Non-profit organizations have the potential to attract donations from a new model of European venture philanthropy but risk losing out on this valuable source of funding as they remain too focused on traditional methods.
According to Chris Carnie, founder of consultancy firm Factary, non-profits will have to change their approach to fundraising dramatically if they are to meet the needs, aspirations, energy and imaginations of these new philanthropists.
The model, whereby venture philanthropy (VP) funds invest in projects and measure the resulting social impact, with the ultimate aim of returning part of the original investment back to the VP fund, has been in existence for some time, but has gathered pace in the last year in Continental Europe, with renewed interest from a number of philanthropists.
This new wave, says Carnie, is being spurred by research and fundraising practice and publications including La Nouvelle Philanthropie. He adds that the European Venture Philanthropy Association too has seen attendance numbers at its conferences soar in the last year despite its relatively modest membership base of 31 VP funds.
Carnie says: “People in the financial sector are especially interested in the VP model, as are younger philanthropists.”
He believes that the model highlights how VPs have found a way to both help society and return part of their original investment to the fund, enabling them to invest further in projects.
“These new philanthropists can invest in social change, measure the change created, and in some cases get the money back so that it can be recycled into more social change. Mainstream foundations – including some of the largest UK and European “brand-name” foundations – are taking an increasing interest in this area.”
Carnie believes that non-profit organizations in Europe are missing out on this philanthropy model as they are too reliant on the asker-giver relationship, to inflexible in the services they offer to donors and critically lacking information about their impact and the value of that impact. He tells us, “It’s more than just an information gap – it’s a paradigm chasm, with nonprofits on one side, and wealthy, willing but utterly frustrated philanthropists on the other.”
Carrie says we can do better, and that there are a good handful of European organizations who are listening to the new philanthropists and changing their ways. But he also indicates there are tens of thousands who are not. Like the development NGO whose standard practice was to send photocopied letters of thanks to donors, starting “Dear Sir or Madam” and in whose offices he saw a photocopied thank-you letter with the handwritten figure “€20,000” in the space after the phrase “thank you for your gift of…”