciousness it develops in the partners about social issues and about how to become an educated philanthropist.
I’ve handled the corporate giving for a number of my clients over the years, and I saw how little they knew about where and how to give away their dollars. In fact, I think many individuals still give the way corporations used to: they choose a problem that appeals to them and give to anyone who comes to them with a proposal to solve it.
What happens in that case is a proliferation of non-profits addressing the same issue — a phenomenon I first observed during the AIDS crisis in the ’80s. One organization would start, and then dissatisfied board members or staff would spin out and form their own non-profit, tweaking the treatment model or the vision. Eventually, corporate donors faced dozens of proposals from rival AIDs organizations (now it’s like that with at-risk youth organizations) and could no longer make their minds up who to fund. They would end up giving each organization a small donation, which didn’t allow any of them to get traction.
Finally one day the corporations got together and said: we’re only going to fund one AIDS organization, forcing a consolidation.
Consolidation in the not-for-profit realm is a difficult concept to pitch, but smart philanthropists urge it. Businesses merge and consolidate as industries mature, achieving economies of scale. Why not charities? Phoenix philanthropists just forced this kind of consolidation among the providers to the homeless, in exchange for a brand new homeless campus.
But these kinds of informed decisions require engagement and education. And that’s what I think is great about Social Venture Partners: it allows donors to engage with its investees, and provides information about new trends in social service and philanthropy.
Perhaps because coaching entrepreneurs is my own “day job,” I continue to find the concept of venture philanthropy (or perhaps the better term is engaged philanthropy) appealing. I joined the board of Social Venture Partners International not because I have an empty life and was looking for some more meetings to attend, but because I would like to see this kind of charitable giving become a national movement. There are already 22 affiliates in the Social Venture Partners network, with three more “in the pipeline.”
If we then pool the resources of all the partners in all the affiliates, we may be able to address on a national or international basis some of the pressing problems we all face in our individual communities: insufficient early childhood education, imperfect programs for youth at risk, a completely inadequate and under funded foster care program, and blah, blah blah—the beat goes on.

“It’s not what happens to you; it’s how you come to it.”
Francine Hardaway, Ph.D.
Stealthmode Partners

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