Draper Richards Kaplan Foundation

Jared Grant

SGM 5119

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Draper Richards Kaplan Foundation

William H. Draper, III and Robin Richards Donohoe began investing together in the venture industry in 1994 concentrating on building companies in India.  In 2002, they created the Founders Fund which invested 14 million dollars from 2002 to 2012 in thirty non-profit organizations. Over the life of the fund, the portfolio of 30 organizations was able to generate an additional 270 million through philanthropic and revenue streams. (1)

One non-profit that was a member of this fund is KIVA, an internet based micro lending institution that petitioned Draper Richards Kaplan for grant money in 2006. After receiving the request, the fund responded by asking KIVA how they planned to grow and helped connect the non-profit with existing micro lenders.  Said one of KIVA’s co-founders of the fund, “They actually helped us shape our business model…They were just really really involved and engaged.” (2) With the fund’s help, KIVA has since become one of the prominent non-profit organizations in the world, and has facilitated the lending of $310 million in 210 countries around the world.

As with any venture capital firm, socially motivated or otherwise, some investments fail. In several cases, the organization realizes that it cannot realistically achieve the goal that it set out to achieve or that it cannot achieve the level of funding that it needs to achieve its goal.  In these cases, the foundation will discontinue funding and move on to another opportunity.

After experiencing this kind of success with KIVA and other organizations funded by the Founders Fund, the foundation wanted to continue its social mission on an even larger scale.  The foundation recognized that it had limited capital to invest relative to the number of social entrepreneurs in the market for funding.  So, in 2010, the foundation enlisted the help of ex-vice chairman of Goldman Sachs, among others to raise $36 million dollars to fund additional organizations looking to achieve social missions. This is significant because of the typically fragmented structure of the philanthropic landscape.  It is much easier for an aspiring philanthropist to start his own foundation than it is for him to find people to invest along with him.(2) The foundation is creating pool of funding that can be used for greater, more focused impact rather than fragmented funding that is often times ineffectual.

Another benefit of this model is that it not only pools dollars, but it pools experience.  The foundation is helping to create a network of non-profits that can depend on each other for support, and that provide insight into what makes an effective business plan in the non-profit world. The foundation uses this knowledge base to stretch the leaders of organizations to develop the right business plan and to think about metrics and a growth strategy…not things that traditional non-profits focus on.  Typically socially motivated organizations seek to achieve their social mission in the near term and lack focus to ensure sustainability.  The foundation helps them to make sustainability of their organization and funding a reality.

  1. http://drkfoundation.org
  2. http://drkfoundation.org/images/downloadable%20documents/DRKF%20Chronicle%20of%20Philanthropy-1.pdf
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One thought on “Draper Richards Kaplan Foundation

  1. tlhill2012 November 24, 2012 at 11:52 AM Reply

    Thanks – a really interesting example that fits well with the other readings. The question that I’m left with is how. How do they measure? How do they select investments? How do they decide to invest more, or to cut their losses?

    On a larger level, $36M is a tiny fund, especially by venture capital standards (but even compared to many foundations). Is this just an anomaly, or part of an emerging social venture investment “industry” or at least approach? Is it effective enough as a lever to be worth more investment?

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