This Venture Funder Likes to Get In Early

The Draper Richards Kaplan Foundation was started in 2002 when two venture capitalists, William H. Draper, III and Robin Richards Donohoe, decided to apply their venture approach to philanthropy. In 2010, they teamed up with a retired Goldman Sachs guy, Robert S. Kaplan, and pulled in over a dozen other philanthropists to ramp things up.

DRK focuses on backing “experienced, dedicated social entrepreneurs with a developed idea for a non-profit organization.”

“Idea” is the key word here. The foundation likes to get in early on new NGOs, digging in and getting involved in an organization’s formative years. The average age of the organizations DRK funds is 1-3 years. Many of these NGOs operate in the global development space, but DRK also funds efforts focused on U.S. problems, especially education.

DRK has put money behind such organizations as Kiva, IDEO, Komaza, Avanti, and Worldreader. (You can see their full “portfolio” here.) The foundation is part of a small group of like-minded global development funders call Big Bang Philanthropy, which gets behind organizations that “address the fundamental needs of the poor” and “are committed to impact at maximum scale.”

By getting involved early, it’s possible to have a large influence on the direction a new nonprofit is taking, and this is when DRK’s assistance can have the most impact. All of which is an unsurprising approach for a foundation started by VCs, since getting in early on good ideas is how these folks score big.

Funding from DRK is what might be called “smart money” in the startup world. The support the foundation offers is very hands-on and useful. In fact, DRK expressly eschews a model of funding that involves providing money and checking in periodically. On its website, DRK describes how its officers take a seat on the board of grantee organizations for three years, “often serving as the first outside board member.”

Again, that’s right out of the VC playbook, where investors nearly always take a board seat when they take a big equity stake in a company.

The point is to develop an active relationship between grantor and grantee: “We work day and night with our grantees, opening our networks and contacts to each of these select organizations, facilitating meetings, convening critical resources and working side by side with each leader to help them reach their full potential and build their organizations to scale.”

That does sound useful, especially given how clueless many social entrepreneurs are about the mechanics of building organizations. And, not to belabor the analogy, but that’s also common with startups, where you have the brainiacs with great ideas who may be business neophytes.

Scale is particularly important to DRK. Just because the foundation is interested in the early stages of an organization’s development, when it’s probably pretty small, that doesn’t mean they expect it to stay that way. The ultimate goal isn’t just to see an organization get off the ground, but to see them “expand enough to directly benefit a large number of beneficiaries and impart enough momentum to influence broader systems that encumber progress.”

Again, that's standard VC stuff: Such investors want to get behind something that can become big, not just piddle along. When the Draper Richards Kaplan Foundation bets on an entrepreneur’s idea, it’s not just getting the ball rolling, it’s going for broke.