August 29, 2009
Profile of a Venture Philanthropist
You may have missed a nonprofit-related item in last week's New York Times. It was in the Business section in a regular column called The Boss, which typically features former Ivy League quarterbacks explaining how they became billionaire financiers. This version, entitled A Banker for the World, focuses on Jacqueline Novogratz, who founded and now runs the Acumen Fund, one of the early entrants in the category of so-called venture philanthropy. As is true of other, later arriving venture philanthropies, Acumen invests rather than making grants, takes management positions in many of the organizations in which it invests, organizes its activities into investment portfolios, and tracks performance according to a complicated set of metrics. It is unabashed about the fact that financial sustainability (meaning, I assume, profit) is among its investment criteria. Although it is not clear from Acumen's website, I know that Jacqueline's original plan included compensating fund managers (otherwise known as program officers) based on the overall performance of their investment portfolios. With all of this socially entrepreneurial innovation, I would love to be a fly on the wall in the office of Acumen's counsel. I have to believe they have a direct line open to the Exempt Organizations division at the IRS.
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