Posted on June 5, 2007

New 'Activist' Givers Embrace 'Bottom-Up' Philanthropy

A new generation of philanthropists, many of them people in their forties and fifties who made fortunes in finance or high tech, is remaking philanthropy in their own activist image, Forbes magazine reports.

According to Forbes, these new givers, part of the growing Give Now movement, will pour between $1.9 trillion and $2.6 trillion into philanthropic causes over a twenty-year period that began a decade ago — roughly 35 percent of the total giving during that period. That capital represents not only a new wave in American philanthropy but also a form of philanthropic activism that mirrors developments in the world of finance and the global economy. "Wealth today has been created by a world view dominated by fast-moving networks, open information, bottom-up entrepreneurialism," said Jacqueline Novogratz, founder of the New York City-based Acumen Fund. "So it's less likely to see [philanthropists] going in at the top of a problem, but more likely for them to find entrepreneurs they can back, and business models they can use, from the bottom-up of the market."

A prime example of the approach is D.C.-based Venture Philanthropy Partners, the brainchild of software entrepreneur Mario Morino. Having sold Legent to Computer Associates for $1.8 billion in the mid-1990s, Morino created a foundation dedicated to using "interactive communications" and digital-age tools to "empower" the disadvantaged. He soon realized, however, that the nonprofit entrepreneurs in the best position to make a difference in their communities rarely had the networks, resources, or managerial know-how to take their organizations to the next level. So he used $9 million of his own money to create VPP and, with two partners, set out to build a network of high-performing nonprofit organizations that would alter "the status quo for children in need of opportunity."

VPP raised a $30 million fund from twenty-six investors, including Steve and Jean Case of AOL fame, and committed its resources to supporting twelve charities in the D.C. area that collectively serve 47,000 children. VPP's chief executive oversees the organization's private-equity approach: top-to-bottom reviews of each charity; identification of management goals and expansion opportunities; and clear targets backed by quarterly reviews.

Having ramped up its capacity and learned a few lessons of its own, the organization is raising a second, $50 million fund, and Morino expects to put another $9 million into the effort. "Bottom line," he says, "if we could help sway the needle from loyalty-based giving to merit-based giving — and [as a result] there was more effective allocation of public funding — that would be a huge accomplishment."