Page 18 - Social_Philanthropy

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This man had in mind starting with an approach to fund social causes and not an association with
businesses. In 1984, the term appeared again because more and more young philanthropists who were
interested in funding social causes appeared. However, the term really gained popularity in USA from 1990
and a debate started to discuss about new approaches and grant creation based on foundations. In 1997,
it was suggested that foundations could use tools from the venture capital to make strong investments in
the organisation and not just in particular programmes. The idea was that foundations could learn from
venture capitalists and have a greater impact when addressing social causes, using methods such as risk
management, measuring performance and revenue, investment duration and exit strategy. This was called
venture philanthropy.

In 1999, experts discussed about the possibility of turning foundations into organisations with a great
value and social impact, and not just an intermediary that gives money to those that need it. As this
debate was taking place, rich entrepreneurs became “philanthropists”, however they were really
interested in the growing interest of venture philanthropy and were not really well seen in the
philanthropy sector (Mrkajic, Murtinu, & G. Scalera, 2017).

Venture philanthropy nowadays

Venture philanthropy nowadays is a methodology used at different levels of the organisational process of
a foundation and its development. The main objective of VP is making sure that the organisation is
effective, and it continues to grow. In general, the aim is to reach more people and in a more effective way.
There are different elements that conform VP, that can be organised in different categories, however, we
will explain this in the next chapter.

The future of venture philanthropy

The development of VP throughout history has been huge. This contributes to make systemic change
possible through non-profit organisations. If we talk about the future challenges of venture philanthropy
we must think about the future generation of 2055, who will be inheriting today’s wealth. Due to
estimations about the profile of this future generation, it is possible that they find VP a great alternative to
other forms of contributing to social change. However, we must also consider future challenges that future
generations will have to tackle to make VP popular and useful. The main challenge to reduce the barriers
to the future adoption of VO Is sharing knowledge and information about this approach. It is true that the
concept is quite complex and there are core aspects that may seem similar but are actually different such
as the management of non-profit organisation, the mission, the organisational culture and achieving
financial sustainability.

4.2 How does venture philanthropy work?

In VP there are several actors involved in the process, each of it with a specific role. There are investors,
social-purpose organisations and the final beneficiaries. Investors are social investors willing to make risks
that other investors may not be prepared to make, and they do it to increase the social impact of
a particular organisation, and they are engaged in the long run.