Money isn’t everything—at least, not to those in the business of venture philanthropy, an offspring of centuries-old socially responsible investing that Jerome Dodson modernized in San Francisco in 1984.
In 1999, John (Bud) Colligan, a partner at the Silicon Valley venture capital firm Accel Partners, working with long-time business executive Penelope Douglas, created a venture fund—now called Pacific Community Ventures—to bring capital and management expertise to modest-size companies that pay decent wages and benefits to people in depressed neighborhoods. Colligan was among the first wave of people who changed the definition of social philanthropy by bringing capitalism into the equation. Along with giving money, these executives wanted to give their time, their expertise, and their connections. They aimed to do good by teaching the disenfranchised how to make a better living. In return for doing good, they expected a return on their investments, or at least a sustainable enterprise.
Around the same time, eBay founder Pierre Omidyar began investing in operations with a “double bottom line”—a social agenda and enough profits to become self-supporting. Jeff Skoll, eBay’s first employee, set up a foundation in 1999 to foster “innovations that will benefit humanity,” with more than $90 million committed to social entrepreneurs so far.
In addition, he started a socially responsible film production company that has turned out features such as Syriana, Good Night, and Good Luck, and An Inconvenient Truth, starring former Vice President Al Gore. In 2000, Microsoft founder Bill Gates and his wife Melinda set up what swiftly became the world’s largest foundation, zeroing in on neglected diseases and education. Through 2006, the foundation had issued more than $11 billion in grants worldwide. Again, unlike classic philanthropies, the Gates foundation emphasized that it expected to see organizations meet milestones, achieve measurable change, and, in many cases, eventually finance themselves.
What all these efforts share is a belief that donors and grantees are exchanging far more than just cash. “We believe we can help close the gap between rich and poor in California by creating good jobs and increased stability for the state’s working poor,” says Douglas.