The Rise of Venture Philanthropy
At the United Nations Climate Change Conference in Glasgow, Scotland in early November 2021, the Bill and Melinda Gates Foundation pledged $315 million to the Consultative Group for International Agricultural Research (CGIAR), with the goal of helping the world’s 500 million smallholder farmers withstand the effects of climate change.
It stands as just one more example of the manner in which venture philanthropy (i.e., using venture-capital principles to support socially conscious organizations) has blossomed in recent years. As an example consider the Novo Nordisk Foundation, based in Denmark. In 2020 it invested $570 million in the life sciences, and among its investments were 33 venture financings.
Then, in May of this year, Novo Holdings — the Novo Nordisk Foundation’s holding company — announced a $125 million funding round for a Singapore-based biotech company called Hummingbird Bioscience, which is developing cancer drugs.
The Nordisk and Gates Foundations are the world’s two richest philanthropic organizations, with respective endowments of $73.1 billion and $49.9 billion, and other organizations have followed their lead. Consider the Asia Venture Philanthropy Network (AVPN), which is based in Singapore and boasts over 600 members in 33 countries. In April 2021 the AVPN partnered with the Gates Foundation to form the Asia Gender Network, which endeavors to strike at the root causes of women’s issues.
And consider the African Venture Philanthropic Alliance, which is based in Kenya and reported in November 2020 that 820 social investors were operating in sub-Saharan Africa.
Forbes once ranked venture philanthropy as the fifth-most promising philanthropic trend, behind impact investing, collaborative philanthropy, the sharing of data, best practices, needs and skills and addressing social problems’ root causes, and noted that it can be particularly effective in funding medical research.
The trend is typified by venture capitalist Ron Conway, who according to Inside Philanthropy has been described as “the Godfather of Silicon Valley.” Known for his donations to the University of California, San Francisco — including the $40 million he put forth for a medical center that bears his name — he also organized a COVID-19 Tech Task Force and put his money behind Slauson & Co., a Los Angeles-based VC firm geared toward economic inclusion.
Inside Philanthropy also reports that late in 2020 Conway and his wife signed the Giving Pledge, a campaign that calls upon the world’s wealthiest people to commit to giving their majority of their riches to charitable causes. As he told Inside Philanthropy:
“I like to give big and give fast. And I encourage that in all the founders that I work with. Once you get going, give big and give fast. The more you give and the faster you give it, the more you’re going to enjoy it. It feeds on itself with a sense of satisfaction and accomplishment.”
The late philanthropist John D. Rockefeller III (1906–78) is often credited with originating the concept of venture philanthropy, in 1969, having described it as “an adventurous approach to funding unpopular social causes.” Over the years, however, the definition has evolved to encompass investment in philanthropic causes, with the expectation of promoting social good, as opposed to realizing profit. The latter makes it distinct from impact investing, which while seeking to do good remains focused on for-profit ventures.
Moreover, venture philanthropy involves providing not just financial support but leadership, guidance and advice. In the aforementioned Nordisk/Hummingboard collaboration, for example, a member of the Novo Venture team will sit on the Hummingboard board.
While some question whether venture philanthropy is a passing fad, others are fully confident that businesspeople will remain committed to making a social impact through their charitable giving in the years to come. The allure, not to mention the need, is just too great to view it any other way.