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Why Venture Philanthropy Is the Future of Giving

 

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For decades, the formula has remained unchanged: donors give to charities, nonprofits, and other social purpose organizations — here in Canada, where LIFT Philanthropy Partners is based, more than $12 billion was donated last year — and organizations, in turn, use those donations to run their programs and offer services in their communities. Benefits are considered to be directly correlated to the size of the donation: more money = more programs and services; less money = fewer programs and services. The cycle simply repeats ad infinitum, without a real understanding of results, impact, or long-term value.

The chief executives of many of these nonprofits are so busy feeding the cycle so as to serve their vulnerable clients that they have little or no time left for the business planning or evaluation that would be the next steps in building organizational capacity. The result is real and systemic challenges that, year after year, aren’t addressed in any meaningful way. For example, despite $12 billion in donations, 42 percent of Canadians have low literacy skills, more than 20 percent of those over the age of 20 have not completed high school, and only 4.4 percent of youth get the recommended amount of physical activity.

How can we help nonprofits do more to tackle these problems? How can we ensure that every dollar of that $12 billion is being used to address the very real, very systemic challenges that are a reality for too many people? How can we get more results from hard-working organizations that are already stretched thin?

What if instead of treating charities like charity cases, we thought of them and invested in them as businesses — helping them scale, become more efficient, and deliver a better ROI? That’s the thinking behind venture philanthropy. And it’s the kind of thinking that should be the future of funding for nonprofits in Canada, the United States, and around the world. Venture philanthropy makes nonprofits stronger, more sustainable, and more efficient at delivering impact, so that they in turn can help more of the vulnerable and at-risk. Although the concept has been around for years — in the U.S., there has even been discussion of whether venture philanthropy has peaked — it has yet to reach its full potential in Canada. Instead of simply providing cash grants to charities, nonprofits, and social enterprises, venture philanthropy invests in their business structure to help them grow and function more effectively. It's the difference between giving someone a fish and teaching him/her to fish.

Venture philanthropists like LIFT Philanthropy Partners select proven organizations with unrealized growth potential, work closely with the organization to develop a strategic plan, and then provide access to the financial and non-financial support they need to implement the plan, with hands-on support from our staff team and business expertise from our pro bono partner network. We may help recruit for a new executive position, design a new governance model, or develop a sponsorship plan — things that allow an organization to fundamentally improve and increase the services it provides to those most in need. The difference is that instead of a financial return on a business investment, the dividends we reap are social — and benefit an entire community and beyond.

At LIFT, we’re pioneering venture philanthropy in Canada, and we’re proud of the impact we're having. As an example, from 2012 to 2014, we worked with KidSport Canada, an organization that believes no kid should be left on the sidelines and provides families in need with financial support for registration fees and equipment. But instead of simply making a donation to the organization, which would have helped a finite number of kids over a short period, we helped KidSport improve its governance structure, enhance its brand and communications strategy, develop a national data management system, and implement a national revenue-generation program. The result is a stronger organization that’s poised to help a much greater number of kids over the long term — and, with the support of the TwentyTen Group, a LIFT partner, has already managed to secure a $1 million national partnership with CIBC, one of Canada’s leading banks — to help it do so.

Instead of asking for donations to charity, let’s start asking for investments in our future — and the future of the many incredible organizations that are helping our most vulnerable people every day. It might just be the best investment we ever make.

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The preceding is a cross-post from Philantopic, a blog for opinion and commentary on the changing world of philanthropy, brought to you by Philanthropy News Digest and Foundation Center. To read the original post, click here. Bruce Dewar is the CEO of LIFT Philanthropy Partners, a national venture philanthropy organization in Vancouver, Canada. Check out https://www.youtube.com/watch?v=iQ7mUnQDaME for LIFT’s “Anthem” on making good better.giving-small.png

Topics: Trends