social venture partners calgary: emergence and early stages€¦ · social venture partners...

Produced by Avril Orloff,Research Consultant

for the Canadian Centre for Social Entrepreneurship

March, 2002

SOCIAL VENTURE PARTNERS CALGARY:

Emergence and Early StagesA CASE STUDY

Social Venture Partners Calgary:Emergence and Early StagesA CASE STUDY

Main issues and questions for discussionIn November 2000, Brad Zumwalt and his wife Tanya, along with 30 otherfounding partners, launched Social Venture Partners Calgary, an organizationthat applies venture capital principles and practices to philanthropic giving.The Zumwalts had enjoyed great success in technology, like many youngentrepreneurs of the 1990s, and were looking for a way to give something backto the community after selling their visual content software company, EyeWire,in 1999. They admired Seattle entrepreneur Paul Brainerd, originator of theSocial Venture Partners concept, and thought his “venture philanthropy”model might be just what they were looking for. In March 2000 they visitedSVP Seattle, decided it was a compelling model and set to work starting Social Venture Partners in Calgary.

Social Venture Partners Calgary (hereafter SVPC) is the first SVP organizationin Canada and has been making grants since June 2001. While it is too soon tojudge whether SVPC will succeed in its goal of fostering long-term socialchange, its existence raises several interesting questions about this model ofphilanthropy. What motivates people to get involved with an organization likeSocial Venture Partners rather than more traditional philanthropic organizations?Who does it appeal to and why? What unique needs does it serve? Whatelements facilitate its emergence, what is required to sustain it, and what are possible barriers to its success? And importantly, is it replicable?

This case study addresses the questions raised above and attempts to find someanswers by looking at the initiating conditions for, and early stages of, SVPC.After providing a brief background on the Social Venture Partners model, itfocuses on Brad Zumwalt, SVPC’s founder, and tries to give a sense of who he is, why he is doing this, and the progress his organization is making. Thestudy then examines SVP’s place in the broader philanthropic landscape and

The author wishes to thank Sherrill Johnson and Phyllis Woolley-Fisher of the CCSE,who conducted the first round of interviews and provided many other resources. Special thanks to the Partners and staff at Social Venture Partners Calgary, especiallyits founders, Brad and Tanya Zumwalt, and Program Manager Diane Robinson, forgenerously sharing their thoughts and insights. The contributions of Phil Levson ofThe Calgary Foundation and the directors of CUPS and CCSYP are also appreciated.Finally, a tip of the hat to Paul Shoemaker and Tom Donlea in Seattle, who providedsupport and helpful feedback on the case.

considers the conditions necessary for its emergence and success. Finally,it looks at some of the challenges faced by social entrepreneurs, such asmeasuring social outcomes, business–social sector partnerships, andreplication, to assess the ultimate viability of the model.

SVPC is an important player in the newly emerging field of Canadian socialentrepreneurship. While there is still no hard and fast definition of socialentrepreneurship, it is generally understood as a model that uses market-basedapproaches to solve social problems. Social entrepreneurship can occur in allsectors – private, public and nonprofit – but typically involves intersectoralcollaboration, bringing business expertise to the nonprofit sector or creatinghybrid models involving both for-profit and nonprofit activities. Like businessentrepreneurs, social entrepreneurs tend to be bold, risk-taking individualswho are problem-centred and results-oriented. They are not limited inachieving their goals by the resources in hand, and they hold themselvesaccountable to both clients and outcomes.1 What makes social entrepreneursunique is their focus on a dual bottom line that emphasizes social as well aseconomic return on investment.

By providing examples of people and organizations engaging in socialentrepreneurship, the Canadian Centre for Social Entrepreneurship hopes tofurther its mission “to build on our collective understanding of the scope ofsocial entrepreneurship and to encourage entrepreneurial thinking andapproaches in matters of social interest between and within the voluntary,private, and public sectors.”

The Social Venture Partners modelSocial Venture Partners was started in 1997 by Paul Brainerd, founder of Aldus Software and creator of PageMaker. After achieving his goals for Aldus,Brainerd sold his company to Adobe Systems in 1994 in a deal valued at $525million. He used a portion of the proceeds to create the Brainerd Foundation,and two years later launched Social Venture Partners in Seattle with 30 initialPartners from the Seattle area.

The idea behind Social Venture Partners was to incorporate the principles ofventure capital into philanthropy. Just as venture capitalists look for ideas andentrepreneurship in new companies, Social Venture Partners looks into thecommunity to discern specific needs and possible solutions. Like venturecapitalists, SVP does more than simply give money to the organizations itsupports: Partners also invest time and expertise in nonprofits “to collabo-ratively strengthen their organizations.” And SVP seeks to catalyze Partners’

Social Venture Partners Case Study • March 2002 2

1 Dees, J. Gregory (1998): The Meaning of “Social Entrepreneurship.” Comments and suggestions contributed from the Social Entrepreneurship Funders Working Group.

SVP seeks to catalyze

Partners’ individual

philanthropy by

educating them to be

well-informed, effective,

and engaged philan-

thropists.

individual philanthropy by educating them to be well-informed, effective, andengaged philanthropists. As Brainerd said in a Seattle Times interview, “It’snot about charity. This is a more engaged giving style. If it’s done right, bothsides end up with more in the end.”

The Social Venture Partners model caught on quickly in the U.S. and hascontinued to spread. By March 2002 there were SVP organizations at variousstages of development in 19 U.S. and 2 Canadian cities (see Appendix A for a map of SVP locations), with another nine cities actively pursuing the idea.While each SVP chooses its own funding areas, all share a set of core prin-ciples, including a focus on capacity building and sustainability, an emphasison outcomes, a hands-on approach, and long-term relationships with grantees.Each Partner commits to donating funds, usually ranging from $5000 to $6000per year, which are invested in a portfolio of local charities chosen by thePartners. Grants are made with the intent of forming multi-year partnerships(generally 3-5 years), since it is understood that generating results takes time.Along the way, Investees undergo annual reviews to measure progress, assessprojects, and redefine objectives. At the same time, SVP engages in ongoingself-analysis to assess its effectiveness and to keep itself accountable to bothits Investees and the larger community.

In addition to contributing funds, Partners are encouraged to volunteer theirtime, expertise and contacts to the charities they support. Though this is notrequired, it is one of the features that attracts people to SVP, and most Partnersactively participate. This can range from hands-on work, such as mentoring achild or setting up a website, to management support such as strategic planning,fund development, marketing, etc.

An interesting feature of the SVP model is its egalitarian structure. To adoptthe Social Venture Partners name, prospective SVP organizations must adhereto a set of core principles, as outlined in SVP Seattle’s SVP-in-a-Box guide-lines (www.svpseattle.org/ about_svp/ svp_in_a_box.htm). Among otherthings, Partners agree to an “organic/ bottom-up/grassroots” structure that“grows from within the community.” They are expected to do most of the workand drive the organization’s future course, with staff acting in a supportive role.Because each Partner (or couple) holds only one voting share, no one canimpose their view by virtue of having more shares than another. In Calgary,all Partners donate the same amount of money, which creates a feeling ofequality – a sense, as one Partner says, that “the person sitting next to me isnot bigger or better than me.”

