Bringing
venture capital disciplines to social investing.
By Joyce Romine
Philanthropy is getting personal these days in cities across
America. Taking a page out of the world of venture capital,
people are investing both expertise and money in nonprofit organizations
to achieve measurable results. This so-called “venture philanthropy”
is taking root in St. Louis in the form of Social Venture Partners.
What is Venture Philanthropy?
Venture philanthropy connects the resources, skills and knowledge
of business leaders to nonprofit organizations that are committed
to strengthening their organizational capacity. Rather than
just sending a check, people are rolling up their sleeves and
working alongside their peers to make nonprofit organizations
better, faster and stronger.
A Social Venture Partners Program (SVP) is a nonprofit, volunteer-driven
organization dedicated to serving as a resource and catalyst
for individuals and businesses to increase their civic engagement
using a venture philanthropy model. A national movement of Social
Venture Partners has developed active programs in at least eight
cities across the country modeled after the Social Venture Partners
Program initiated by Paul Brainerd, founder of the Aldus Corporation
in Seattle.
Brainerd developed an analogy between investing venture capital
in an emerging business and providing a grant to a nonprofit
organization, including the need for appropriate due diligence,
continuity of monitoring, technical and/or management support,
and objective measures for determining success. Based on this
analogy, he formed an entity called Social Venture Partners
in 1997. Seattle’s SVP has grown from 30 partners to 195 and
is involved with 20 organizations. Kansas City launched its
own SVP in October with the support of the Kaufmann Foundation
and Kansas City Community Foundation.
Now the concept has found a home in St. Louis. John Fort, a
St. Louis businessman and “social entrepreneur,” discovered
a kindred spirit in Paul Brainerd and decided to spearhead the
effort to develop a Social Venture Partners in St. Louis. Fort,
current program manager of Children’s Legal Alliance, a program
he seed-funded and developed at Legal Services of Eastern Missouri,
long ago realized his interest in philanthropy was more than
the traditional route of writing a check or serving on a board.
“I wanted to be more engaged but felt alone in my interest in
venture philanthropy,” he says. “When I heard about SVP, I realized
there were many others who had the same desire to be more hands-on
in philanthropy. SVP is now a passion of mine. It provides another
way to direct and connect philanthropic interests to create
a better community. The SVP should be seen as a positive addition
to the current philanthropic landscape.”
In the fall of 1999, Fort attended a conference in Dallas about
SVPs that included representatives from several other cities
interested in developing SVPs.
“I was amazed at how committed the other SVP leaders were,”
Fort says. “I thought it was a great idea for St. Louis and
soon teamed up with the St. Louis Community Foundation and the
RCGA to put together a plan for starting an SVP here.”
That partnership led to a luncheon held Sept. 26 hosted by the
Regional Business Council at the RCGA to introduce the SVP concept
to a group of foundation and business leaders. Presenters included
Paul Shoemaker, executive director of Social Venture Partners
of Seattle, and Jerry Kitzi, president of Social Venture Partners
of Greater Kansas City.
Shoemaker came from the world of Microsoft before taking the
helm of Social Venture Partners. But he emphasizes SVPs are
not just for young people or techies. “The SVP represents the
fabric and makeup of its community,” he says. “Seattle happens
to be dominated by the technology field but in St. Louis there
is a wonderful diversity of industries that can help build a
very strong SVP.”
“New venture philanthropy is a way to engage a new generation
of people in investing in the community,” notes Kathy Osborn
of the RCGA. “In the SVP, the investment of time and money doesn’t
garner a return of money, but rather a stronger nonprofit community
and measurable results.”
Many new businesses, especially in the technology field, have
achieved significant growth and success. “They are poised to
consider how they can give back to the community where their
businesses have flourished,” Osborn says. Many of these business
leaders are interested in approaching philanthropic efforts
in a new way with a more hands-on approach than previous generations.
Who Wants to Be a Venture Philanthropist?
Ten years ago, there were just 1.3 millionaires. Today there
are 5 million. Forbes magazine predicts a total of 20 million
millionaires in 10 years. “New wealth” from technology wizards
and dot.com founders is merging with inherited wealth to create
a rising river of funds to American charities. Foundation giving
grew by $3.3 billion in 1999 in the United States.
“There’s a change in thinking about philanthropy today,” Fort
says. “It’s in many ways a shift due to economics and the growth
in technology. People look at philanthropy with more of an entrepreneurial
spirit. They want to be engaged and see how their money is being
used versus what it’s used on. It’s more of an investment.”
Fred Perabo, acting president of Metropolitan Association for
Philanthropy (MAP), says he has noted this trend, too. “Donors
are being proactive in determining needs to be addressed and
measuring the effectiveness of their grants,” he says. “SVP
is an exciting, timely concept. The idea of more people engaged
in community life and civic ventures is invigorating. It will
help MAP too because it’s a way of getting new people to the
table and looking differently at the role of philanthropy in
St. Louis.”
Fort believes people are looking for more positive interactions
because of the trend of the experiential economy. “Our society
has become disconnected in many ways,” he says. “Individuals
are looking for ways to connect and do something more meaningful
within their communities. This, combined with increased wealth,
has led us to the second Golden Age of Philanthropy. Bill Gates
is in essence the new Rockefeller. It’s exciting to be involved
with philanthropy during this time. The possibilities are endless.”
