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Venture Philanthropy and Non-Profits: Does It Deliver?

Two years ago Vesper initiated the Venture 21 project. The purpose of the project was to help nonprofits determine whether venture philanthropy was right for them. We provided workshops and presentations to help nonprofit leaders assess what venture philanthropy is and how it works.

As the project developed, we became increasingly aware that information on venture philanthropy is generally one-sided and written from the perspective of the venture philanthropy institutions. Their assumption is that nonprofits are run in a "culture of dysfunction" and that answers are rooted in business world solutions. We realized that there is no body of knowledge written from the nonprofit side.

We therefore initiated Phase II of the project to help develop a nonprofit point of view of venture philanthropy. A structured survey was conducted with a sample of human service nonprofits in the San Francisco Bay Area. The survey found that while nonprofit leaders are enthusiastic about the prospect of venture philanthropy funding, the popularity of venture philanthropy distorts the actual opportunity. The fact that a few human service nonprofits were engaged in venture funding creates a false perception that funding is available. In reality, all venture philanthropy funds studied in this project were closed or by invitation only. Furthermore, most venture funds service one or two grants at a time. The formidable obstacles of limited access and scarcity of grants require a new kind of specialization to penetrate a closed system.

Venture philanthropy is exciting because it promises to help nonprofits strengthen their organizations in strategic ways they cannot do for themselves. But can venture philanthropy deliver? There is no coherent body of knowledge to define exactly what it is, and no standards upon which to evaluate it. Models are as different as the individuals who fund them. The unanswered question is: "Can the capacity builders build capacity?" The challenges posed by venture philanthropy require a new specialization in preparing nonprofit organizations and in penetrating venture fund systems.

To read the full report of our findings regarding Phase II, view our website at www.vesper.org, click on Publications, then Venture 21 and finally the report "Accessing Venture Philanthropy: The Possibilities from a Nonprofit Perspective."

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Vesper Society is a private operating foundation with programs in leadership, health, and Central America. Our mission is to create opportunities for individuals, groups, and organizations to apply moral and ethical values in decision making on social and economic issues.