What is Venture Philanthropy?
Philanthropy is driven by passion and the heart, but venture philanthropy requires a business plan to accompany the desire. Venture by definition has the risk of failure, just as much as succeeding. However, like most things, the higher the risk invites the potential for a higher return, and who can argue with that if it’s bettering the world?
Impact investing and venture philanthropy have several differences. Venture philanthropy, has been around for much longer than impact investing, and concerns the application of the principles laid out by traditional venture capital financing, with the difference being to ultimately achieve philanthropic efforts. The phrase was initially invented by John D. Rockefeller III back in 1969 with his beliefs surrounding venture philanthropy to be an "adventurous approach to funding unpopular social causes". Backed up by the Harvard Business review, and taught to the masses in further education, on how we as an entire nation could learn from venture capitalists, Venture philanthropy has evolved to be recognised as a collective effort rather than the investment itself.
Addressing the world's most challenging and toughest issues, is no small feat. We've adopted strategies and continued to try and have a positive impact on the world, but this notion isn't something that we can easily define. We can however take inspiration from venture philanthropists who have certainly got it right, these are people who exercise high engagement from the grantees and measure the impact they are having, to try and better it tomorrow.
A great example of a truly philanthropic organisation is Robin Hood. Their mission is to improve the living standards for 1.8 million low income individuals residing in New York. Their impact is completely measurable, each year they have kept more than 200,000 New Yorkers from going hungry, helped individuals source jobs and continue to aid as many people as possible to stop living on the streets. They are transparent in who they are as an organisation, with explicit interest in informing you as a reader that every penny you help raise, goes directly to the charity, no administration cost is taken.
Venture philanthropy doesn't always need to be on a such a large scale. Tej Kohli, a London based investor spotted the opportunity to provide children with missing limbs a chance at a normal life. The Tej Kohli Foundation endeavours to fund arms for ten children over the next 5 months as part of its 'Future Bionics' program, which will highlight how assistive technology can markedly improve the lives and confidence of young people living with disabilities.
It's no secret that street crime amongst young people is on the rise not only in the U.S but around the world, coupled with an increase in gang culture. Venture Philanthropist, Tony Hawk set up the Tony Hawk Foundation. The foundation supports the youth in low-income communities with skateboarding programs and the building of skateparks. To date, the foundation has awarded over $5.7-million to a number of public skatepark projects across America in the bid to keep young people active rather than turning to gangs and crime.
Venture philanthropy isn't explicitly interested in profit but rather in making investments which promote some sort of social good. It's investing for impact.