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Venture Philanthropy

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Non-profits face many challenges in their efforts to address society’s most pressing needs. Many of the organizational and structural challenges of non-profits stem from their traditional relationships with the foundations that fund them. Non-profit leaders and workers are often frustrated at the inability for their programs to achieve their goals. Many programs with high potential often fall short. The limited impact of non-profits is mostly due to the way their funding foundations design their grants.

For the foundation, program efficacy is high priority, they design grants that put the bulk of attention and funds on the end product. As a result, many valuable causes are unable to be addressed, many programs unable to sustain. Non-profits and foundations must adapt their traditional relationship to a more effective model; non-profits need the space to build a sustainable infrastructure and foundations need to value and fund these efforts.

Venture philanthropy is a strategy for creating sustainable infrastructures and programs for philanthropic organizations. Spearheaded by big name venture capitalists such as, Chris Sacca the approach incorporates elements of venture capitalism into the structure of non-profits. The strategy has been a valuable tool for many contemporary non-profits working to fight climate change, structural racism, and poverty.

Nonprofits and Foundation Funding: The Traditional Approach

Foundations are the main source of funding for non-profits. The traditional attitude of the foundation is to focus on the mission at all costs; they view organizational capacity as a distraction to powering results. In turn, non-profits have run off of disorganized staff, lack of solid infrastructure, and lack of resources. No one has invested in the non-profit, only their goals and mission.

Traditionally grants are designed with restrictions on how the granted money can be spent. Foundations normally break funding down into three main stages: development of a program, early assessment of results, and fundraising to gain additional support. The focus is short-term. This leaves the non-profit with scarce resources for using their time to set up sustainable models that can have long lasting implementation plans. Additionally, the relationship fostered between foundations and non-profits is not founded on partnership but rather oversight. Rather than taking a partnering role, grant providers provides the occasional check-ins rather than insight and guidance.

Venture Capitalists and Startups: A Closer Look

Venture capital investment projects inherently focus on the long-term. Venture capital financing includes money, expertise, and assistance given by investors to start ups and new businesses that have long-term growth potential. Venture capital investors are typically people that have accrued a large wealth base, but can also be investment banks, venture capital funds, and other financial institutions. The key to venture capital success is its holistic approach to success-the value given is not solely in monetary form.

The high-risk nature of these investments causes investors to be actively involved in the success of these projects. Venture capital investors are partners, rather than overseers. Investors often supplement their large financial investments with guidance on critical decisions implementing infrastructure, and mentoring team members. Venture capital investors have long lasting relationships with their startups and are key players in their success. They take the time to develop a deep understanding of the complex organizational needs.

Venture Philanthropy

Venture philanthropy looks to incorporate some of the strategies of venture capital projects into the structure of philanthropic and non-profit organizations. Non-profits that utilize this approach often look for guidance from successful entrepreneurs and implement business like strategies into their infrastructure. Bringing venture capitalists on board provides an essential resource.

This strategy looks to adapt the traditional relationship between non-profits and foundations to a more sustainable and successful model. In this approach, the foundation and non-profit develop a partnership based on understanding and addressing structural needs. Rather than have a large and overwhelming intended goal, non-profits would design a series of smaller goals to be assessed over longer periods of time.

Charity Water: A Venture Philanthropy Success Story

In 2007, Scott Harrison was trying to figure out the strategies for taking his non-profit to the next level of success and outreach. In efforts to understand branding and business strategies, Harrison reached out to some of the world’s most successful entrepreneurs and venture capitalists for input. Chris Sacca, as well as many other entrepreneurs, became a vital sounding board of strategy for Harrison. This eclectic group of entrepreneurs came to the table with more than just funding; they provided Harrison with their time and talents. These valuable mentors advised Harrison on how to create a great product and develop an organized infrastructure. Fast-forward to 2019 and Charity Water is one of the most acclaimed and successful non-profits in the U.S.

Pressing social issues deserve the holistic efforts needed to create sustainable solutions. Non-profits have historically acted as societies valiant fighters of social change; however, they need the space to develop structure and funds to develop a productive infrastructure. Employing venture capital strategies is a great tool for non-profit leaders-there are many advantages to employing a business mind.


The Psychology of the Haves and the Have Nots

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I recently received this blog post in my Inbox from a marketing expert that I follow for work. I have followed Julie through a divorce, some rough times, restarting her business and now excelling at what she is doing. Her personal story really resonates with me on a personal level.

And of course, the article title, Leaving Scarcity Behind: How To Make A Large Purchase Decision With Abundance Based Thinking got my attention. As I continue to work to get on more solid ground financially and make wiser decisions. I hope to leave the “scarcity” behind and have a time of “abundance” – someday.

Here’s my questions: for those of you who have been on this journey, have paid off all your debt, was their a mindset shift afterwards? Not immediately…but as your journey away from debt continued?

My Mindset

I already recognize that even though business is going well, and I am making continued strides toward being financially healthier, I still function with the mindset of “it could all fall apart tomorrow.” And it could, for sure. I know this, I’ve been there, and not too long ago.

When the kids ask for something, I still answer with “we can’t afford that” or “we don’t have the money for that.” Which I know leaves them with the impression that we don’t have money still.

And I know what I should be saying is “there are other places we need to spend that money right now” or “maybe down the road” or something like that.

But really I am still very much in poverty mode. Every dime that comes in is accounted for in one form or another…whether it’s to pay a monthly bill or earmarked for a debt payment. And other than what I consider essentials…kids activities or trips to see my family, I really don’t consider any other expenditures. My immediate response “we don’t have money for that.” When the truth is, we do have a buffer now and I could allocate money toward that.

Not that I’m planning to go that direction now. I really am 100% gung ho about getting debt free, especially these last two years while Princess is in high school.

The Future – After I’m Debt Free

But will there be a time, after I am debt free and continuing to make good financial decisions, that I will start to feel safe again. When I will feel okay with spending money again?

I can’t imagine every feeling comfortable joining an “exclusive club” like Julie mentions in her article or buying a name brand bag…those just aren’t my things. My temptation is travel and experiences with my kids, which I’m sure long time readers know.

But now, the thought of any extra money going anywhere just feels back in my stomach. And even with a decent EF, I always feel poor. Does that make sense?

 


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