Posts Tagged ‘venture philanthropy’

Translation Services: What Does Venture Philanthropy Really Provide?

January 10, 2013

The Nonprofiteer threw a bit of a bomb at a meeting today.  (“Now, dere’s a bolt from da blue,” as Andy Sipowicz would say.)  Perhaps she should be sorry—but she’s not.

After a group of young “venture philanthropists” described their efforts to help expand a small number of poverty-fighting nonprofits and to attract other philanthropists to support them, she had a few thoughts which she generously shared.

  • Their analysis of Return On Investment in this context was very exciting, comparing the dollars spent to the dollars added to the projected lifetime earnings of program participants as a result of whatever intervention the nonprofits provided.
  • Their goal of “Scaling Up What Works,” while admirable, had challenged many other institutions.  Did they have a template for determining which nonprofits would continue to succeed after significant expansion?  (Not really: they look for leadership and give it management support; but management support can’t clone inspired leaders.)
  • Their main achievement was to have assembled a group of white people (staff and Board) to whom other white people would give money.  White people are reluctant to give money to black and brown people (she observed).  But this group, by virtue of its comfortingly familiar MBA-speak upper-middle-class front, is able to overcome that reluctance. 

Afterward, the meeting’s host suggested to the Nonprofiteer that her last comment had been both off-putting and dismissive.  On reflection, she concluded that, while she was sorry to have embarrassed her host in front of his guests, she was glad to have given voice to the Subject That Dare Not Speak Its Name: the gap between the resources available to white people and those available to nonwhites.  We’d like to think that philanthropy responds to need, but most donors actually respond to being asked by those who look a lot like they do.

If these people can level that tilted playing field, more power to them.  And if some of them can make a career out of doing so, mazel tov.  But while the advice and management training and analysis and for-profit perspective on nonprofit problems are all very well, let’s not fool ourselves about what’s really useful in this model: the ability to look and sound like the sort of people who should be entrusted with a lot of money.     

That’s not a critique of pale people who want to help.  It’s just a plea for frankness about how racism plays out in our sector.

Nonprofit lipstick on a startup pig?

May 14, 2008

In the midst of a conversation on the 501(c)Files among skeptics about “venture philanthropy,” the following comment appeared, suggesting that what’s really going on is a sort of high-end shell game and money laundry. The Nonprofiteer extends her appreciation to commenter JP Burnes for his/her provocative notion:

Venture Philanthropy . . . one of the last few tax write-offs or tax advantageous schemes–-or ways to help buddies get rid of dogs or other unwanted investments[?] Here’s how it works . . . . a non profit . . . creates for-profit entities to generate revenue to help support the non-profit parent. But . . . . a for-profit company, a startup in technology, needs an investment from a known brand . . . to make it attractive to other investors. But the known-brand knows it won’t get anything for its investment in the startup. So the primary backer of the startup, a V[enture]C[apitalist], donates a few million to the name-brand’s parent non-profit. The brand then turns around and invests nearly the same amount into the startup……lots of favors all around.

In other words, a start-up business buys credibility by “donating” to a brand-name nonprofit, whose for-profit subsidiary funnels the money back whence it came. The start-up is no richer than it was before, but no poorer, either, and now it’s able to present itself to potential purchasers as an established pillar of the community instead of a fly-by-night operation–particularly if its founder has gotten some ink as one of those amazing “venture philanthropy” creatures who’ve figured out how to make charity unnecessary.

Comments from people who actually understand venture capitalism eagerly solicited!


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