Nonprofit innovators Jed Emerson and Paul Shoemaker think that a combination of traditional and venture philanthropy is needed now for a significant positive, lasting impact on issues facing an increasingly complex society.
In a column written by the two men for Worth magazine, Shoemaker and Emerson credit "classical" philanthropy with shaping the framework for social change, but state that the full potential of social innovation in the nonprofit sector will never be fully harnessed without the help of venture philanthropy.
Shoemaker is the executive director of Social Venture Partners, a Seattle-based nonprofit technology "incubator" for children's and educational causes. Emerson is the Bloomberg Senior Research Fellow in Philanthropy at Harvard Business School and president of the Roberts Enterprise Development Fund (REDF). REDF is a San Francisco-based group that provides money, expertise and other resources to nonprofits that help poor and homeless people.
According to the REDF’s definition, venture philanthropy is the application of venture capital principals and practices to charitable causes. Venture philanthropists help nonprofits plan, launch, and manage new programs and provide grants, networking and management advice and other support to these organizations.
Shoemaker and Emerson say traditional philanthropy has helped create a charitable legacy in the U.S. that would not otherwise exist, but funding practices that worked in the past should be retooled if future progress is to be made.
"The fact is too many nonprofits are chronically under-funded and not getting the help they need to build the long-term organizational capacity and infrastructure necessary to continue to succeed at their work," the two men write.
The traditional approach of one-time support for a program -- such as a literacy effort -- and then it being funded in the long term by the government, they report, is no longer acceptable. Tapping into the new economy isn’t enough, either. What is needed is what they call diverse capital, offering customized technical and financial support to manage social sector groups.
Emerson and Shoemaker say venture capitalists not only share common principles and use various approaches, but also bring a mix of investors, focus and strategies into the social capital marketplace, creating partnerships with philanthropic resources that promote social change faster and more meaningfully.
"The emergence of new century philanthropists has helped classical philanthropists re-visit such fundamental questions as organizational development, strategy, accountability, and impact," they state.
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