I recently stumbled upon a concept and idea called venture philanthropy.
Truth be told, I had heard of the term but wasn't really sure what it meant. I asked myself, “What exactly is venture philanthropy?“
According to Investopedia, venture philanthropy is the application or redirection of principles of traditional venture capital financing to achieve philanthropic endeavors.
Somewhat similar to traditional venture capitalists, the key difference is those who consider themselves venture philanthropists are not explicitly interested in profit.
Instead of making investing for profit, they make investments that promote some sort of social good. Social good, that sounds great right about now.
With all the talk of entrepreneurialism and blogging here on Money Life Wax, combined with some of the social issues currently residing in America, I decided to write about venture philanthropy today.
Unfortunately, there is a growing stigma that for those who have created wealth and successful businesses, they did it at the expense or loss of others.
While this is true in some cases, it isn't the case for most entreprneurs who truly want to make a difference in some way with their service, product, or idea.
And in the case of venture philanthropy – that is exactly the idea – add good to society! So I was recently asked to shed some light on the idea of venture philanthropy and talk about some of the major players in the industry, spreading a little positivity that we can all use 🙂
Major Players in the Venture Philanthropy Arena
Looking around at the economy or the social struggles occurring presently can be somewhat depressing.
Many of us, primarily because of what is constantly promoted by the media, forget there are still great things happening in the world and good people who are striving to make a difference.
In writing this, I came across successful businessmen like Mark Stevens, who may not always be in the spotlight, but that doesn’t minimize their philanthropic efforts. Stevens, for example, is big on encouraging change, promoting a better quality of life for struggling citizens, and figuring out a way to provide needed resources for the who are underserved.
In fact, many of the world’s richest individuals give back to causes and movements that need the funding, and their giving encourages other philanthropic efforts (think Bill Gates).
A bright side in these difficult times is the work of many trying to make the world a better place, including venture capitalists and venture philanthropy organizations that give to organizations working towards social change and for the good of marginalized Americans.
Philanthropy For Creating Leaders
In order for there to be real change, people capable of making changes need to be equipped!
Case in point – strategic investments into community organizations geared toward building strong leaders. Venture Philanthropy Partners, or VPP, is a group that does just that.
In addition to providing monetary resources, the team at VPP provides expert consulting for the nonprofits working with children and youth in low-income areas around the national capital (think grassroots campaigns)
The group at VPP has chosen to target their funding and assist the nonprofits with the most potential to make a significant impact in the lives of underserved children. The focus is on the education and development of the children, with the goal of helping to create leaders.
(How often have we all thought about making an impact to those in need?)
The funds are designed to strengthen the group’s organizational capacity to where a noticeable change in child welfare around the communities is evident. The company is off to a strong start, as they have already pledged over $85 million to these nonprofit partners.
Gathering Big Players
When you think of venture philantrohpy, the first place you most likely thought of was Silicon Valley.
Silicon Valley is home to some of the most successful venture capitalists firms in the country and has been the home to countless big name entrepreneurs.
Silicon Valley Social Venture Fund is a group facilitating the giving efforts of donors and nonprofits in need. SV2, as it is called, connects different donors together to make one large grant to an organization that stands ready to make a difference and has apart their services and operations as cutting-edge.
The monetary resources are given in conjunction with their advising and consulting experiences of various partners to improve the nonprofit’s efficiency within their community.
The group offers three rounds of grant dispersal a year, with the grants ranging from $100,000-$150,000. SV2 has a number of professional partners working with them, including tech entrepreneurs, doctors, lawyers, and university professors.
This professional network is able to use their experience and insight, as well as their money, to expand the operations that they deem the most socially beneficial. SV2 has given over $3 million to 35 different nonprofits since the company was founded (talk about making a positive contribution and impact) all with the goal in mind of promoting grassroots movements!
Promoting Grassroots Movements
Change always occurs at the grassroots level. If one person gets out of debt or starts a side hustle because they read an article on MLW, there is a positive ripple effect.
Another example of a venture philanthropy group is North Star Fund, which can be found in NYC. North Star Fund is a community foundation organizing donors, raising money, and offering technical support services for several grassroots nonprofit groups.
The social focus is varied, ranging from health care, human rights, housing, and wage increase and equality efforts.
The money from these philanthropists funds social justice efforts for marginalized groups like:
- The elderly,
- Low-income families,
- People of color,
- Women’s groups, and
- Those belonging to the LGBTQ community.
In over 30 years, North Star Fund has impacted more than 700 groups across the five boroughs of New York City by their distribution efforts of $35 million. Their focus is grassroots activism, rather than offering funds to more established nonprofits groups.
These are the big guys giving the little guys a hand in the fight for social justice.
Helping Fund Education
As a teacher, I recognize that the single most important aspect of creating change lies within education. NewSchools is hoping to contribute to that change.
Two venture capitalists and a social entrepreneur were the original founders of NewSchools.
This venture philanthropy firm works with education entrepreneurs in the quest to change public education. The fund raises money through institutional and individual supporters, then takes the money and invests it back into education reform organizations.
Not just any nonprofit or for-profit is eligible for funding. There is a rigorous screening process that makes sure the organizations have the capabilities to enact real change and deliver results for underserved students.
One of the firm's biggest initiatives is the College Achievement Network.
This outreach connects low-income families with charter schools and works with the students to make sure they are prepared to enroll in college after graduation. Research is gathered on social pressures, affordability, poor academic planning, and family stress as factors of low-income students and their lack of access to quality education.
NewSchools take education seriously and is handing over some serious money to see that a flawed system is improved.
Final Thoughts: Working Together
Many of the partnerships and philanthropy efforts enacting real change were started by a few individuals working together for the good of mankind.
Truth be told, this is how all positive change occurs. An idea is manifested and a few courageous individuals act upon it and pour tireless energy to see it through.
Venture capitalists and venture philanthropists don’t just want a great tax write-off like most state.
Most of these individuals and companies are committed to making their community and world a better place, and they are willing to risk their funds to see it happen.
The causes are varied, but the end result is the same- a world with more opportunities for all.
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $200,000 in student loans with his wife in less than four years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post and more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their chocolate lab named Morgan, working out, helping others with their debt and recommend using Personal Capital to track your finances.