Nonprofits In Need
Another reason philanthropy is growing is based on nonprofits’
need. In recent years, there is less and more restrictive government
support and funding of nonprofits so they’ve had to rely more
on local community and corporate support. “The nonprofits’ need
for more capacity building including technology, management
skills and operational effectiveness has led to changes in philanthropy,”
Fort says. “A St. Louis SVP would be important to many local
nonprofits because of its focus on long-term funding tied to
capacity building by the SVP partners.”
Donn Lux, president of David Sherman Corporation, is a founding
partner in the St. Louis SVP. He had heard about the Seattle
SVP from his former co-worker, Paul Shoemaker, who put him in
touch with Fort. “The SVP idea hit a chord with me because venture
philanthropy is like starting a new business,” Lux says. “I
haven’t had the opportunity to be involved with philanthropy
in such an exciting way. It’s a great way for busy people to
be involved and get personal satisfaction from using their business
acumen and their financial contributions to really help others.
I finally found the right avenue to give something back to the
community through the SVP.”
Joe Blomker, president of Maryville Technologies, is on the
steering committee to develop the St. Louis SVP. He is already
committed to being a partner. “I’m very excited about the impact
the SVP can have on St. Louis,” he says. “St. Louis has phenomenal
non-profit institutions that have been pulled in two dramatically
different directions: delivering services and dealing with funding
requirements. SVP focuses its attention on the middle ground
to improve operational effectiveness, efficiencies and capital.
This allows the potential to exponentially improve the organization.”
For the past three years, Maryville Technologies has taken a
venture philanthropy approach by adopting the Family and Youth
Center in St. Louis. The agency focuses on computer literacy.
Maryville Technologies serves as an idea bouncer for the agency
and employees donate time to help train people on computers.
“Now SVP will be the vehicle that can do these kinds of things
community wide,” Blomker says. “Finding synergies between non-profits
and companies will make the effort even more effective and beneficial.
In Seattle, they’ve seen that the SVP is a catalyst for people
to get involved at every level. Philanthropy takes on a life
of its own and gains momentum.”
Blomker adds that traditional methods of support such as the
United Way are still important. “SVP is just one vehicle to
support the needs of the community,” he says. “But to have the
most impact, intimate involvement is needed. By working to add
vitality to the community, it benefits the business community
and our families.”
John Capps, president of Plaza Motors and a founding SVP partner,
says too many nonprofits are undercapitalized. “They provide
essential services but may not be able to support capacity,”
he says. “Through the SVP, we will attack the root problems
and increase capacity by offering various types of expertise
as well as financial support. Then ultimately, the nonprofit
many become more self-funded.” For Capps,
involvement in the SVP is a more meaningful, “fascinating” way
to engage civically and philanthropically. “I’m inundated with
calls everyday from people requesting donations, but the money
I give them is not always meaningful—I’m giving a little to
a lot,” he says. “Through the SVP I can make a more significant,
long-term impact. And a byproduct is that I get to meet other
interesting people along the way.”
Capps says the business model approach to giving is attractive
to his generation. “Outcome-based giving and hands-on involvement
is what many of us have been looking for,” he says. “It’s very
holistic, not just project specific. People are enthused about
the idea and I believe will get involved just based on word
of mouth.”
How the SVP Works
The St. Louis SVP will officially launch in January 2001 as
a joint civic venture of the St. Louis Community Foundation,
the RCGA and the Regional Business Coucil, and other civic investors
with an initial group of managing partners who will serve as
a Steering Committee. The ultimate goal is to recruit 100 partners
by the end of 2002.
The SVP will raise funds from individuals—investor partners—who
agree to give a minimum of $5,000 each year for a two-year period.
The partners’ financial investments will be pooled into a fund
managed by the St. Louis Community Foundation. Based on the
collective decision of the partners, investments are made in
a small number of non-profit organizations. This venture philanthropy
approach includes long-term funding of general operations, the
development of a partnership with the nonprofit organization
and the measurement of sustained incomes.
The RCGA will house the project and provide administrative and
operating support.
Partner involvement ranges from hands-on work to management
support. Although partners are not required to contribute time
and expertise, most do. The heart of the SVP model is engagement
of the partners in three teams that will:
• manage organizational infrastructure issues such as outreach,
recruitment and communications
• make decisions about which nonprofits to support
• organize volunteer efforts to help grantees and determine
target issues.
Educational programs about philanthropy and community for partners
and their families also is a cornerstone of the SVP program.
The idea will be to create expertise and inspiration about community
engagement and philanthropy.
“Under the SVP model, we’ll partner with an agency where we
strongly believe we can make a difference and that will be a
good fit,” Fort says. “It could be a small organization that
does great work but just needs a push. But it’s not for all
nonprofits. Initially, we will just be very focused on two or
three organizations.”
Tullia Hamilton, executive director of the St. Louis Community
Foundation, says the SVP is an idea whose time has come. “For
the St. Louis Community Foundation, diversity is key,” she says.
“It’s important and necessary to have a variety of approaches
to helping nonprofits. There is no one right way so it’s good
to have as many models as possible. The SVP is another funding
tool.”
She continues: “It’s exciting to be expanding the philanthropic
pie. I think the SVP will encourage people to be more involved
and supportive of nonprofits both individually and through the
SVP.”
“The SVP is a new model for people who recognize the importance
of a stronger community to be involved and work with others
who have similar interests in philanthropy,” John Fort says.
“I like to think of our SVP as a Philanthropic Club, much like
a book club or other investment club. It’s very exciting
Joyce Romine is a St. Louis-based writer and owner of Streamline
Communications.
