"Venture philanthropy" gets a lot of play these days, but it means different things to different people. And to some, it means nothing good: Imposing silly metrics on a social sector that tends to defy easy measurement by the bean counters of the world.
To many of its disciples, though, venture philanthropy simply means taking a rigorous approach to giving away money so you're more likely to have an impact. Business investors have been refining their methodologies for decades. So why not borrow from that world?
That's how Liam Krehbiel sees things. He's an heir to the Molex electronic interconnector fortune, who, after a stint at Bain and Company, decided to apply venture investing principles to the philanthropy sector, rather than pursuing the family business. Like many new philanthropists, Krehbiel combines funding with management support to give Chicago-area nonprofits a fighting chance. “Think about what successful venture-capital firms do,” Krehbiel told Michigan Avenue Magazine. “They look for high-potential, early-stage companies and provide the financial and intellectual capital to help them grow. We do the same thing.”
Krehbiel named his venture A Better Chicago (ABC), and it’s already making a local impact after just a couple years. ABC’s priorities are early childhood education, K-12 education, and workforce development. ABC provides annual six-figure grants and guidance in these priority areas for business planning, infrastructure development, branding, communications, and technology. Recent grantees include Citizen Schools, Genesys Works, Jumpstart, One Million Degrees, Reading in Motion, and KIPP Chicago Schools.
"We're looking for outcomes," Krehbiel said in a Chicago Tribune article. "If nonprofits aren't quantifying their impact, if they aren't able to show us a set of outcomes that matter, about how they're really changing the life trajectory of a person, we're not interested. Anecdotes are not of interest to us."
More recently, ABC created an incubator-style program where startup non-profits compete for $100,000 in seed funding. Launched in 2012, Project Impact aims to spur innovation in Chicago by helping new nonprofits get low-income residents out of poverty. The program had 60 applications last year, and four finalists were selected by a panel of judges after pitching ideas to a live audience. The 2014 application dates should be announced soon.
Krehbiel asks his staff (composed of three managing directors, a portfolio associate, and a marketing director) to consider four basic questions when deciding whether or not to fund a nonprofit organization:
- Does the program produce transformational outcomes for its participants?
- Do we think the leadership has what it takes to build a strong, successful organization?
- Is the organization on solid ground financially and operationally?
- Do we think this model is scalable?
At least for now, Krehbiel has limited ABC’s grantmaking to the Chicago metropolitan area. He cites the 1.2 million people living in poverty in the Chicago region and prefers to focus on the challenges in his own backyard.
To get your nonprofit organization on Krehbiel’s radar, complete the Refer a Nonprofit form on the ABC website.