The notion of partnership is key to understanding how Social Venture Partnersworks. As Paul Brainerd writes (www.svpseattle.org/about_svp/ values.htm):

We are a Partner-driven organization. Partners do the work of the organization. They learn first-hand the needs of the

“Partners do the work of

the organization. They

learn first-hand the

needs of the community

and how we can be most

effective in meeting

those needs.”


An interesting feature of

the SVP model is its egali-

tarian structure…as one

Partner says, that “the

person sitting next to me

is not bigger or better

than me.”

community and how we can be most effective in meeting thoseneeds. The staff helps coordinate and facilitate the work of thePartners in the organization.

Partnership also characterizes the relationship between SVP and theorganizations it supports. Once a grant is made, SVP works with theseorganizations to help maximize their effectiveness. Brainerd acknowledgesthat nonprofit practitioners are the program experts:

We respect the work and expertise of our communitypartners. We do not pretend to have the answers to addressingcommunity and social issues. We respect the knowledge andexperience that others have in our community to effectivelyaddress those problems. Our goal is to engage in an honestdialogue on how to best combine our business skills with theneeds of the nonprofits in which we invest.

Most of SVP’s original Partners in Seattle and elsewhere came from a similarbackground to Brainerd: high-tech entrepreneurs and venture capitalists whowanted to give back to their communities in an active way. Unlike traditionalphilanthropists, many of them were quite young and did not come fromprivileged backgrounds. They had profited from the technological revolutionand were now looking to put their profits to good use. As the appeal of theSVP model spread, it began to attract a broader demographic, including olderPartners and people from a variety of professional backgrounds, generallyreflecting the local economy of each city. But all share the commitment to an“engaged” philanthropy that allows them to be personally involved with theircommunity rather than just donating money.

Brad Zumwalt, now 36 years old, is one of these people. In 1989 he joinedImage Club Graphics, a graphics software provider that was twice recognizedas one of Profit Magazine’s 100 fastest growing companies in Canada. In 1994the company was sold to Brainerd’s Aldus Corporation, which was subsequentlyacquired by Adobe Systems. In 1998 Zumwalt founded EyeWire and negotiatedfinancing to secure a purchase of assets from Adobe. A year later he soldEyeWire to Getty Images. Having succeeded in business, the Zumwalts werenow looking to do something for their community. They already knew andadmired Paul Brainerd, and visited Social Venture Partners in Seattle to learnmore about the organization. SVP’s “venture philanthropy” model resonatedwith them, and they decided to start an SVP in Calgary.

Meanwhile, The Calgary Foundation (TCF) had been considering pursuing asimilar model. The foundation had heard about SVP thanks to two localphilanthropists who had sent articles about the organization to Phil Levson,TCF’s Director of Fund Development. One of them, an octogenarian who wasa strong believer in the importance of getting the next generation involved in


“Our goal is to engage in

an honest dialogue on

how to best combine our

business skills with the

needs of the non-profits

in which we invest.”

philanthropy, thought SVP could be an effective model. He thought TheCalgary Foundation should take the initiative to set one up or help it along.TCF was receptive to the idea, because, as Levson observes,

Younger people are not as interested in the more traditionalapproach where you write a cheque and that’s the end of therelationship. We find the younger donors want more control.They’re not prepared just to write a cheque to The CalgaryFoundation and let it go into our community fund where wehave discretion. They want to be involved in every decision.This is a way to engage them in a way that makes sense tothem.

The foundation contacted SVP Seattle, who told them about Brad Zumwaltand suggested they all work on it together. TCF then met with Zumwalt, anddecided to let him run with it. “We were open to nurturing the model outside of the foundation,” says Levson. “And Brad had all the energy and potentialleadership to move this forward that we weren’t able to muster up ourselves.”TCF originally wanted SVP to work within the foundation’s own grantingcycle, partly so that SVP wouldn’t have to set up their own infrastructure. “But they chose to do that on their own,” says Levson, “which was fine.” InJune 2000 the Zumwalts established funds with the Calgary Foundation tostart Social Venture Partners Calgary, putting in their $5000 and making a giftto the Administration Fund that would cover all administration costs until theend of 2003. They then began recruiting other partners, and in November 2000launched SVPC with 35 members.

Not surprisingly, SVPC attracted a similar demographic to Social VenturePartners organizations in other cities. As Zumwalt notes, SVP attracts peoplewho understand the venture capital model and the risks it involves, and whopossess an entrepreneurial spirit. Since his background was in technology, he“naturally” started with people from that sector since, he says, “technologyunderstands a venture capital model.” But Partners now come from a widevariety of areas, including the energy sector, investment banking, the serviceprofessions and other businesses – and Zumwalt would like to see even greaterdiversity, including ethnic, age and geographic (broader Calgary) diversity.

Like all Social Venture Partners organizations, SVPC has its initial fundingfocus (children and education), but shares SVP’s core principles and charac-teristics. Partners each contribute $5000 annually for a minimum of two years,which buys them one voting share in the organization. Couples may participateas a “partnership unit,” donating $5000 between them. This gives them onevote as a unit on governance matters as they relate to the partnership. (If bothparticipate in a grant committee, however, each has a full vote in that area.)And, as in all SVPs, many Partners donate their time and expertise in additionto money. In the year following its inception, SVPC grew from 35 to 51


“Younger people are not

as interested in the

more traditional

approach where you

write a cheque and

that’s the end of the

relationship.”

Partners, engaging a total of 95 people including one staff member and otherinvolved people (friends of SVP), who are not Partners but help out by sharingtheir expertise.

As stated in its first annual report, SVPC’s two primary goals are “achievingpositive social change in Calgary and providing an entry point for a new waveof local philanthropists.” The latter is in line with the second part of SVP’smission, which is to “stimulate, educate and catalyze” Partners’ individualphilanthropy. To that end, SVPC has established a Partner Education Program,dubbed “Philanthropy 101.” This program brings Partners together to learnabout giving, and offers workshops and other resources to help them “fullyrealize their charitable potential while providing new insight and knowledge ofthe various aspects of philanthropy.”

In June 2001 SVPC announced its first two Investees: the Calgary UrbanProject Society (CUPS) and Calgary Community Support for Young Parents(CCSYP). The agencies received cash grants of $30,000 and $50,000respectively for the first year, along with the time and resources of SVPC’sPartners, to help them build capacity and expand their programs. Thepartnerships are expected to last around five years, after which the agenciesshould be more self-sustaining, says Zumwalt. Through a collaborativeprocess the Partners and Investees will develop an appropriate exit strategy.

Just like in a venture capital investment on the for-profit side,it would be a poor investment if they always required morecapital every year. We want to bridge them through to a spotwhere, with training in fundraising, board development,communication and awareness, they can move to more stablesources of funding than when they hooked up with us.

SVPC has since concluded a second grant cycle, and in January 2002announced its next set of Investees: Calgary Reads Society and The HeraSociety. In the long run, Zumwalt says, they plan to have a maximum of 20Investees at any one time, and to grant, on average, $40,000 annually to eachagency in five-year relationships. SVPC will also continue recruiting morePartners, with a target membership of 200 Partners within the next four years.

Motivating factorsInterestingly, prior to starting SVPC, Brad Zumwalt had had little experiencewith philanthropy or volunteering. While developing his business, his goal wasto build and grow, and because there was a lot of risk involved, he felt he hadto focus solely on the business:

I’m from that part of the spectrum where you focus on thefinancial aspect of your business. You do the best job you can


Partnerships with

Investees are expected to

last around five years,

after which the agencies

should be more self-

sustaining.

