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A New Model for Philanthropy

The 1 June issue of Forbes magazine reports on "The
New Activist Givers,"
who, according to the article, are changing
the way private foundations interact with their funding recipients (hat-tip: Philanthropy News Digest). This new
breed of donor, many of whom made their money in the Internet boom of the
1990s, gets involved with funding recipients in much the same way that venture
capitalists get involved with their investments.

The article tells about software entrepreneur Mario Marino, who put $9 million
of his own money into Venture Philanthropy Partners. VPP gives money mainly to
inner-city educational and health-care projects. Its due-diligence approach
includes "top-to-bottom reviews of the handpicked charity, identification
of expansion opportunities and management goals, and clear targets backed by
quarterly reviews to ensure benchmarks are getting hit."

This merger of hands-on venture capitalism with philanthropy is spreading to
scientific research funding as well. In Science Careers this week, "Opportunities"
columnist Peter Fiske talks with
entrepreneur Avi Spier
about the partnership between his company,
Allon Therapeutics, and the Institute for the Study of Aging (ISOA). In their
arrangement, ISOA provided early funding to the company, and with that support
Allon Therapeutics developed promising new treatments for Alzheimer’s disease.

But ISOA didn’t just write a
check. Spier reports that ISOA "acted as a venture investor, which meant
that Allon had to make a strong business case for realizing clinical and
commercial success. The institute put the company’s business plan and
supporting documents through more extensive review and due diligence than
typical VC deals." Spier says that other philanthropies are beginning to
use this more activist approach, including the Cystic Fibrosis Foundation, the
Juvenile Diabetes Research Foundation, and the Bill and Melinda Gates

One comment on “A New Model for Philanthropy”

  1. Michael says:

    I think this is a good method for fundraising. It will ensure that money goes to the best charities and scientific research.
    CLEAR Wireless Internet

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