In 1999, Paul G. Schervish and John J. Havens of the Social Welfare Research Institute at Boston College, developed models which predict that $40 trillion to $136 trillion will transfer through generations during the next 50 years. Schervish also estimates that $19.2 trillion to $50.2 trillion of that will be spent on philanthropy by 2052 and experts say that much of the giving will done by people who are new to philanthropy and who want to be more engaged in philanthropic works. Thus, it is not surprising that strategic or venture philanthropy has been garnering a lot of attention in the past few years, both from nonprofits and donors looking for something more than traditional ‘chequebook giving’. Although most would agree that it is too early to talk about lessons learned, the general mood regarding this type of philanthropy seems to be one of optimism.
A growing form of philanthropy but not necessarily a new one
“My feeling is that more than ever it’s a vital topic,” says Natasha van Bentum, CFRE and creator of VenturePhilanthropyGuide.org. “Venture philanthropy was a term that arose spontaneously during the transition from 20th century philanthropy to 21st century philanthropy and most philanthropists nowadays have essentially become venture philanthropists. They want engagement and results. They are not sitting back anymore and just writing the cheque and being content. Those people have become the exception.”
Brad Zumwalt, the founder of Social Venture Partners Calgary (SVPC), agrees that this movement is gaining momentum but he also points out that it is not necessarily a new concept. “I do think this type of philanthropy will continue to grow. However, I don’t think it is growing from today forward. This is exactly what has been going on with strategic philanthropy from foundations and from private donors for decades. There might be some new terminology involved but what we aspire to do is very much along the lines of the strategic philanthropy that has gone on in the past.” he explains. “The more we get into this, the more we realize that we are just trying to have the same good intentions, best efforts, and innovative thinking to get problems solved, as they did thirty or forty years ago.”
Laying to rest some perceived fears
Even though this type of giving finds its roots in the past, ever since venture philanthropy became a hot topic in the nonprofit sector one of the persistent concerns has been that these engaged philanthropists may become too involved and influence an organization’s mission. Gary McPherson, executive director of the Canadian Centre for Social Entrepreneurship, says this over-involvement is already occurring, though not because of venture philanthropists. “I think it happens with government funding right now. They want the money used in a particular fashion and if you don’t dance to that tune you don’t get the money, and if you do dance to that tune you might have to reconfigure yourself to meet the criteria.”
He doesn’t see engaged philanthropy falling victim to this. “It’s a false fear,” he says. “Organizations that are into social venture are more used to risk so they are also likely to be less restrictive as long as it makes sense. If there is a hiccup or a challenge they will learn from that and move forward because in business sometimes the most useful lessons are what appear to be failures or setbacks. They bring that mindset with them.” McPherson says the other thing to realize about these venture philanthropists is that they recognize that they don’t necessarily understand the issues. They understand the financial element, the business or the technology, but if they don’t understand the social mission or the business of the organization, they aren’t going to try to manage it.
Brad Zumwalt reiterates this point when he says, “We are very upfront about our intentions. We are not about diverting the mission of an agency. Our job is to get in behind that mission and build organizational capacity so they can go and achieve whatever it is they are trying to achieve.” The Hera Society recently received a grant from SVPC and executive director Rosemary Bonner agrees that the fear of too much involvement by venture philanthropists may be overstated.
“Someone mentioned it to me when we were going for the SVPC grant but I think that for us it’s all about having very clear boundaries regarding what they will be involved in and what they won’t be involved in.” She says the organization sees this type of philanthropy as a benefit not a drawback because her agency can get free additional assistance in the areas of technical support, marketing, and media, areas where SVPC has expertise.
Finding new ways to bring different sectors together
“I think that venture philanthropy has been a really interesting and stimulating evolution in terms of the general philanthropic field,” says Tim Draimin, executive director of the Tides Canada Foundation, which offers a platform for more engaged and strategic philanthropy by interested donors. “The private and nonprofit sectors are very different but that doesn’t mean that there aren’t things that can be borrowed from the private sector to add value to the nonprofit sector.”
It was this belief that also inspired Bill Young to found Social Capital Partners, an organization that will invest in and incubate revenue generating social enterprises that employ at-risk youth and other disadvantaged populations. “I wanted to figure out a way to use my business experience and find a creative way to give back. So rather than have these walls between the public, private, and voluntary sectors, why not think of hybrids that try to combine business and social services in a different kind of model.”
Malcolm Burrows, director of gift planning at the Hospital for Sick Children Foundation in Toronto, has also been looking at new ways to engage the business community in philanthropy. In 2000, a new category of gift options with created by the Toronto Stock Exchange so that companies could issue charitable gift options during their initial public offering (IPO). In response to a proposal put forth by the foundation, the TSE has also agreed to extend this category of options to include all publicly listed companies in Canada, allowing for the issue of charitable options at any time, not just during a company’s IPO.
Burrows says the whole options idea is central to a lot of ideas of venture philanthropy. “The challenge, particularly when dealing with entrepreneurs, is that they often have more future potential than current cash. That is why there is a lot of focus on various ways of giving and making the commitment to charities that don’t focus on cash.”
Whether they give cash, stock options, or their time and expertise, it seems that engaged philanthropy in different forms is here to stay, though it will only be one option among many. Perhaps van Bentum sums it up best when she says, “The bottom line is that there is a new philanthropy in the air and the best and the brightest are going to breathe that air.”
