By Paul Shoemaker, Founding President, Social Venture Partners International
Wherever I travel, it’s clear that communities are confronting big problems. Traditional philanthropy of the cheque-writing variety is not strong enough to solve them.
Instead, I’d like us to think about what might be possible if we contributed our intellectual and social capital as well as our money; if we pooled the charitable contributions of multiple people and made more substantial grants to organizations that are leading social change.
Strategic Philanthropy
Venture philanthropy recognizes that a great program – one that teaches kids to read, helps lift people out of poverty, or improves health outcomes – is no stronger than the organization underpinning its delivery. It’s crucial to invest in the organization and its capacity. If you want to have effective, sustainable programs that really make a difference, you must have a strong, stable organizational infrastructure supporting it. You have to go beyond writing a check and take a long-term view of what it means to invest in solutions to global or local problems.
The characteristics of venture philanthropy (or engaged or strategic philanthropy, terms which are also often used) are: high engagement on the part of donors; multi-year funding; a focus on building the capacity of a social purpose organization to fulfill its mission; offering financial and intellectual capital; and a determination to evaluate performance – to “see what works.”
The term gained currency in the 1990s when a new generation of philanthropists began to think about how they could have the greatest possible impact on an organization or a cause. It uses many of the tools of venture capital funding to support organizations taking an innovative, high potential approach to some of our most difficult and entrenched social issues.
The concept has spread globally. Specific practices may be adapted to local conditions, but it maintains a core set of key characteristics: high engagement; tailored financing; multi-year support; non-financial support; involvement of networks; organizational capacity-building; and performance measurement. It encompasses not just grants, but equity investments, loans, lines of credit, mezzanine funding and “patient” capital.
It’s About More Than Money
Please don’t misunderstand me: cheques are great – nonprofits and social innovators need them! I am the first to acknowledge this. But sometimes the people who write them have skills that are just as helpful, and sometimes more powerful. Developing and tapping those skills is a major part of a new organization in Brazil we are calling NESsT Partners.
I’ve spent a lot of time talking with people who feel helpless in the face of the problems they see around them: there’s a sense of “What on earth could I do that would make a difference?” The fact is, we are selling ourselves short: individuals have more to give – and it’s not just money. Let’s focus instead on building powerful relationships among people who want to give back and the social enterprises and social innovators who make change possible.
Social Venture Partners (SVP), the organization I’ve worked with for 17 years is about more than writing a cheque: it’s about partnering wSocial Venture Partners (SVP), the organization I’ve worked with for 17 years is about more than writing a cheque: it’s about partnering with the nonprofits and social innovators who are trying to make a difference in our communities.
In Sao Paulo, we are working with the team at NESsT Brazil to offer individuals the chance to bring their professional and business skills to the table, and put them in service to the social challenges that Brazilians care about most.
Think of this approach as a three legged stool:
- The first leg is program capital- the knowledge and understanding of a particular issue that social enterprises and social innovators bring to some of Brazil’s entrenched social problems
- The second leg is the financial capital contributed by members of NESsT Partners to a pooled fund that makes grants to social innovators. It’s an effective and fun way to leverage your charitable dollars
- The third leg is the intellectual and social capital the members of NESsT Partners can bring to social innovators.
Working Side by Side with Social Innovators
We want to provide talented, thoughtful individuals with the opportunity to use their time and skills to strengthen nonprofits. We call it strategic volunteering: the goal is to work side by side with social enterprises, connecting them with skilled volunteer consultants who can help take an organization’s social mission to a new level.
Put it all together, and you have a model that works on multiple levels: it allows individuals to amplify their giving; it strengthens and funds social enterprises and social innovators and helps extend their reach; and it equips communities to tackle our greatest social challenges and our common goals together.
Brazil Context: Barrier or Opportunity?
Philanthropy in Brazil has advanced greatly in the last 20 years, particularly within corporations that have started or improved their institutes and foundations. The concept of individual or family philanthropy, however, has not grown within the Brazilian culture. Whether this is because there are no attractive tax incentives or because giving back is not engrained through education for Brazilians, the fact is that such a culture does not exist and this is always an obstacle to consider when working with philanthropy in Brazil.
The engaged philanthropy model is an innovative proposal that leverages resources and skills together to act effectively in solving social problems. By being participative, this model builds long-term relationships and at the same time provides learning for both supported social entrepreneurs and engaged philanthropists.
The concept of social business in Brazil has grown over the last five years and this has meant that every year new business ideas are put into practice, expanding the need for investment in the early stage. Social businesses need flexible resources (i.e. donations, recoverable grants, loans or equity), that when combined and applied at the right time, contribute to their development. Different from regular business, they take longer to reach a break-even point and to be ready for scaling.
Quoting NESsT in its article Scaling Social Enterprise Impact by Investing at the Early Stage:
“The persistent problems of unemployment, poverty, social exclusion, poor social services, and environmental degradation – even in fast-growing emerging market economies – call for new, innovative solutions. Neither pure market-based nor pure public sector approaches have effectively confronted these problems. Social enterprises offer a hybrid response to complex social problems. Social enterprises address the social and economic barriers that face marginalized or disadvantaged communities, and attempt to tackle them using a market-based approach.”
To act in this hybrid and complex market, we also need hybrid and complex resources. Here is where engaged philanthropy can play a key role. So as we see, the barriers to philanthropy in Brazil are also opportunities for bringing new innovative models, such as engaged philanthropy, which is the basis of NESsT Partners program.
Combining Our Heads and Hearts
NESsT Partners is a chance to combine the head and the heart in a purposeful, effective way. An important by-product is that participants will gain a real understanding of the complex social issues confronting Brazil. Fixing these problems is way harder than succeeding in business or in a profession: the reasons why a child will thrive or not are many and intertwined: poverty, degree of access to quality education and health care, how capable parents are, neighborhood stability and more.
Building better communities takes time, but we’ll have a greater chance of success if we pool our talents and finances, research where we can make the greatest contribution and focus our efforts there.
We’ve already seen results in the cities where SVP operates, in efforts to ensure more children attend pre-school and arrive at school ready to learn; more teenagers and young adults make it through high school, ready for a job or further education; more people have access to the training and support they need in order to support a family.
There’s now an international network of SVPs in the US, Canada, China, India, Japan, Korea, the UK and Australia – altogether, close to 4,000 people in 39 cities. I hope Sao Paulo and NESsT Partners will soon be part of this international network.
Change starts with you. What change do you want to see in your community? What issues are you passionate about? Think about what you might do, and what might be achieved if you had a network of individuals investing time, talent and money. If you’re out to change the world, NESsT Partners is here to connect you to the people and organizations that can make a difference.
Paul Shoemaker is the Founding President of Social Venture Partners International—a global network of thousands of social innovators, entrepreneurs, philanthropists, and business and community leaders that fund and support social change agents in nearly 40 cities and 8 countries.