May 14, 2008
Venture Philanthropy: A "High-End Shell Game"?
Is “venture philanthropy” really just a “high-end shell game”?
So wonders Kelly Kleiman, on her blog The Nonprofiteer, in response to a comment on the 501cFiles.
Back in February, Tom Durso, who writes the 501cFiles, posted a critical analysis of a New York Times article lauding venture philanthropy. On Tuesday, somebody posted a comment to his blog raising the idea that start-up businesses use nonprofit organizations to buy credibility for their companies.
“What reporters should be questioning about venture philanthropy is whether it’s one of the last few tax write-offs or tax advantageous schemes – or ways to help buddies get rid of dogs or other unwanted investments,” says the blog writer.
He lays out this scenario: A start-up company needs an investment from a “known brand” to get started. So the company’s primary backer — a venture capitalist — might donate a few million dollars to a nonprofit that also engages in for-profit ventures (for example, National Geographic). Then the established organization turns around and gives nearly the same amount to the start-up company.
“There should be far more critical analysis of what’s going on with venture philanthropy,” he concludes. “Yes it can do a lot of good. But, yes it opens up more schemes to help a few buddies out.”
What do you think? Have you seen examples of this?
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The NYT story subjects may turn into an example of this if the companies mentioned in in that 2/24/08 story are sold or have new majority owners after just a 1-3 years of ownership. After all, if it’s truly philanthropic goals driving the people who turned the non-profit bookclub for disadvantaged students into a combined company with ePals in 2007, then they would keep it for more than a few years to have a lasting impact on children globally. The Cases, the Gates and other billionaire internet owners who are truly committed stay in the game and motivate others to invest because it’s the right thing to do. There’s no expectation of getting something back. There’s just something about that NYT story that beneath the veneer of nobleness something just isn’t squaring. Maybe there are too many lawyers involved who live to conjure complicated deals for the sake of bamboozling the world with their supreme intelligence when really all they are doing is obfuscating reality.
— JP Burnes May 17, 08:25 PM #