SVPC’s two primary goals

are achieving positive

social change in Calgary

and providing an entry

point for a new wave of

local philanthropists.

growing a small company, and consciously reject any socialresponsibility by saying, “I don’t have time and don’t want mypeople to think about social responsibility with a business thatis already so high risk.”

Zumwalt felt that trying to “address two markets at the same time” – in thiscase, business and philanthropy – would have detracted from what hiscompany was trying to do. While he acknowledges that some people may be able to do both successfully, he says he wouldn’t advise any company heinvested in to do anything but deliver on its business plan. If the plan worksout, then it’s time to give back to the community. So Zumwalt concentrated on building Image Club and EyeWire into highly successful and profitablecompanies. Once they had achieved their business and financial goals andEyeWire was sold to Getty, it was time to change course and “balance thingsout.” Starting SVPC, the Zumwalts felt, could provide a worthwhile andeffective channel for their money and their energy.

Certainly, Paul Brainerd played a key role in their decision to start up a SocialVenture Partners organization. Brad Zumwalt regards Brainerd as a role modeland admits that he wouldn’t have become involved if Brainerd had not madethe choice to be “very public in his philanthropy” and provided a model forthem to follow. But at the heart of their decision was their sense of responsi-bility to the community, and the desire to give something back.

We have done tremendously well by this community, and otherpeople were pulling their weight so I could just selfishly workheads down on growing the business and doing very well forthe shareholders. But then we had a kind of switching gearsand wanting to give back.

These sentiments are echoed by two of Zumwalt’s former employees who arenow SVP Partners, Blake Springer and Patti Acheson. For Springer, givingback to the community is a core personal value.

It’s being honest and saying we don’t exist in a vacuum. Weoperate in a community and we should remember that andinteract with it. We employ people in the city and they havefamilies and lives, and if you can improve that even in smallways – well, if every company thought like that, then we wouldhave a lot more change!

Acheson admits that for most of the years she worked at Image Club andEyeWire, she didn’t think much about community.

We sold to the U.S., we talked to U.S. customers, we wereowned by a U.S. company. So I didn’t even think about Calgary.I didn’t care about the economy in Calgary, I didn’t care about


Once the Zumwalts had

achieved their business

goals, they felt it was

time to change course

and “balance things out.”

Acheson admits that

for most of the years she

worked at Image Club

and EyeWire, “I didn’t

care about the economy

in Calgary…because our

economy was the U.S.”

anything in Calgary because our economy was the U.S. Butwhen we were sold again to another American company, Ithought, geez, I don’t want to do this anymore. Then I startedthinking about what is in Calgary and how I could give backto Calgary, and that’s how it worked for me…You get soinsular in your careers. So to be out there and see all thedifferent things that are going on is quite heartwarming. And I think, “Yes, this is the right place for us to be.”

But all stress the need, for them, to go beyond traditional philanthropy ingiving back to their community. This need is at the heart of the “engaged”philanthropy Social Venture Partners practices, which Zumwalt contrasts withtraditional “chequebook” philanthropy. Engaged philanthropy, says programmanager Diane Robinson, fulfills people’s desire to be more personallyinvolved in their giving by allowing them to share their professional expertiseas well as donating money. This not only helps the grantees, but just asimportant, gives more personal satisfaction to the donor. The fact that this kind of engagement is one of the qualities Zumwalt uses to pitch SVP topotential Partners speaks to the desire of many new philanthropists to morefully immerse themselves in their philanthropy.

Certainly, none of the Partners interviewed wanted to simply give money orput in time (although individuals who are time-constrained are not discouragedfrom investing money). Rather, they wanted to be involved in a way that wouldallow them to make use of their gifts – the technological, management, andother unique skills they developed during their years in business. As PattiAcheson puts it:

I have lots to give. I ran a world class call centre for ten yearsand I know what I’m doing. I don’t need to make money and Idon’t want to work for someone else – but I certainly want togive that expertise to somebody!

Being personally involved also gives Partners the satisfaction of seeing theimpact of their efforts. Says Blake Springer:

I like the idea that I can see and have a direct influence onsome of the things that are going on. With Social VenturePartners you get to see the change. Even if it’s just throughstories that Partners tell you about the projects they’reworking on, you get a sense of what you’ve created, thatyou’re actually making a difference for a small group ofpeople.

This is not to say the Partners want to run the show for their Investees. On thecontrary, they want their community partners to tell them what they need, notthe other way around. Acheson sums up this attitude:

Partners want to be

involved in a way that

allows them to make use

of the technological,

management, and

other unique skills they

developed during their

years in business.


I don’t want to tell people how to run their business. I want tosay, “How do you need me to help? I’m committed to you fora year. This marketing guy, this website builder, this accountant,this lawyer – we can be behind you, help you shore up youroperations. Tell us what you need and we can facilitate theplan and do the execution for you. We work for you, we areone of your employees.”

Brad Zumwalt takes the notion of engagement still further. More than justbeing involved, he wants to be the one to get things started. He is not contentto jump on someone else’s bandwagon. What motivates him is building some-thing that didn’t exist and making it “run and work and perpetuate and grow.”

I get a big jazz out of that. I would not go and apply for theExecutive Director job of SVPC if it had already been runningfor five years. But if there was a chance to jump in for no payand start it – create it and try to build it – then that’s whereI’m at.

Of course, with engagement goes responsibility, a word Zumwalt uses whentalking about the things that motivated him to start SVPC. Realizing that hewas capable of initiating a Social Venture Partners in Calgary, and recognizinga readiness for such an initiative, he felt it was his responsibility to do so.Nonetheless, he is amazed at the degree of responsibility he feels toward theorganization. Indeed, Zumwalt notes,“We have other investments but they arejust money, and this is so much more than just money.” Tanya Zumwalt addsthat she also feels a lot of responsibility toward the Partners:

I want to make sure that this is a truly rewarding experiencefor them, that they’re getting what they hoped to get out oftheir investment and the time and energy they spend on SVP.

In addition to the above, Springer and Acheson cite peer influence as amotivator for becoming involved with Social Venture Partners – knowing thepeople involved and believing in them. Just as Paul Brainerd served as a rolemodel for Brad Zumwalt, Springer and Acheson cite Zumwalt as theirinspiration. Says Springer,

I knew Brad had the drive to get it done. I honestly wouldn’tjump on this kind of venture or dedicate as much of my time orenergy to it if it was someone else. There’s only a handful ofpeople I would trust to say they’re going to do this and get itdone.

He knew from personal experience that Zumwalt would do what he set out todo, and that he would bring to SVPC the same values he brought to his work:honesty, communication, openness, a sense of community. “He’s been a huge


With engagement goes

responsibility, a word

Brad Zumwalt uses when

talking about the things

that motivated him to

start SVPC.

mentor for me,” Springer continues, “in that he thinks about those things morethan anyone else I’ve ever known.” Acheson concurs. When Zumwalt told herof his plans to start Social Venture Partners, she said simply, “Sign me up!” Tobe sure, she was already feeling the need to move on, and believed in the SVPconcept. But here again, trust in Zumwalt was key.

I would get on any ride that Brad was on. He is such anamazing leader. Working with Brad, I knew it would be donein a way that would be good for the community, and that itwould be done in a businesslike way.

