Venture capital takes financial capital and expertise and provides it to high-potential, high-risk, startup businesses. Venture philanthropy uses the same approach and applies it to philanthropic donations in the nonprofit or social enterprise sector. Both VC and VP involve a commitment of time and resources, carry a high degree of risk and can produce outsized returns.
Many people think of charitable donations as social investments. Just like business investments, charitable social investments come in different varieties for different types of investors. Some donations to nonprofit organizations are like investing in bonds: They involve low risk and generate more conservative social returns. Many charitable organizations do excellent and important work, and such donations produce meaningful and largely predictable results.