An address by Mario Morino, VPP, for the
Greater Washington Business Philanthropy Summit March 16,
2000.
This document
is also available in Adobe Acrobat (PDF) format.
Thank you and good morning. I am delighted
to be here today and honored to be a participant in this Summit.
Many of us should pinch ourselves to be sure
that we're not living in a wonderful fairy tale. I don't have
to tell you that this region is hot. We are experiencing remarkable
economic successes that are beyond our wildest dreams. We
have extraordinary companies, that are driving change and
innovation—AOL Time Warner, MicroStrategy, just to name
a few. And new companies are being born every day fueled by
exciting ideas, inspired people and innovative solutions demonstrated
with the likes of WebMethods' stock climbing 508 percent the
day it went public and Network Solutions being purchased for
$21B. And, the beat goes on.
But there is something else on the horizon,
something even more profound. These same leaders who are driving
change and innovation in business are beginning to bring the
same expectations to their philanthropy. They are beginning
to think about where and how to channel their wealth to make
a difference.
We have the remarkable opportunity to take
this wealth, knowledge and energy and channel it in meaningful
ways to address some of our most vexing and longstanding social
problems. We have an opportunity to build and align the efforts
of these leaders with the efforts that have been going on
in the region for some time. We, the National Capital region,
can be the first in the New Economy to demonstrate how to
close the wealth loop—from innovation, to financial
success, to life significance.
Why I am so optimistic?
We are already accumulating the wealth and
resources that could really make a difference, but we have
only seen just the tip of an iceberg. We've established an
economic engine here that will sustain significant wealth
creation and survive the inevitable market correction. The
region's New Economy is real and will soon become THE economy.
We have created an entrepreneurial ecosystem
with rich networks, formal and informal, connecting people
to other people to find talent, money and other resources
to create and build companies. And there is a emerging spirit
of collegiality among the firms here that sets us apart from
other regions.
Although we still have deep divides—a
river, the color of our skin or the amount of money in our
bank accounts—we are a region that is beginning to come
together. More people recognize the importance of the District
of Columbia and that there must be a strong central core to
this burgeoning region. Institutions like the Smithsonian
are coming to recognize that, in spite of their national status,
they are part of this regional community. New organizations
are helping us cross boundaries. Whether it's WIN and its
community organizing, or the Metropolitan Dialogue to explore
how faith can be the basis of change for us, or the Mid-Atlantic
Venture Association through which venture money is flowing
into the region, there is a social fabric being woven.
We have a strong legacy of leadership and
of civic engagement. Bob Linowes, Abe Pollin, the Grahams
and others have contributed much to this region and its health.
And we have new leaders like Steve Case and Michael Saylor,
who are with us today, and who join an even broader group
of those like Mark Warner, Jim Kimsey, Raul Fernandez, Jeong
Kim and many others. These leaders come to philanthropy relatively
young. They seek and expect to change the status quo and are
willing to take risks to make it happen. They've already done
it in their business lives and know that such dramatic change
is possible. And they'll settle for nothing less in their
philanthropic actions.
Why change?
In the eight years that I have been working
through the Morino Institute to help people and communities
understand the opportunities and risks presented by the Internet
and the New Economy, I have had the privilege to meet some
remarkable people and organizations doing great work. What
I've learned is that there are good programs and organizations
out there who have found solutions that work. Rarely, however,
are those solutions broadly disseminated or implemented on
a broader scale. What's needed are not necessarily new solutions
but new ways to fund and support the good organizations and
ideas in the nonprofit sector.
All too often, the discussion of philanthropy
focuses too greatly on how to raise more money for charitable
causes. While this is vitally important, not enough attention
is paid to how to use and distribute that money to achieve
better results. There is a whole "new philanthropy"
that has emerged that includes e-philanthropy, philanthropic
financial services and venture philanthropy. Taking aim on
this latter point, I'd like to talk with you today about venture
philanthropy.
What is venture philanthropy?
Well, it borrows some of the practices of
the venture capital model. The best venture capitalists do
more than provide funding. They also provide the know-how
to build great companies. Their focus is not only on creating
better products, but on investing in the people, organizations
and systems that can build and create those products. Imagine
if we applied these principles to the way we fund nonprofits.
The way we support nonprofit organizations
doesn't encourage investment in building strong organizations.
Money flows to programs, not to organizations. We want a program
to provide shelter to more people, but we are reluctant to
invest in developing the organization to do this well. We
reward those with the low overheads, making it almost impossible
for them to re-invest in their own development.
Ironically, at the Morino Institute we've been
living venture philanthropy without realizing it. We were
just doing things in a way that made sense to us. We listened
and learned about the nonprofits with whom we worked. We wrote
checks, but our involvement went further. Without trying to
change their mission, we tried to help them be more effective
in what they did.
Now, imagine a venture philanthropy fund that
follows this model to identify people and organizations that
have the potential to be market leaders in what they do. Imagine
this fund investing substantial amounts of money, not $15,000,
but several million dollars. Imagine that the fund provides
strategic management and technical assistance to help an organization
develop its management, create strategic partnerships and
develop alternative revenue streams to enable the organization
to sustain itself. And imagine the fund working with organizations
to develop clear performance goals that enable them to continuously
improve their effectiveness, while providing their investors
and other stakeholders an accountability of their progress.
What is its promise?
Let me give you an example, where this has
happened. City Year, a national youth service corps that was
the inspiration for President Clinton's Corporation for National
Service, benefited greatly from this type of approach.
Ten years ago, founders Michael Brown and Alan
Khazei needed to raise money to launch their program that
would build a national youth service corps that would function
like a domestic Peace Corps.
General Atlantic Partners, one of the leading
investors in information technology and Internet firms today,
heard about this program, met the founders and within 15 minutes
decided to give them a $100,000 challenge grant. They did
this because they saw the potential. They saw a strong management
team in the founders and a terrific idea. That $100,000 grant
enabled City Year to raise $100,000 each from four additional
companies within 40 days. So in little over a month, they
went from nothing to half a million dollars. But General Atlantic's
involvement didn't stop there. They took a seat on the organization's
board, helped them with management issues and continued to
provide advice and financial support that increased every
year.
Today City Year is in 11 cities and engages
more than 1,000 young people between the ages of 17 and 24
each year in meaningful service that benefits them and their
communities.
Imagine what this kind of approach could do
to help other organizations such as the YMCA, Goodwill, Boys
& Girls Clubs and our public schools that make a difference
in so many people's lives. Imagine how much more of a difference
they could make to more people if, with greater funding and
strategic management support, there were ways to significantly
leverage their infrastructure and services. Venture philanthropy
offers this promise.
The Morino Institute is well on its way to
launching a social venture fund here in the region to demonstrate
venture philanthropy. And we have lots of support. Raul Fernandez,
Mark Warner and others are committed to the concept and the
way it would help change philanthropy and build nonprofit
organizations.
In 1994, I somewhat naively presented to the
Northern Virginia Roundtable a vision for how the National
Capital region would experience a transformation to become
a leading center in the new commerce of the Internet. Now,
for many reasons, that has come to pass. Today, maybe just
as naively, but with even more passion and conviction, I suggest
that we are on the verge of yet another transformation that
will profoundly change philanthropy and the nonprofit sector.
This time the change will come more slowly and will be much
more difficult, even traumatic for some. But it will happen.
The opportunity, the resources, the leadership
and the need are here. We are beginning to see a convergence.
I challenge each and everyone one of you to get involved,
to get engaged. You can make a difference. Just imagine "We
can be the first region that gets it right in completing the
wealth cycle in the New Economy."
|