In the same way, Acheson and Springer hope to inspire others to get involved.One of their jobs as Partners is to bring in other people, and both believe thepeer approach is a big factor in influencing that decision.

It’s not an explicit thing, but if you care about it passionatelyyou should be telling other people, and those people know youand trust you. There will be other people who come to SocialVentures because a person they trust is involved.

Not to be overlooked in all this is the social aspect of working with one’speers: “meeting other folks, other interesting people, learning about philan-thropy, about causes.” It’s almost a given that Partners will share similarinterests, and Zumwalt, Acheson and Springer are enthusiastic about thenetwork SVP creates. Says Springer,

With Brad and the people he knows, and the people they knowand this whole network, it’s an interesting group of people,with varied backgrounds; these people have done a widerange of things. So it can be kind of a social club, and also away to find out about opportunities through the network.

Not networking in the sense of trying to get a job or make sales, Achesonexplains, “but seeing who else is out there and how they are giving, how theyare working with this kind of money and how they’re dealing with it.”

This gets back to the fundamental notion of partnership that underlies the SVPmodel. As Tanya Zumwalt notes,

That’s the magic behind the program: a group of people whodon’t necessarily have a bond in terms of industry or socialgroup, getting together for the betterment of the community.All those people sitting around the table learning togetherhow to be better givers, how to more effectively contribute notonly their energy but also their financial resources to thecommunity.


One of the jobs of

Partners is to bring in

other people, and

Acheson and Springer

believe the peer approach

is a big factor in influenc-

ing that decision.

Finally, there is the educational component of Social Venture Partners. BradZumwalt considers himself to be “as green as you can get in the social andnot-for-profit world,” and says the possibility of learning more about philan-thropy was another thing that motivated his involvement with SVP. SaysZumwalt, “Tanya and I plan to get a very good Philanthropy 101 educationout of this, and continue with more philanthropy.”

Tanya Zumwalt credits Paul Brainerd and Paul Shoemaker for SVP’s emphasison learning. She especially praises their willingness to share their mistakes,which she believes is key to the learning process.

A very attractive quality, to me, was their insistence that SVPis a learning organization that makes mistakes and continuallyevaluates those mistakes. That’s how they want the culture ofthe organization to be: “We’re going to make mistakes, butlet’s evaluate them and learn from them. We’re going to bevery honest about what worked, what didn’t work, where wecontinue to fail, and what our successes were.”

SVP’s hands-on, engaged approach also plays an educational role, she says.

I feel strongly that you learn best by doing. You learn moreabout the giving process by actually rolling up your sleevesand getting your hands dirty, so to speak, than if you just writea cheque, for example.

In addition to the informal learning, SVPC has also instituted a Partner Edu-cation Program to enable all Partners to fully reach their charitable potential.Zumwalt likens the organization to a “farm team” for more advanced philan-thropy, and believes that a philanthropy education program is key to makingthat happen. Partners learn about various aspects of philanthropy throughworkshops, seminars, and discussions with guest speakers, and hope that thiswill also facilitate cooperation between the business and nonprofit sectors.“How do you go in and talk to people? How do you help them?” Acheson asks.“We need to be educated on that, and that is part of Social Ventures Partners –to educate us about how to help people.”

Progress to dateIn November 2000, SVPC’s Partners voted to make children and educationthe initial focus of their giving. They drafted a set of grant guidelines andcontacted “every charity in Calgary we could find.” Much to Zumwalt’ssurprise, they received 63 letters of inquiry in response despite the fact thatSVPC was still new and unproven. Says Zumwalt,


“A very attractive quality

was Brainerd’s and

Shoemaker’s insistence

that SVP is a learning

organization that makes

mistakes and continu-

ally evaluates these

mistakes.”

The buzz I had that day was as big as the buzz you get whenyou sign a huge deal and maybe go over the quarterly number.That kind of response from the community was great!

Another buzz, he said, came from the calibre of resumés they saw when theywere recruiting for staff, and from the applicants’ willingness to take a salarycut “to plug into the SVP idea,” a gesture tantamount to making a significantfinancial contribution to the movement.

Initial interviews of grant applicants took place in February, 2001, and in June,as noted earlier, the Partners voted to fund two organizations: the CalgaryUrban Project Society (CUPS) and Calgary Community Support for YoungParents (CCSYP). The former serves socially and economically marginalizedpeople, while the latter provides support and education to young, disadvantagedfamilies with children under the age of three. Workplans and objectives weredrawn up in August, and volunteer teams started working with each organiza-tion the following month.

It’s still too early, of course, to say how effective the model will prove to be atcreating long-term social change. But both SVPC and its Investees are pleasedwith how things are going so far. Diane Robinson reports:

So far our work with [the Investees] is going very well. We’vehad between 6 and 10 partners proactively involved andengaged in working with each one on a specific task…and thefeedback we’ve received is all very, very positive.

Lorraine Melchior, Executive Director of CUPS, says the relationship withSVPC is “extremely important in two areas:”

First, the funding received, which was most important inprogram development, especially in this initial phase. Theother thing is that we are mounting a capital and an operatingcampaign, and it was very helpful to be able to say that therewas close scrutiny by Social Venture Partners. They were verythorough in their assessments, and that we were selected helpswith credibility for other sources.

Pamela Scott, Executive Director of CCSYP, notes that her agency’s budgethas grown from $197,000 in 2001 to a projected budget of $350,000 in 2002,“in large part because of SVP support.” In addition to the funding theyreceived, Scott says, their profile increased as a result of SVPC’s support, andthey were able to attract another donor who would support some of the serviceexpansion SVPC had originally undertaken. This has allowed them to rerouteSVPC’s funds away from direct service provision and apply it as “risk capital”for starting up some kind of revenue-generating social enterprise.


It’s still too early to say

how effective the SVP

model will prove to be at

creating long-term social

change.

Both agencies also appreciate the volunteer work being done by the Partners.CUPS has benefited “terrifically” from the assistance provided by knowledge-able volunteers who are in turn involving others, says Melchior. As forCCSYP, Pamela Scott says its relationship with SVPC has “far exceeded”her expectations:

For example, we asked for networking support. And inaddition to networking the computers, they provided trainingin how to utilize that network to the maximum of its capabilities.Another volunteer who originally agreed to do a feedbacksurvey for us then undertook to develop our exit interviewsystems… They all went far beyond what we ever assumedthey were going to do.

As noted earlier, SVPC added two new Investees to its grant pool in January2002, and will bring in more as time goes on. Asked what they have learnedfrom their experience so far, Brad Zumwalt replies:

We have learned that this kind of thing takes on a moreorganic pace than one that can be driven by resources youthrow at it. It was my sense, and the sense of others on theBoard, that we weren’t doing enough early with theseagencies. [Yet] the agencies sensed that they were almostdrowning in the involvement and requests for involvement thatthey were getting from SVP…It’s two different worlds, and youneed to be respectful of that. At the same time, [the agencies]are eager and can benefit from a lot of the experience that webring on the business side. And we’re benefiting from whatwe’re learning about that pace and about the caring work that people are doing in the other sector.

Zumwalt also stresses the importance of attracting and maintaining a diverseset of Partners:

Make sure you’re as cross-sector and as cross-industry and ascross-age group and as cross-parts of the city as you canpossibly be…If you start out with six folks that all know eachother really well, that would be severely limiting. But if youstart with six people who don’t know each other that well, youhave fresh rolodexes to go at in each of the six areas!

