| Abstract: | - Non‐traditional charitable sources of revenue may be categorised as follows:
- Venture philanthropy: Human resources and funding invested as donation in the charity by entrepreneurs, venture capitalists, trusts and corporations in search of a social return on their investment. It involves high engagement over many years with fixed milestones and tangible returns and exit achieved by developing alternative, sustainable income.
- Commercial ventures: They seek a financial return on investment by creating a social enterprise operated by charities and their trading/holding companies alone or in partnership with the corporate sector, venture capitalists or investors to provide funding. Venture philanthropists may also ‘invest’ without establishing an equity position in the commercial enterprise. Any profits are re‐directed to mission‐related activity, although the business activity may or may not be mission related.
- Social venture capital: It funds commercial ventures (as above) but may not seek a complete return on investment; instead the investor may off set some or all of the investment against social outcomes.
- Within the context of venture philanthropy, this paper demonstrates how charities, venture capitalists and entrepreneurs may work together in strategic alliances. It explores venture philanthropy from the perspective of venture capitalists and entrepreneurs, giving examples. Charities are shown how to prepare themselves to take advantage of these entrepreneurial opportunities.
- Although the emphasis in this paper is on venture philanthropy, the processes outlined may be used to help a charity take advantage of opportunities within the broader social entrepreneurial context. Successful venture capitalists and entrepreneurs have demonstrated the ability to turn outline business ideas into big results, frequently in highly competitive business environments.
- A common characteristic that appears to unite these individuals when they divert their interest toward social ventures is a desire to apply their business‐like approach, which includes planning processes, milestones and outcome measurement to their social venture activity.
Copyright © 2005 John Wiley & Sons, Ltd. |
