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Perspectives: Entrepreneurs become partners to aid nonprofits
Sunday, June 10, 2001 By Linda Dickerson
In the face of shrinking venture capital pools and a declining stock market, most entrepreneurs are focusing exclusively on their own bottom lines.
However, as part of a nationwide movement, Pittsburgh entrepreneurs recently launched the country's 19th Social Venture Partners group.
To date, 50 have pledged a minimum annual contribution of $3,000 to a fund that partners will allocate strategically. Their allocations will benefit nonprofits advancing the status of at-risk children in Allegheny County. Pittsburgh Social Venture Partners will differentiate itself from other grant-making institutions by giving more than money. Partners also agree to contribute their time and expertise to the nonprofits that PSVP funds.
Linda A. Dickerson is a principal in Dickerson & Mangus Ink., an issues consulting firm.
"It's not really the capital that we bring to the table. It's the human capital that matters," said Sanjay Chopra, the newly elected PSVP chairman.
By providing expertise to local nonprofits, PSVP hopes to add capacity to the nonprofit sector without also adding cost. Social venture partnering is a nascent nationwide experiment to expand the intersection between the nonprofit and the for-profit worlds.
Although a more stringent application of basic business principles could streamline many area nonprofits, the for-profit community also could generally benefit from greater understanding of the typical nonprofit's commitment to mission. As a consequence, the exchange of information between for-profits and nonprofits should significantly improve the operations of both.
While the practices that ensure for-profit success apply to nonprofit organizations, usually these practices require some translation to transcend the boundaries of the for-profit world and to produce results in the nonprofit arena. Social Venture Partners' primary goal is to expedite this translation.
Although the two worlds have many similarities, the differences are still appreciable.
"Nonprofits are the cathedral builders of the world. Their impact is much more long term," said Chopra, a founder or co-founder of several business start-ups, the most recent of which is Intellions.
Charged with resolving the community's most vexing problems, nonprofits frequently need a long-term perspective. Being somewhat insulated from brutal market forces affords them the luxury of experimentation and frequently extends the period allowed for to new operations.
For-profit enterprises are not always so lucky. Public companies report quarterly and feel the consequences of their results immediately. A sense of extreme urgency pervades most for-profits.
Nonprofits aren't lackadaisical, but their sense of urgency comes from their dedication to their missions. Insulation from the minute-to-minute pressures of the market also can mean less operational efficiency. Partners from PSVP hope to help the nonprofit sector to address that.
To determine where to best place nonprofits' resources, PSVP developed several criteria. First, the Partnership defined its initial priority to be at-risk children and youth in Allegheny County.
"We examine whether we can streamline the organization and make it better," Chopra said.
Pittsburgh Social Venture Partners plans to invest $100,000 to $500,000 annually in each of two to four different investments. "We want to invest for the long term -- three to seven years," Chopra noted, trying to be sensitive to nonprofits' extended time frames.
PSVP plans to make its initial investment by year-end. "Our goal is 100 partners by 2002," Chopra said.
Regardless of whether the community can accurately measure PSVP's impact, the impact will be more than commensurate with the investment. Providing entrepreneurs with a user-friendly approach to philanthropy ensures a much better future for this community.
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