Would they do anything differently the next time around? Sure, says Zumwalt.For example, they have already implemented some changes in the educationalprocess, both for new Investees and for the grant committees. Diane Robinsonsays that she would ideally like to see a longer education period for the grantcommittees (it is currently one month), “to allow them to sink their teeth intothe community issues.”


“We have learned that

this kind of thing takes

on a more organic pace

than one that can be

driven by resources you

throw at it.”

Other things will stay the same, at least for the time being. For example, thegrant committees chose to keep the evaluation criteria for granting quite broad,since they felt they did not yet know enough about the issues to focus thecriteria too narrowly. SVPC will not speed up the recruitment process either.While they recruited more slowly than they had originally intended, Zumwaltnow believes that was the right thing to do.

You should not grow these things too fast – you should growthem slowly and steadily. Get the critical mass, then pick agrowth trajectory and stay on that vector. Recruiting is goingto be a constant, not a phase you’ll grow out of.

All involved agree that the SVP process is a learning experience, and as such,will continue to evolve over time. As Lorraine Melchior of CUPS puts it,

It’s about relationship, and the development of relationshipover time. And the important thing is to allow that to occur, inthe sense of letting the relationship take time. Because it’s tooimportant to rush…It’s a process – a learning process on bothsides.

DiscussionSocial Venture Partners is one model among many in the emerging paradigmof social entrepreneurship – or venture philanthropy, as Zumwalt prefers tocharacterize his activities. In this section we address the questions: Whatelements facilitate the emergence of a Social Venture Partners? What conditionsare necessary for it to succeed? What gaps does it fill – that is, why SVP ratherthan traditional philanthropy? And what factors could hinder its emergence orsuccess?

LeadershipOne element that appears to be key to both the emergence of an SVP and itscontinued success is personality: the right person heading up the organization.As we have seen, Zumwalt attributes his involvement with SVP to PaulBrainerd’s example, while Patti Acheson and Blake Springer cite Zumwalt astheir inspiration for coming on board. Pamela Scott of CCSYP believes theirrelationship with SVP is so good “because of the individuals who have made acommitment to this organization.” And Lorraine Melchior of CUPS agrees thatthe Zumwalts are a major draw: “You would have to go very far to find peoplewho are more dedicated to giving back to the community.”

Social Venture Partners International agrees that good leadership is crucial.SVP International was established to build a federation of Social VenturePartners communities who share the SVP mission, to support the mission oflocal SVPs, and build an effective network for sharing knowledge and best


“It’s about relationship,

and the development

of relationship over time

…it’s a learning process

on both sides.”

practices. With its bird’s eye view, it is in a position to monitor aggregatetrends, statistics and impacts of SVPs across North America, and to build anoverall picture of what works and what doesn’t. In its list of key successfactors for local SVPs, “high quality leadership” occupies the top spot. SaysTom Donlea, who heads up the federation:

You need that strong leader, a person who has respect andconnections in the community, who businesspeople feelcomfortable with and trust that the model will be used welland the money will be spent well – that’s a huge part of it.

Phil Levson of The Calgary Foundation adds:

You need someone who’s in between major entrepreneurialventures and is willing to really focus on the project. Becauseit takes so much nurturing and handholding for these otherentrepreneurs to come on board.

He notes that one of the mysteries of SVP is that it can bring together a groupof independent-minded entrepreneurs to work together without clashing. Butagain, this requires good leadership to work.

If you get somebody who’s successful on their own and wantsto control things too much, it’s not going to draw the peoplein. That’s where Brad has been really instrumental. Eventhough he has some pretty good ideas of his own, he saw thevalue of a group working together. And even though he likes tobe in control, he listens and tries very hard to incorporatewhat other people think.

An example of what can happen in the absence of an effective leader can beseen in what happened in Austin (TX). With 70 people involved in its firstyear, Austin SVP was “going great guns,” according to one source. But whenits “visionary” founder left, they hired a new executive director who “just didnot click,” and their partnership dropped to less than 30 people. Other cities inwhich SVP organizations have been unable to get off the ground similarly citelack of leadership as one of the key causes for their failure.

Location and contextLocation may also play a part in the emergence of an SVP. Some places maysimply be more hospitable than others to SVP’s brand of philanthropy due totheir cultures, economic situation, density of entrepreneurs per capita, compo-sition of local communities, etc. One of the issues surrounding the importationof American initiatives is that Canada differs from the U.S. in important ways.We have a different political structure and a different regulatory environment.We have a different mix of cultures and different visions of society. The U.S.


One of the issues

surrounding the

importation of American

initiatives is that Canada

differs from the U.S. in

important ways.

In the list of key success

factors for local SVPs,

“high quality leadership”

occupies the top spot.

is essentially an individualistic society, while Canada leans more toward acommunitarian ideal. Americans prize risk-taking and innovation, whileCanadians tend to be more cautious. On the economic front, there is moremoney in the U.S. than in Canada, and more venture capitalists per capita.Even the philanthropic environments are different, with much of the respon-sibility for giving in the U.S. falling to wealthy individuals, while in Canadawe have tended to look to (and expect) the state to provide social services. All these factors may make the U.S. a more fertile breeding ground thanCanada for an entrepreneurial style of philanthropy.

There are, of course, risk-loving entrepreneurs and venture capitalists inCanada as well, with a high concentration in Alberta, particularly in Calgary. If the existence of an entrepreneurial culture is necessary to the emergence of a Social Venture Partners, then this would be a natural place for the model totake root. While such a culture may be a necessary condition, however, it isprobably not sufficient. Ottawa, for instance, has emerged as a high tech centrewith its own complement of newly wealthy entrepreneurs, but so far SVP hasnot been replicated there. Why not?

Zumwalt thinks Calgary contains a combination of elements that make SVP “a natural fit” there. One of these is the city’s “frontier” mindset, whichreflects the pioneer values and entrepreneurial mentality of Alberta as a whole.Another is its long tradition of volunteerism and community initiatives. Indeed,according to Statistics Canada, Calgary has traditionally been the “volunteercapital of Canada,” with seven out of ten Calgarians over the age of 15volunteering their time.

Another thing that facilitated the creation of SVPC, Zumwalt believes, was the openness of established philanthropic organizations like The CalgaryFoundation and United Way Calgary to SVPC’s entry into the field. Thiscontrasts with some other cities, where innovations have sometimes run into resistance from “the entrenched nonprofit community.” The CalgaryFoundation, in particular, has played a key role, providing SVPC with someinfrastructure, a ready mechanism to handle the fund, and tax receipting.Under a written agreement between the two organizations, SVPC is “onsidewith CCRA” (Canada Customs and Revenue Agency) regulations and othergovernance requirements. TCF also adds credibility to SVPC in building itspartnership, Levson points out:

Some of the Partners never heard of The Calgary Foundation,but once they see our material and the fact that we have over500 funds here and they start talking to a few people, thePartners realize that they have the infrastructure in place,and are less likely to worry about the money being handledproperly.


Calgary’s openness to

SVPC contrasts with other

cities where innovations

have sometimes run into

resistance from the

entrenched non-profit

community.

Diane Robinson acknowledges that The Calgary Foundation and United Waywere instrumental to SVPC’s start-up success, and Tanya Zumwalt is vocal inher appreciation of the role TCF has played.

