Donors practicing venture philanthropy see their gifts as investments and draw on the analytical rigor of the for-profit world to assess the nonprofit organizations they support. It has become increasingly popular as businesses show more concern for social good, traditional funding sources have shrunk, and donors demand more impact from their giving. To explore the trends and what they mean for giving, SSIR's publisher Michael Voss speaks with Jim Bildner, CEO of Draper Richards Kaplan Foundation, and Julia Reed, managing director of relationship management with Schwab Charitable.

Michael Voss: Julia, to kick us off, can you share with our listeners a simple definition of what’s meant by venture philanthropy and your sense of how venture philanthropy fits in the broader philanthropic ecosystem?

Julia Reed: Thank you for having me today. Venture philanthropy is the practice of defining your philanthropic asset, that is what you give to charity as an investment. As an investor, you may seek out securities or companies that you deem good opportunities based on their performance, their social responsibility approach, or your own values and risk appetite. As a venture philanthropist, you are selecting not-for-profit organizations with similar rigor, the impact, or potential impact that an organization has as a metric of its performance. So the term ‘venture’ in this context really refers to charitable giving as an investment, where the primary performance metric is the impact of the beneficiaries you’re giving will have.

In terms of where venture philanthropy fits in the landscape. I think it takes a different piece of that pie for each of us, just like a balanced investment portfolio. The biggest risk with the gift of charity, though, is you make a gift to a social entrepreneur or not-for-profit that doesn’t have the impact that you expected. A social venture fund can diversify your philanthropic investment among many expertly-vetted not-for-profits, and you can be a part of a fund’s impact with a tax-deductible grant made payable to the fund, for example.

Read the full article about venture philanthropy's role in effective charity with Jim Bildner, Julia Reed, and Michael Voss at Stanford Social Innovation Review.