from George Kay
Virtuous Capital: Combining Capital with Management
Venture philanthropy, like the venture capital it evolved from, involves not just giving money to a cause, but giving their management experience as well. It is easy to just write a check and move on, but venture philanthropy involves a much higher engagement. It combines traditional business practices with a charitable cause. Metrics and data are used to measure the effectiveness of programs. Business plans and strategies are developed to ensure the charity has a defined purpose. Often, the donor will require changes in personnel or the establishment of financial controls. All of these methods are used to improve the effectiveness of the charity. The venture philanthropist can make these changes to an existing organization, or create their own from the ground up.
Thomas Siebel made his fortune as the founder of Siebel Systems Inc, a successful software company. Siebel noticed the destruction the methamphetamine epidemic was having on Montana’s teenage population, and decided that action needed to be taken. One option he had as a man of wealth would be to donate a sizable amount towards public services announcements, and let established organizations handle the problem. Instead, he used the business techniques honed from his time at the helm of Siebel Systems, and created the Meth Project. With the Meth Project, Siebel hired marketing, advertising and PR firms to create an advertising campaign to raise awareness among teens on the dangers of meth. He used marketing techniques such as focus groups to test which advertisements had the best results. He used benchmarking, taking statistics on drug use and crime relating to meth use and addiction. Using these methods, Siebel was able to get the best bang for his buck. As a result of the Meth Project, “between 2005 and 2007, meth use in Montana dropped 45 percent among teens and 72 percent among adults, while meth-related crimes fell 62 percent.” (Kramer, 2009)
A similar venture philanthropy story can be found in Venture Philanthropy Partner (VPP). VPP teamed up with See Forever, a foundation that operated charter schools. Before VPP, See Forever “didn’t have any sort of governance or long term strategy,” (Van Slyke, 2009). Although it was managed by a undoubtedly caring and involved team, they did not have the business sense required to operate an institution of their size. When VPP teamed with See Forever, they did not just give their money, they gave their expertise. VPP suggested changes in their organizational structure, moving the principal (and math teacher) into the role of Executive Director. They advised on alternative methods of funding, such as government grants. They recruited executives from prior business connections to join the See Forever team. VPP suggested that See Forever expand to not just getting its students into college, but setting up alumni associations to ensure that they not only graduate but thrive in college.
Although many people do not have the time or ability to give more than money to charitable organizations, when it is possible, venture philanthropists can give so much more than just funding. The long term relationships created when venture philanthropists partner with charitable organizations help by guiding, advising, and managing the organizations they support. On the contrary to just donating money, this gift is priceless.
Kramer, Mark, R. 2009. Catalytic philanthropy. Stanford Social Innovation Review, Fall.
Van Slyke, David M.; Newman, Harvey K. 2006. Venture philanthropy and social entrepreneurship in community redevelopment Nonprofit Management & Leadership, 16 (3): 345-368