They’re very aware that this is different than what they’redoing, but they are incredibly supportive. They also make surewe follow all the Revenue Canada rules, and we’re learningwhat we can spend on what, and what could be an expense.And they’re very arm’s length, which is key.

This is not to say that The Calgary Foundation agrees with everything SVPCdoes. Though he does not argue with the Partners’ choice to do their owngranting cycle, Levson believes the organization would have done better tooperate within TCF’s granting cycle.

They could still get all the benefits from making decisionsaround grants without trying to start from scratch. And theycould have tied into our granting cycle at such a lowered cost.It’s that need to do it on their own that makes it expensive.

Levson has stressed the need to keep costs down, and notes that the Zumwaltsare “working hard to keep admin costs at 20%.” But he is cautious about thempumping their own money into SVPC to help it along:

That money isn’t coming through us, and I’m trying to say toBrad, “It’s fine if you can do that for a year or two, but if ithas to be on a longer-term basis, then to me there’s a flaw inthe program.”

The Zumwalts are cognizant of what has traditionally been defined asadministrative costs but believe that this break from tradition to invest ineducation and development, or the “R&D” arm of its mission, is part of whatmakes the model so attractive.

Nevertheless, despite his reservations, Levson believes that SVPC is makingimportant contributions to the philanthropic and charitable community inCalgary, that it shares important goals with The Calgary Foundation, and thatthe two organizations can enjoy mutual benefits from their relationship.

Thus, it appears that another factor contributing to the success of a SocialVenture Partners is its ability to fill gaps in the philanthropic community whileat the same time being able to work with and learn from more traditionaldonor organizations.


The Zumwalts believe

that the break from

tradition to invest in

education and develop-

ment, or the “R&D” arm

of its mission, is part of

what makes the SVP

model so attractive.

Other conditions for successWhat other conditions are needed for a Social Venture Partners to succeed?Paul Shoemaker, Executive Director of SVP Seattle, outlined some keyelements in an article in Responsive Philanthropy (Spring 2001). Above all, hesays, there must be a good “fit” between funder and investee. That means thatthe funder understands and supports the Investee’s mission, the Investee reallywants the kind of relationship being offered, and both parties are willing to dowhat it takes to make the partnership work. Tom Donlea of the InternationalFederation points out that in the cities where SVP has worked,

They’ve got some nonprofit execs who “get it.” They arereaching out to meet entrepreneurs in these cities saying,“We would like to do things differently. We don’t want to giveup the core principles that we hold to meet our social mission,but we want to look at unique ways in which we can generaterevenue, create businesslike planning, have relationships thatare sustainable and not based on charity, and that we’veearned.”

Another crucial element is communication. Partners must explain how theSVP model works and how it adds value, while Investees must be able to talkabout what they want from SVP, and say when things are not working. Inaddition, both parties must be clear about what they bring to the table. Theymust also be willing to acknowledge their limitations, says Zumwalt.

The Partners aren’t coming in just as experts; they’re notconsultants. They are people who want to try and learn. Andto allow that growth takes a certain maturity. We try to be ashumble as we can about saying we’re babies at this. So it’simportant that people can accept that.

Among other conditions deemed necessary for success are: a firm focus,a cash flow model, funding flexibility (allowing grant money to be movedaround as the Investee’s needs evolve), “financial savvy,” and a broad recruit-ing policy. Pitfalls include making too many grants, relative to volunteerresources, and recruiting too narrowly. For example, one of the newer SVPshas a strong technology focus which shows up in its title, and there is someconcern that this organization’s clear emphasis on technology could limit itsrecruiting capabilities and interest in the community. Rather, one observersuggests, “Be focused in your recruitment, but also open up the gate to getenough people to make it work.”

Finally, just as on-the-ground education is a strong component of SVP’smission, some Partners believe university education may play a part indetermining the future of new philanthropic models. Business schools haveonly recently begun to offer courses in philanthropy and volunteerism, and


Pitfalls include making

too many grants relative

to volunteer resources,

and recruiting too

narrowly.

For a Social Venture

Partners to succeed,

there must be a good

“fit” between funder

and investee.

Zumwalt, Springer and Acheson believe such courses could open futureentrepreneurs up to the role of philanthropy in the economy and the differentoptions that are possible. The schools need to show students that companiesthat engage in this kind of behaviour do well, even outperform other companies,says Springer, and to provide models – such as Social Venture Partners – forhow it can be done.

I think there are people who would be excited enough by theconcept to really dedicate themselves to it. A lot of people getout with their Bachelor of Commerce and do a couple of yearsarticling and discover, “This is not for me, it doesn’t make mehappy, what can I do?” And one of the alternatives may besocial entrepreneurship – that may be the thing that makesthem tick.

Why SVP?So far, we have looked at some of the elements and conditions that are neededfor a Social Venture Partners organization to emerge and survive. But there isanother, more fundamental set of questions that must also be asked: Why SVPat all? What unique needs does it fill that are not currently served (or served as well) by traditional philanthropic models, both from the funders’ and thecommunity perspective? Does SVPC serve different parts of the communitythan, say, United Way Calgary or The Calgary Foundation? How does themodel improve on more traditional models?

Addressing the last question first, Diane Robinson emphasizes that SVP is not necessarily better than the older models – it’s just different, and serves a slightly different market. Using Paul Shoemaker’s banking analogy, sheexplains this difference as follows:

In the ’80s, certain companies needed a different kind ofcapital from what the banks could or [would] provide, hencethe emergence of venture capitalists. Banks weren’t bad orwrong, they just weren’t the best fit for certain kinds of start-up businesses. Applying this to philanthropy, we are fillingthat niche in the market, funding nonprofits that are lookingfor a different kind of funder.

What makes SVP unique, she says, is “the combination and interplay betweenour grant making, volunteerism, and philanthropic education.” She believesthat few, if any, other organizations offer donors all three avenues of involve-ment. SVP’s level of engagement sets SVP apart from traditional “chequebook”philanthropy, while the money aligned with being a Partner sets it apart fromtraditional volunteering. This combination of elements provides more personalfulfillment for certain types of donors, Robinson believes.


There is another, more

fundamental set of ques-

tions that must also be

asked: Why SVP at all?

Business schools need

to show students that

companies that engage

in social entrepreneurship

do well, and provide

models for how it can

be done.

It builds a more meaningful commitment between the volun-teers and the [nonprofit] organization – they take ownershipand feel partly accountable for the nonprofit’s success. Also,through our model, these people become Partners in ourorganization – they contribute to our organizational needsand make the decisions to steer SVPC in the direction theywant it to go.

It also attracts people who may not have engaged in philanthropy beforebecause they found the traditional models unappealing. Their involvement inSVP represents a net gain for the community, says Robinson, by “building anew tier of philanthropists.”

We believe the combination of these [elements], and the net-work of people who are learning and doing this together, willhave greater impact in this community over time. Not only arewe pooling their funds, we’re pooling their minds. By buildinga community of engaged philanthropists, these people willlearn from, inspire and collaborate with each other to make a greater difference collectively than they would on their own.

Paul Shoemaker of SVP Seattle emphasizes that SVP’s team approach is key.Partners are not only giving time and money as individuals, he points out, butas part of a team working in the context of a plan or strategy that will besustained over a multi-year relationship. One manifestation of this teamworkapproach, which Phil Levson finds rather unique, is in the way SVP involveshusband-and-wife teams.

