Venture Philanthropy: The Light for Social Enterprises

Investment and Involvement

The target of venture capital is traditional for-profit enterprises, while venture philanthropy’s target is the start-up social enterprises. Venture philanthropy not only provides financial support for the investee but also provides management, human capital and technical support. In addition to monetary measurement, venture philanthropy also emphasizes social impact.  Unlike venture capital, venture philanthropy focus more on capacity building. It is often the case that investors for social enterprises involve in daily management of the organization, and sometimes take positions in the social enterprise.

Venture Philanthropy in China

I learnt this word from the organization where I interned with in Shanghai called NPI. It is a leading organization in China which runs business in the field of non-profit incubator, venture philanthropy and CSR consulting. NPI collaborates with Lenovo Greater China on the Lenovo Venture Philanthropy Program which is mainly focus on sponsoring young social entrepreneurs. In addition to venture capital, Lenovo China offers its professional resources to assist in training and public practice for college students who are interested in social entrepreneurship. NPI helped Shanghai Civil Service Bureau to initiate a venture philanthropy program in 2010. The Shanghai Community Services Venture Philanthropy Competition sponsors innovative ideas to improve and transform Shanghai's community service.

Besides, foreign practitioners also facilitated venture philanthropy in China. LGT Venture Philanthropy, founded by the Princely Family of Liechtenstein/LGT Group in 2007, expanded its Smiling World Accelerator Program to China in late 2012. This program aims at strengthening capabilities of social enterprises and improving their core business areas. 

 

Moral Dilemma

Since social enterprises are determined to resolve social issues and expected to bring positive social impacts, should venture philanthropists have lower standard while making investment?  Should the criteria for supporting a social venture be the same with a traditional for-profit venture? If investors reject to provide funding to a social venture which does not have a satisfying business model, and the social venture closed down as result, who should to blame, the social enterprise or venture philanthropists?