March 06, 2014
(Heather Grady most recently was vice president for foundation initiatives at the Rockefeller Foundation and currently is serving as an advisor to the Conrad N. Hilton Foundation. As a member of the Rockefeller Foundation executive team, she provided vision, leadership, and direction to help the foundation achieve its goals of building resilience and promoting equitable growth and also managed a diverse group of professionals in the U.S., Asia, and Africa working in a a range of areas, from climate change, agriculture, and health to transportation, impact investing, and employment. This is her first post for PhilanTopic.)
Venture Philanthropy in Development (90 pages, PDF), a new report from the OECD's NetFWD, charts the directions that many foundations and individual philanthropists are taking to tackle today's social, environmental, and economic challenges. While the term venture philanthropy has been around for almost half a century (credited in the report to John D. Rockefeller III, who said it was "the imaginative pursuit of less conventional charitable purposes"), it is seen as an emergent field, and there is little enough agreement on the term itself that the originators of the report gave scant attention to precisely defining it.
At a panel I moderated on the occasion of the report's launch, common dimensions of venture philanthropy were easily identified: high engagement with the grantees supported within any particular portfolio; provision of non-financial as well as financial support with a targeted group of grantees (e.g., convenings); an entrepreneurial start-up approach; a blending or even blurring of the lines between grant contributions and investments for financial return; working at a systems level to influence a combination of practice, policy, markets and even public opinion; and focusing on a positive enabling environment to achieve success.
The report is based on research from which the authors conclude that those sharing in depth their venture philanthropy experiences (the Rockefeller, Lundin, Shell, and Emirates foundations) were on a transformational journey, one that was not a "from-to" path but a much more inclusive and – as I read it – meandering one. As an integrative approach, it provides new opportunities for foundations to work with their grantees differently, and also for coalitions of foundations, civil society organizations, governments, and businesses to enter differently into shared ventures, not unlike the collective impact approach.
I learned a new term when one of the main researchers, Alexandra Stubbings, told us that the approach may force foundations to do a "drain-up" review. While that sounds fairly unpleasant, philanthropic institutions do need a good shaking out now and again.
Our discussion didn't gloss over the doubts and risks. First and foremost is the inevitable question of whether all this is simply old wine in a new bottle. Paula Johnson of Harvard's Hauser Center reminded us that venture philanthropy has been around for a couple of decades, and what is particularly interesting now is the nexus of venture philanthropy and development. She also noted that we need to look at how grantees feel about this and be honest that part of the appeal is the interest of many (often newer) funders to roll up their sleeves.
David Crook of the STARS Foundation, which didn't participate in the study but is an important member of NetFWD, sees the litmus test of venture philanthropy as whether it can address the most fundamental problem facing most NGOs today – a dearth of stable, unrestricted funding, which prevents them from being independent and resilient and requires them to constantly chase funds. He also wondered whether it will address, or exacerbate, the power imbalance between donors and grantees. I wondered if there wasn't a conflating of venture philanthropy's measurement emphasis with what is, quite simply, a broader embracing of monitoring and evaluation methods among an increasing number of foundations. Meanwhile, probably the biggest potential confusion is that venture philanthropy will be conflated with support for market-based approaches.
One finding of the study was that the agendas of foundations, official donor agencies, and governments can be starkly different, even when aims are shared. Ultimately a measure of the worth of venture philanthropy will be whether it stimulates and enhances collaboration and reduces fragmentation of effort – no small task in an environment bursting with new and often unpredictable sources of wealth and giving. Will it enable smaller foundations and NGOs to punch above their weight and bring fresh thinking and ingenuity to the table? The answers to these questions are crucial to solving many of society's most intractable problems.
Given its nature, venture philanthropy can be likened more to taking an exciting journey than following a playbook. And, as with all emergent trends, thoughtful and engaged leadership with "ears to the ground" will determine whether it is a passing fad or an increasingly important direction for philanthropic institutions.
We'd love to hear what you all think. Use the comments section below to share your thoughts, experiences, and caveats….
-- Heather Grady