Often, in the older philanthropy models, it’s the guy who’s gotall the money and is active in the community but he’s notengaging his spouse in that activity. [SVP] is engaging bothspouses so that both can be Partners and both can make acontribution, and it’s OK even if they have different views!

The focus on multi-year relationships with its Investees is another feature thatdistinguishes SVP from traditional philanthropy and is, in Levson’s opinion,one of its greatest strengths.

The fact that they’re willing to stay five years on a project is ahuge positive for the charitable sector. It’s one of the beautiesof the program, because it takes a year just to understand whata charity is doing, and another year to begin to build strengthin the relationship. Then the next three years can be spentsolidifying the relationship and beginning to truly add value tothe organization. Over the long term they can be much morecost-effective and efficient in their impact with those groupsthan if they changed groups every one or two years.


Partners not only give

time and money as indi-

viduals, but as part of a

team working in the

context of a plan that will

be sustained over a multi-

year relationship.

It is important to remember, however, that Social Venture Partners – andventure philanthropy in general – was not created simply to fulfill a new kindof donor. As Robinson points out,

It also stems from nonprofits who, through the ‘90s, startedsaying that they wanted help building capacity, business skills,closer relationships with funders, long-term funding, etc.

With this in mind, SVPC provides funding for a variety of needs, be thatcapital for a building, new equipment, staff, organizational development, orprogram expansion.

We don’t restrict our funding to programs/services, we don’texpect [the agencies] to do more with less, we want to helpthem do more with more. Many agencies are telling us thatthey’re starved of funding for administration, and most oftheir funding is short-term. We want to help them buildcapacity, and we’re investing long-term in order to do that.

There is also a degree of flexibility in SPVC’s grant making that is oftenabsent from other sources. For example, when another donor stepped in tofund service expansion for CCSYP, SVPC was willing to withdraw fundingfrom service provision and transfer it to another initiative, which the agencygreatly appreciated.

SVPC hopes that their approach also allows Investees to take more risks. Oneissue that continually plagues nonprofits is the lack of tolerance in the sectorfor failure. Risk-taking is discouraged because there is no capital in the non-profit sector, and without some financial security, organizations cannot affordto make mistakes. They therefore tend to be shy of embarking on risky venturesbecause failure may be punished by withdrawal of funds. The venture capitalmindset that drives organizations like SVP, however, is one that understandsand embraces risk. Indeed, risk and failure are seen as part of the process.Whereas traditional funders respond negatively to mistakes, says TanyaZumwalt, SVPC’s approach is more like, “Oh great! You guys are identifyingthose weak spots, so we can move forward and try to rectify the situation.Thanks for bringing that to our attention.”

Diane Robinson believes this mindset has allowed SVPC’s Investees tobecome more willing to take risks. By way of example, she cites theexperience of CCSYP:

Our funding with CCSYP has opened up an opportunity formore risk-taking. They are looking at potentially starting up a new social enterprise or strategic alliance to generatealternate sources of revenue (independent financing). Weencourage this and help manage the risk by being involved.


One issue that continually

plagues non-profits is the

lack of tolerance in the

sector for failure.

SVP’s creation…also

stems from non-profits

who started saying they

wanted help building

capacity, business skills,

closer relationships with

funders, and long-term

funding.

Besides, says Tanya Zumwalt, they have learned from SVP Seattle thatmistakes are at the heart of the learning process. And despite the mistakes thathave been and will be made, “the successes truly outweigh the failures.”

Asked if SVPC serves a different part of the community than United Way orThe Calgary Foundation, Robinson says not necessarily. The qualities theylook for in their grantees may or may not be the same as what the otherorganizations look for. But UW and TCF fund hundreds of agencies andprograms, while SVP

funds a select few and begins a long-term relationship whichentails 3-7 years of funding (depending on the agency) andvolunteer resources, from people who are acting and thinkinglike investors with a keen ownership position.

SVPC also occupies “a different rung on the giving ladder,” somewherebetween United Way donations, which are generally smaller than thePartners’ $5000 contribution, and foundation donations, which are generallylarger.2

With respect to funding criteria, Robinson acknowledges that here too theremay be some overlap with those of the other organizations. SVPC places astrong emphasis on long-term solutions and measurable outcomes.3 Thefundamental difference, however, is SVPC’s focus on opportunities for itsPartners to contribute their time and talent as well as their money. The agencymust be able to identify specific volunteer projects for the Partners, and tohave “given thoughtful consideration” as to how SVPC can be involved andmake a difference to its organization.


SVPC occupies “a

different rung on the

giving ladder,” some-

where between United

Way donations and

foundation donations.

2 According to informal sources, the average annual donation to the United Way of Calgary andArea is approximately $316 (an average of 57,000 donors), and the average “Leadership Gift”(over $1,000) is $2,500. The average annual gift to The Calgary Foundation was $14,205 overthe past two years.

3 Based on their first two Grant Committees, they have broken the key criteria down into twohigh-level categories: program attributes and SVP fit. Some of the questions they pose inevaluating applicants are:• Does the agency clearly articulate a critical need that it strives to meet? • Is the population segment sufficiently identifiable to ensure delivery of the program to

those intended? • Does the agency have a clear vision and a well-structured program? • Are they focused on funding long-term solutions and making fundamental changes? • Does the proposal demonstrate measurable and meaningful outcomes? • Are their project milestones/success measures clear and well articulated? • Does the agency identify specific volunteer projects for SVP? • Have they given thoughtful consideration to how we could be involved and make a difference

to their organization?

Tanya Zumwalt adds that the granting committee she was on also looked atwhether prospective Investees were collaborating with other nonprofits, whichthey felt was an important criterion. She acknowledges, though, that each grantcommittee is allowed to set its own parameters and specific criteria, so anothergrant committee may not make that a priority. She did not think the possiblediscrepancies would hurt prospective Investees, since decisions were ultimatelybased more on the site visit than on the proposal. However, it seems thatstandardizing the granting criteria might ultimately benefit both Partners andInvestees.ˇ

Another key question, given SVP’s strong focus on measurable outcomes, is:What kinds of measurements are they using to determine the success of theirinitiatives? It is generally acknowledged that social returns are harder tomeasure than economic returns – but that doesn’t negate the need for measure-ment. Paul Shoemaker explains that SVP has chosen to measure two areas: themeans through which the Investee executes its mission (infrastructure, capacityand sustainability), and the ends – the ultimate behavioral and social outcomesachieved by its clients.

Robinson points out that SVPC does not “create” outcome measures. Rather,it helps its Investees develop their own measurement tools to enable them toevaluate their programs and improve client outcomes. At the same time, SVPCengages in ongoing self-analysis in order to remain accountable and improveits own performance. To this end, it has formed a portfolio grant committee,which will reassess SVPC’s performance annually with respect to eachInvestee and report on what has been accomplished.

Robinson acknowledges that SVPC has not yet developed “one sure set ofperformance measures” for its Investees. Partners are learning to differentiatebetween measuring outputs (e.g. hours of service or number of clients) andmeasuring outcomes (e.g. a changed life). “It’s important that our Investeesare focused more on the latter,” she says, “but unfortunately, the former ismuch easier to measure.”

