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Venture Philanthropy

Posted September 3, 2009 1:54 PM by Dylan Miyake

The Wall Street Journal weekend edition last weekend covered Eli Broad and his philanthropy. If you don't know, Mr. Broad is retired from for-profit jobs where he founded two Fortune 500 companies. He lives in Los Angeles and manages a foundation with $2.1 billion. As Ms. Riley, from the WSJ points, out, he is living by the Carnegie mantra of "Who dies with wealth, dies in shame."

So the gist of the article is that Mr. and Mrs. Broad are trying to give away their money in a responsible way. As we have written before in this blog, they do not see them selves as charitable bankers, just writing checks to those in need. They view themeselves as strategy-focused, and they want to know that their grants are having an impact. Ms. Naomi Schaefer Riley, the writer of the article, quotes Mr. Broad in the title of the article called "We're in the Venture Philanthropy Business."

This reminds me of another blog post I made last year about philanthrocapitalism. The topic there was about how nonprofits should be looking for ways to make their "businesses" sustainable with recurring revenue streams. Microfinance might be the best example of this. Looking a little deeper, I think these are a bit different things as Mr. Broad is not looking for a financial return, he is looking for a demonstrated impact. He wants to know, as do many others that his "investment" in nonprofits is making a difference.

I think he could find out pretty easily, if he could get his grantees to measure and manage their strategy. With a simple Balanced Scorecard, the nonprofits, even schools (an area of his focus) could demonstrate how the actions or processes they undertake link to student achievement. They could link programs to outputs and ultimately outcomes.

In a simple way, I think Mr. Broad is pushing for accountability across nonprofits, which is great, and which also gets solved by having a management framework like the Balanced Scorecard. It doesn't have to be cumbersome. Imagine having 8-10 objectives with 10-15 measures that you update quarterly. This is a great way to demonstrate to your leadership, boards, and donors that you are making an impacts. It might be a great way to get some "venture" money out of Mr. Broad. Just something to think about.