What is venture philanthropy?
Venture philanthropy combines the principles of venture capital with the goal of supporting non-profit organizations and projects. It is an innovative approach in which venture capitalists not only provide financial support, but also contribute their expertise, networks and experience in order to achieve a significant social return. In contrast to pure impact investing, venture philanthropy goes beyond mere financing. It focuses on the active participation of the donors to help the beneficiary organizations achieve their goals. When selecting projects and organizations, particular emphasis is placed on their potential for social impact, similar to venture capital.
The three pillars of venture philanthropy
In contrast to traditional donations, which are usually made without direct influence, venture philanthropy is characterized by active involvement. It is based on three central pillars:
- Financial capital: The provision of financial resources is an indispensable component of social impact venture capital, as it enables non-profit organizations and projects to carry out their work. Growth and further development are also only possible with adequate financial resources. While a financial return for investors is conceivable, venture philanthropy focuses primarily on a long-term and sustainable social impact.
- Intellectual capital: Venture philanthropy involves the active participation of investors in terms of entrepreneurial strategies, management, mentoring and advice. Non-profit organizations and projects benefit from an entrepreneurial, impact-oriented approach that helps them to professionalize their structures and processes and make them more effective.
- Social capital: The third pillar consists of the networks and contacts of investors from which a philanthropic project can benefit. Business relationships within the third sector and with the private sector can open up new opportunities and perspectives for a non-profit organization.
Social venture capital as a driver for the third sector
Applying successful and proven entrepreneurial approaches to non-profit organizations and projects can accelerate the development of philanthropic projects. Techniques and methods that have proven successful in the private sector are also highly relevant to nonprofit causes. Venture philanthropy integrates capacity building, an impact-oriented mindset and effective impact measurement into the nonprofit sector, which leads to continuous development of the entire sector. The impact of an entrepreneurial approach on a project or organization is individual and should always be evaluated based on the specific circumstances. A collaborative partnership between investors and beneficiaries, based on trust, shared values and goals, is crucial.
Venture philanthropy in Switzerland
Venture philanthropy is a relatively new concept that was introduced in the USA in 1969 by J. D. Rockefeller III. In 2004, the European Venture Philanthropy Association (EVPA) was founded, whose members include a number of Swiss organizations. In Switzerland, social enterprises, foundations, banks, companies, private individuals and charitable organizations work together and benefit from each other’s strengths. Spheriq, the largest digital philanthropy community in Switzerland, offers a platform for
