In 1969, John D. Rockefeller III defined venture philanthropy as, “An adventurous approach to funding unpopular social causes.” The concept of venture philanthropy has been around a long time and its goal is to improve social systems instead of individual organizations or projects. Most of the same venture capital principles are used when investing in social ventures. While there isn’t a primary interest in making a profit, return on investment isn’t out of the ordinary.
Venture philanthropists are generally very involved in the oversight and invest more than just money. They support the organization in non-financial ways such as providing executive expertise and marketing support. Often major donors will sit on the organization’s board.
This type of philanthropy can take a variety of forms which include private foundations created by wealthy individuals, grants from the government or universities, or investments by large companies or other institutions.
Another form of philanthropy is impact investment. It differs from venture philanthropy in several ways. Typically there is no pre-determined beginning and end of the project, and while venture philanthropy focuses on social change, impact investment encompasses a broader range of projects with a global focus.
In 2007 The Rockefeller Foundation defined impact investing as, “Mobilizing large pools of private capital from new sources to address the world’s most critical problems.”
Both types of philanthropy can incorporate financial returns as part of their investment but that is not always the case. Many large corporations and foundations are not just investing in the stock market to make money. They’re choosing to invest in initiatives that improve the world and address issues such as poverty, poor education, and climate change.
Funding for impact investing comes from fund managers, banks, wealthy families or individuals, or pensions. These investments are aimed at improving access to financial services, providing healthcare and housing, and sustainability and conservation. Many investors support start-up organizations with the goal of the new entity eventually being philanthropic contributors. Some investors seek only modest returns or aim to replace the original capital so it can be reinvested.
GSX Ventures is committed to the support of philanthropy and non-profit organizations. Our non-profit group is experienced working with religious groups and foundations to develop strategies in keeping with their goals and missions.