We want to see that they are focused on client outcomes in terms of the impact they’re having on people’s lives. Arethey making a difference? We understand that this is hard to measure, particularly given that it takes a long time –potentially more than ten years – to see lives changed. So this[measure] is not cut and dried, and we have not specificallydefined what outcomes we expect to see. The key is that theagency is focused on client outcomes, not outputs, and hassystems in place, or wants to implement systems, to evaluatethe effectiveness of their programs.

Brad Zumwalt cautions against relying solely on traditional criteria:


It is generally acknowl-

edged that social returns

are harder to measure

than economic returns,

but that doesn’t

negate the need for

measurement.

Partners are learning to

differentiate between

measuring outputs (hours

of service or number of

clients) and outcomes

(a changed life). “Unfor-

tunately, the former is

much easier to measure.”

You can chase the outcome measurement piece too hard. If weare growing the partnership and sustaining that level throughthe years, then we’re bringing net new people to philanthropy,and that’s an outcome in itself. On the agency side…if weaccept what they’re doing is the right thing to do, if they havestrong leadership with a passion to do it, then if we can comein and build organization to support their mission and increasetheir efficiency, I think we can feel really good about that.

Another measure of success, perhaps, will be the degree to which Partners andInvestees learn from each other to their mutual benefit. Zumwalt hopes that thePartners can bring to the community groups a greater sense of possibility:

Open up their hope. Instead of thinking small, think large;instead of thinking about these kids in this small area, whatabout this many more kids and serving these broad areas?Instead of looking at all the problems they have, what aboutthe sense of possibility and the sense that maybe there isanother generation behind these funders who will step in andfund this? Then they could start to dream big and really growthis thing as opposed to just doing it.

In turn, he hopes the businesspeople will learn from the nonprofits and fromtheir passionate commitment to their causes:

I hope we can have people find that. I think that for big-egobusiness people it adds some meaning to their success. If thenot-for-profit world gave us those causes to think about, thatwould be a good thing.

All that said, Social Venture Partners will not always succeed. Venture philan-thropy is not the right approach for every funder or for every nonprofit, and itspractitioners acknowledge this. Some organizations will continue to prefer themore hands-off approach of traditional funders like foundations and UnitedWays. Some social problems are so complex and intractable that they mayrequire a purely charitable approach. Others are politically unpopular and areunlikely to attract support from many SVP Partners. And then there is thelarger question of how well businesspeople and nonprofits will ultimatelywork together. The organizational cultures of the for-profit and nonprofitsectors are so different that misunderstandings can easily arise.

Zumwalt sees the most “glaring” difference between the two sectors as “themotivation to be efficient.” In the for-profit sector, he explains, efficiency iscrucial to higher profits and is a prime motivator, while for nonprofits the mostserious motivator is the cause.

In the nonprofit world there’s this cause thing that people arejust consumed about, and it just doesn’t exist when you are


The organizational

cultures of the for-profit

and nonprofit sectors

are so different that

misunderstandings can

easily arise.

Venture philanthropy

is not the right approach

for every funder or

forevery nonprofit,

and its practitioners

acknowledge this.

trying to make money. And that is so much more important tothem than efficiency that as long as they’re serving the cause,if the organization is messy and the roof leaks and thecomputers don’t work, well, whatever – we are serving animportant cause!

Another important difference between for-profits and nonprofits is the former’semphasis on measuring outcomes. “A lot of people who give that kind ofmoney want to know, What did I get for that? Who got help because of that?What results do you have?” Patti Acheson points out. But while she agrees on the importance of defining objectives, setting goals and making long-termplans, she worries that the emphasis on measurement could shift the non-profit’s focus away from its mission of helping people. She feels that the mostimportant measure is “not how our financials are or how many marketingcampaigns we can do, but how many people we helped.”

Blake Springer talks about the difference in the two sectors’ sense of time.

I come from a technology world where everything changesevery ten days. And I don’t think that is necessarily a badthing. It creates a lot of problems, but at the end of the day wehad huge leaps and bounds because of the mentality thatwe’re not willing to sit still, we’re constantly driving forward.

He thinks it would be a good thing if the Partners could bring some of thatentrepreneurial energy to the nonprofits they fund, “because [the nonprofits]may tend to move too slowly for their own good.” But at the same time,Partners must realize that outcomes may only be felt a few years down theline. So, he says, it will be “a learning experience for people not to go in and throw their weight around and try to implement things on an unrealisticschedule.”

In June 2001, the Canadian Centre for Social Entrepreneurship co-sponsored a workshop that addressed the question of strategic alliances between non-profit and for-profit organizations (for the full report, see CCSE’s web site atwww.bus.ualberta.ca/ccse/Publications). One of the most serious impedimentsidentified was the power imbalance between the sectors. This can create a“charitable donor–grateful recipient” relationship in which “value-flow is oneway and consists of a generic, usually unequal, exchange of resources.” WhileSVP tries hard to achieve a more balanced and equal relationship betweenPartners and Investees, it is clear from the above that attention must be paid to ensure it stays that way.

ReplicabilityFinally, there is the question of whether the SVP model is replicable elsewherein Canada. At the time of the first interview, Calgary was the only SVP organ-ization in Canada. Recently, BC Technology Social Venture Partners, targeted


Partners must realize

that outcomes may only

be realized a few years

down the line.

primarily to and for the high tech sector, opened up in Vancouver. The idea hasyet to take root elsewhere in Canada, however. A group of entrepreneurs triedto start an SVP in Toronto, but are no longer pursuing the model. They havechosen instead to focus on their own family foundation and practise venturephilanthropy through the foundation. However, they have not ruled out assist-ing in the establishment of an SVP in Toronto at a later date. Edmonton is alsohoping to start an SVP, and other cities have floated the idea, but none have yetmoved beyond the planning stages.

It will be worth following the newer SVPs to discern the common elements forsuccess and learn what may hinder the emergence or development of the modelin other cities. It will also be worth tracking the progress of the existing SVPsto see how their marriage of business expertise to social causes benefits thecommunity in the long run and provides a model for future social entrepreneurs.

Questions for Discussion1. What are the changing demands and expectations of new/emerging

philanthropists?

2. What macro (social/market) conditions drive or allow the emergence ofventure philanthropy organizations?

3. What are some possible preconditions for successful implementation of an SVP organization in other cities (eg., population, market diversity,economic or community strength) ?

4. What are some potential challenges in establishing working relationshipsbetween for-profit and nonprofit partners? How could they resolvedifferences in values and priorities?

5. What mechanisms could be put in place to alleviate potential problems?

6. What kind of training do new philanthropists need in order to discerncommunity needs and make effective grants?

7. What are examples of actions that could make an organization sustainable?

8. What advantages and disadvantages does the SVP model have comparedto traditional philanthropy?

9. How do Canadian companies whose market/customer base is in anothercountry deal with their home community?

10. What role can business schools play in presenting alternative models tostudents other than purely economic/for-profit ones? What are theirresponsibilities in educating the next generation of leaders?



Appendix A

Social Venture Partners Organizations

Key:

• Affiliateo Early stages

• Vancouver•Seattle

•Portland

San Francisco

• •Denver

Phoenix•

Houstono

Minnesotao

Clevelandoo

Chicago

oSt. Louis

Boulder•

Boston•

•Pittsburgh

•NewYork

Dallas•Austin•

• Calgary

San Diego•

Kansas City•

Maine o

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