By Richard Bockoff and Barbara Bry
Throughout his successful business career, entrepreneur Alan Sorkin had a long history of involvement with numerous charitable organizations. Yet, he was frustrated because he wanted a higher level of personal participation. He also noticed that many organizations operated without accountability for their promised social results. So in 2001 Alan and his wife, Louarn, became founding members of San Diego Social Venture Partners (SDSVP), part of a national trend of what is being called venture philanthropy.
Venture philanthropists consider themselves "activist" investors, not "passive" donors. These venture funders look for both a social return on their investment (SROI) and a high level of engagement with the causes they fund. The investors require the establishment of a sustainable business model with fixed measurable milestones. Moreover, these activist investors leverage their financial contribution by providing additional value through assistance with strategic planning, marketing, board development and the development of appropriate business systems.Although venture philanthropy is only a small part of national giving, it has received a lot of publicity, and other donors, including foundations and corporations, are asking tougher questions and demanding more rigorous, verifiable outcomes from the causes they support. Venture philanthropy started in Silicon Valley in the 1990s as venture capitalists and entrepreneurs wanted to apply business principles to social problem solving. Entrepreneurs particularly understood the importance of building a solid management team just as they had done in the companies they had started.
Entrepreneurs Darcy Bingham and Carrie Stone brought the movement to San Diego, and the local Social Venture Partner group now has 70 members, primarily couples, who contribute $5,000 per couple per year.Through SDSVP the Sorkins became involved with the Human Development Foundation (HDF), one of the charitable organizations SDSVP supports. Alan feels this charitable organization is a good example of opportunities that came to fruition with SDSVP's input. HDF's goal is to help gifted children from low-income families achieve their full potential. In 2002, SDSVP provided the organization with a three-year grant of their partner's time, talents and resources. The $49,401 grant was earmarked for the Parent's PLACE, (Parent Literacy and Academic Curriculum Enrichment) Program, which places parents in the classroom so they learn their child's curriculum.
According to Marjorie Fox, HDF's executive director, the return on investment has been leveraged dramatically when you calculate the value of strategic planning, board development, the donation of 24 computers, thedevelopment of a Web site, the development of technology to track tutor time and other activities, and other financial contributions. This example of venture philanthropy shows clearly that when you leverage money with involvement, you exponentially increase the returns.Effective venture philanthropy takes money, time and effort. While it is often obvious to the recipient that outside strategic involvement produces measurable results, what is even more striking is that in talking with the "investors," one finds that their perspective is that they often feel they got more out of the process than the recipient of their support.
It is a delicate balance between the nonprofit and the funder. To lead effectively, one cannot be intrusive. But, by the same token, the nonprofit needs to understand, appreciate and create an atmosphere in which guidance can be accepted and acted upon. The nonprofit sometimes thinks that all it needs is the money. But what is most needed is "smart" money, and in that area SDSVP fills a critical role.