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Overview

The nonprofit world and the philanthropy that supports it are experiencing extensive, if not radical, change. Change is coming for many reasons and in many forms. The New Economy has spawned a massive creation of new wealth and with it different expectations for how best to channel that wealth for societal good. Information technology and interactive communications are transforming the way organizations communicate with each other, the people they serve and those who fund them. Privatization, coupled with an increased emphasis on wealth creation within nonprofits, is leading to a blurring of roles between profits and nonprofits.

The ultimate force for change will be the nonprofit funding mechanism itself. Today, an extraordinary opportunity exists to borrow some of the best practices of the New Economy and blend them with the knowledge of traditional philanthropy to create a more effective philanthropy.

One such approach has been called "venture philanthropy," a relatively new field that has no single accepted approach or agreed-upon definition.

The Morino Institute, working with Community Wealth Ventures, has done extensive research in this area. In partnership with business and community leaders and the Community Foundation for the National Capital Region, the Institute created, incubated and launched Venture Philanthropy Partners.

This approach is modeled after practices of high-end venture capital investors, those few who work to build great organizations instead of just providing capital. With this form of venture philanthropy, the most successful funders are strategic partners with the organizations they fund. Instead of ending with the funding, their work starts there. They develop relationships and build trust with the people of the organizations in which they invest. Instead of intruding and directing, they support and consult. Instead of controlling, they become partners that share risk. They provide management advice. They help managers deploy technology that helps them achieve their missions. They make long-term commitments that enable organizations to invest in capacity for the long haul. More than anything else, they help build great organizations that, in turn, create great value. Experience suggests that many nonprofits—and therefore the people and communities they serve—could benefit from a similar approach.

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