What is Venture Philanthropy | Venture Capital Investments

Venture philanthropy is an emerging approach to that applies strategies commonly used in venture capital investments and entrepreneurship to the nonprofit sector, with the goal of achieving significant and sustainable social impact. Venture philanthropists make strategic investments in nonprofit organizations and social enterprises to further a social mission or objective.

Traditional philanthropic models typically involve:

One-time donations or grants by donors;
Hands-off approach by donors, allowing recipients of donations or grants to have operational control and decision making over the activities funded by the donations or grants; and
Focus mostly on financial resources and support.

Venture philanthropy, on the other hand, involves a more engaged approach with the following key features:

Longer-term commitments, where venture philanthropists typically commit to working with the organizations they support over an extended period, often several years;
Focus on capacity building rather than just financial resources, including providing management expertise, mentorship, and guidance;
Active involvement in the recipient organization, including serving on boards, providing strategic advice, and connecting the organization to other organizations or venture philanthropist’s existing network;
Focus on measurable social impact and outcomes, often with specific goals and performance metrics set to track the progress of investments; and
Risk tolerance similar to venture capitalists, where venture philanthropists are willing to take calculated risks in investments with potential for high-impact solutions with an understanding that not all initiatives may succeed.

Overall, venture philanthropy aims to employ a more strategic and outcomes-based approach to philanthropic funding, to help organizations become more effective and efficient in addressing complex social issues and achieving their social mission. By leveraging the expertise and resources of both the nonprofit and business sectors, venture philanthropy can help organizations grow and achieve measurable outcomes, as well as improve their governance, financial management, program delivery, and overall organizational and operational effectiveness. Venture philanthropy also encourages connection to other venture minded philanthropists and organizations, creating more growth opportunities for organizations and fostering shared learning, including best practices, lessons learned, program design and outcome measurement, among different stakeholders, leading to increased collaboration in the social sector to achieve impact-oriented solutions more effectively.