The Rockefeller Foundation recently hosted the Organization for Economic Cooperation and Development (OECD) for the launch of a new study on venture philanthropy. Venture philanthropy is not a new concept. In fact, it’s been in use long enough—at least since the 1960s—that it has taken on multiple meanings, all of which are embraced by this new report. Rather than focus narrowly on venture philanthropy as market-driven investments that must create financial returns to be viewed as sustainable, the report takes a broader view of grantmaking and investment, one that deploys system-wide approaches, longer time-frames, higher levels of engagement, and rigorous but flexible forms of evaluation.
This ‘big tent’ approach to understanding the many facets related to venture philanthropy is the right one because it reflects the inherent strengths of the philanthropic sector itself. The varying approaches and experimentation with new methodologies; and the rich variety of capacities, ideologies, networks, and resources make philanthropy a robust system, one that may appear messy when viewed as a whole, but that derives its innovative capacities from that diversity.
Despite the enormous scope of activities that have been described as “venture philanthropy,” the OECD, in particular its Network of Foundations Working for Development (NetFwd), has identified key characteristics that many venture philanthropic efforts share:
- Strategic framing which coordinates targeted resources (grants and/or investments), so that collectively they create systemic change
- Scales of intervention that address systems and sectors, rather than individual organizations or projects
- Sector focuses that tend to be cross-sectoral, engaging civil society, markets, and/or governments as needed
- Funding mechanisms that blend grants and investments, as appropriate to the theory of change
- Engagement styles that are more hands-on, using extended interactions with and sometimes between grantees
- Engagement periods that reflect the goal of systems changes, often five-to-ten years rather than one-to-two years.
- Culture and capabilities that are focused on innovation and experimentation
- Monitoring and evaluation that allows quick adaptation and focuses on outcomes and impacts.
These are not a comprehensive checklist, or a set of required litmus tests for a project or Foundation to consider itself a venture philanthropy. Instead, they constitute an overlapping set of characteristics that in some combination characterize a new approach to philanthropy. Some of the projects and foundation’s examined in this study neatly align with all or most of these characteristics. Other foundations have blended portfolios that are more heterogeneous. The Rockefeller Foundation’s work in developing the impact investing industry through the Global Impact Investing Network (GIIN), and more recent efforts to help accelerate the adoption of social impact bonds are pretty easily identified as venture philanthropy; but other important projects, like the Asian Cities Climate Change Resilience Network (ACCCRN) or Smart Power for Rural Development, bear many of the key characteristics of venture philanthropy in their multi-sector approaches to systemic change, involving long-term engagement with carefully chosen networks and clusters of grantees.