It's Time to Reassess Venture Philanthropy 2.0

It's Time to Reassess Venture Philanthropy 2.0

During the heady days of the Internet Revolution, venture philanthropy became a darling of the business press. Pierre Omidyar was lauded on the cover of Forbesi n May 2000 as the "Radical Philanthropist," and Christine Letts, co-author of the seminal "Virtuous Capital: What Foundations Can Learn from Venture Capitalists" (Harvard Business Review, March 1997), was keynoting corporate CEO gatherings across the country.

Venture philanthropy was the magic bullet that would transform willing nonprofits into well-oiled, catalytic engines for change implying that those of us "in the biz" had been missing the obvious.

At that time, I was director of a ten-year, $30 million initiative to enhance youth services in seven disenfranchised communities at the Chicago Community Trust. Each day I struggled with the tough work of building nonprofit capacity, and there was nary a magic bullet to be found. Like many of my colleagues, I believed wealthy donors could best serve the interests of poor communities by writing checks and letting nonprofit professionals handle the heavy lifting.

When the dot-com bubble burst, young billionaires crashed to earth and venture philanthropists faded into what, I assumed, was embarrassed silence.

But the movement didn't die. Instead, a handful of savvy and stalwart leaders continued to refine their strategies. People such as New Profit's Vanessa Kirsch and the Acumen Fund's Jacqueline Novogratz deepened their relationships with mega-donors and groomed a new crop of techno-gurus positioned to win big in the inevitable next round of Web innovation.

Over the past year, venture philanthropy has re-emerged with force, and the players are poised to be more influential than ever. Once again, journalists are trumpeting the term to convey a wide array of sector-blending efforts that resonate with some significant fraction of highly visible, immensely wealthy donors.

Though some will debate the fine points of what is and is not venture philanthropy, what I'm talking about are the efforts of high-net worth donors who invest significant time and money in exchange for clearly defined measures of success and the potential to generate greater than average social returns.

In the years since what I call "Venture Philanthropy Version 1.0" faded from the scene, I've come to believe that these more engaged donors represent not only new resources, but also new potential for catalyzing change in a world that desperately needs it. Based on the efforts of Bill Gates, Sergey Brin, Larry Page, Steve Case, Jeff Skoll, et al. (each of whom may or may not embrace the term "venture philanthropist"), venture philanthropy has entered a new phase. "Venture Philanthropy Version 2.0" is more radical, more sophisticated, and potentially more high-impact than ever before. Here's why:

Ambition has increased immensely. These donors aren't content simply to make progress against global problems; they intend to solve them. Most of us working in the nonprofit sector have had to raise money a nickel and dime at a time. We have never had the luxury of assuming that, with the right approach, we could get all the money we needed to implement solutions. These guys do it every day in business and they don't stop with their philanthropy.

Nonprofits aren't the only game in town. In Version 1.0, donors looked exclusively to nonprofits to implement their ambitions. The literature is rife with descriptions of the predictable conflicts that occurred when Type A venture philanthropists met Type A executive directors. In Version 2.0, however, some donors are avoiding these struggles by establishing for-profit or hybrid models that effortlessly leverage their expertise. This may not be good news for fundraisers, but it significantly expands the universe of resources being brought to bear on social challenges.

Innovation vs. organization. In Version 1.0, practitioners worked to scale promising ideas by building the capacity of promising nonprofits. The focus in Version 2.0 is less about organizations and more about innovations like microfinance and $100 laptops. Donors targeting millions of beneficiaries worldwide can't just build one organization when a wide array of cross-sectoral alliances is required.

As a case in point, Michael Cline is a venture capitalist and philanthropist who personifies the potential of Version 2.0 through his efforts to save the world's wild tiger population. Talk to Cline for more than five minutes and you will gain an appreciation not only of his love for tigers but also for the philanthropic strategy he employs. He recently made a ten-year, $5 million grant to the Wildlife Conservation Society which he structured to "provide a very crisp example of a model where business people, particularly entrepreneurial people, work very closely with the people on the line, as opposed to just the administration of a nonprofit to achieve something that has been very difficult to achieve."

Michael has worked with a wide range of partners to develop the business plan, called "Tigers Forever," that guides his efforts. Rife with metrics, it also provides a base that has enabled him to gain a $5 million match for his donation. He told me that what excites philanthropists most is when they believe they actually are having an impact on their cause. "The amount of money you can get if you are close, in terms of demonstrating that we really can get a whole different level," he said. At 46, he is at the pinnacle of his professional career. Yet, even with a wife and five kids, Michael devotes 20 percent of this time to tigers.

Cline is obviously a dream date that any nonprofit would be lucky to get. But like the early venture philanthropists who preceded him, he is pushing us all into new territory. Rather than assuming we know more about social change than the donors who fund it, the time has come to explore fully what we can learn from those who are excelling in this rapidly changing business environment.

Call it what you will, Venture Philanthropy is back and Version 2.0 is poised to rock our desktops. And if it means more money and influence for the causes we care about, I am willing to forgive its awkward adolescence to explore a new future. How about you?

Susan Herr is the founder of PhilanthroMedia, a new media communications company working to advance ideas that matter.