How did someone who could almost be termed the ‘resident critic’[1] of venture philanthropy come to join the board of NESsT? Alliance talked to Bruce Sievers.

According to Sievers, there are two aspects to this. One is a historical one. A couple of years ago NESsT co-director Nicole Etchart came across his ‘If Pigs Had Wings’ article and thought it would be interesting to include his criticisms of venture philanthropy in the discussions at the NESsT Forum in Budapest. ‘I thought it was interesting that they were interested in the possible criticisms and downsides of the application of venture capital techniques to philanthropy. They were not jumping into a field blindly, they were trying to look at the possible negatives of applying new techniques to non-profit activity. So that began a discussion, and from there we hit it off. When they invited me to be on their board, philosophically I thought it was a really good opportunity for me to engage more deeply with these issues. My point has never been to advocate a blanket rejection of the idea of applying new techniques to the work of philanthropy. My view is that we can use all the help we can get. If there are good ideas coming out of the business world, then we ought to look at them and use whatever we can.’

He was especially intrigued by the work NESsT was doing internationally in terms of strengthening organizations. ‘Fundraising is extremely difficult in those parts of the world where there isn’t a large philanthropic base like there is in the US or Western Europe, so the idea of looking for ways to generate incomes for non-profits is very appealing. I’m interested both in how to do that and in how to do it well and avoid possible dangers.’

Sievers’ sees his contribution to NESsT in terms of both looking at the creative, positive contributions of venture philanthropy and helping make sure the dangers are avoided. ‘We don’t want to fall into the trap that some of the narrower applications of the venture capitalist techniques to the field of philanthropy do.’

Could Sievers’ involvement in NESsT and the venture philanthropy field be seen as a way of focusing foundations more widely on issues like organizational strengthening and longer-term relationships – which could just be called good grantmaking? ‘If Pigs Had Wings’ makes the point that you don’t need the venture capital model to bring these values into the non-profit sector. ‘Yes,’ he says. ‘That’s definitely one of the most positive aspects of this whole approach, trying to compensate for some of the deficiencies in the way philanthropy is normally practised – which is too oriented towards projects and the short term and not sufficiently concerned with the health of the organizations that are doing the work’

In fact he sees parallels with the influence the organizational effectiveness movement – and in particular Grantmakers for Effective Organizations (GEO), which began as a Council on Foundations affinity group – has had on US foundations in the past few years. The emphasis on how foundations can strengthen themselves he sees as ‘partly a product of the venture philanthropy push, and a good one’.

Finally, Sievers mentions inspiration to new donors. ‘That s one thing we haven’t touched on, but the newer, younger donors, the younger wealth, are really interested in looking at new ways of doing things. They’re a little frustrated with what they see as the slow moving and not always effective work of the past, and if they’re drawn into putting additional resources into the field, so much the better.’

1 See also ‘Lost in Translation’, Philanthropy, Vol XIV, No 6 (Nov/Dec 2000), pp50-52; ‘If Pigs Had Wings: The appeals and limits of venture philanthropy’, available online at http://csvos.georgetown.edu/publications.html The original of this article appeared in Foundation News and Commentary, Vol 38, No 6, Nov/Dec 1997, pp44-46.

Venture philanthropy facts and figures

Venture Philanthropy 2002 is Venture Philanthropy Partners’ (VPP) third annual report on this emerging field. In conducting the research, Community Wealth Ventures Inc (CWV) surveyed and profiled 44 ‘high-engagement grantmakers’ in the United States.

CWV and VPP explain in the report why they choose to use the term ‘high-engagement grantmaking’. As they see it, ‘the term “venture philanthropy” will never acquire the sanctioned specificity of a label like “organic produce”. Different organizations will always use the term in different ways.’ They have shifted to the more expansive term ‘high-engagement grantmaking’ because it comfortably embraces the full range of philanthropic innovations that are represented by a number of forward-thinking grantmakers. This broader definition allows for discussion of the wide range of manifestations of the technique, avoids negative connotations of for-profit sector superiority, and retains the critical essence of venture philanthropy – its commitment to a highly engaged presence on the part of the funder.

Overall, the report found that:

• Despite a slowing economy, high-engagement grantmaking continued to grow and spread – both across the US and internationally.
• Most organizations are still too young for this new practice to have proved itself. Two-thirds are two years old or younger; only four began grantmaking activities before 1998.

Generally, high-engagement grantmakers focus on three key areas: providing management assistance in addition to funding; helping grantees build organizational capacity; and helping non-profits establish and track outcomes.

The majority of respondents (75%) report that they are providing a level of management assistance, such as consulting or marketing assistance, that is of equal to or greater value than the monetary grants they award.  Grantmakers also recognize that investing in organizational change takes time, with two-thirds indicating that the length of their grants averages between four and seven years.

More than 60 per cent of respondents indicated that they work with potential grantees early in the relationship to develop specific mission and organizational outcomes by which to measure success. Thirty-two organizations (76%) said that financial sustainability of grant recipients was a goal, although most funders have not reached a stage in their investments in which they’ve identified or developed exit strategies.

CWV estimates that the total capitalization of the respondents is just over $400 million. They made grants of just over $50 million last year, compared with $27.6 billion in grants from all US foundations. While the amount of money being distributed by high-engagement grantmakers is thus very small, the techniques of high-engagement grantmaking, if proved successful, have the potential to influence tens of billions of dollars of philanthropic support.

To download Venture Philanthropy 2002: Advancing nonprofit performance through high-engagement grantmaking, visit VPP’s website at http://www.venturephilanthropypartners.org

For more information about Community Wealth Ventures, visit http://www.communitywealth.org