Venture Philanthropy Goes Into Politics

The model, connecting wealthy investors with needy charities, has moved into the political arena with the New Progressive Coalition

by Jessi Hempel

In recent years, Silicon Valley venture capitalists have led a growing effort to transform the philanthropic sector through what's been dubbed "venture philanthropy". The efforts of folks like eBay (EBAY) founder Pierre Omidyar and Acumen Fund founder Jacqueline Novogratz to use capital markets to solve social ills have struck a chord.

Sure, many of the benefiting businesses may not have the greatest profit margins, but already wealthy investors can measure their profits in terms of social capital (for example, how many meals were served to homeless people) as well as cash.

The business focus, meanwhile, brings metrics and efficiency to a sector renowned for just the opposite. Now, as the 2008 election approaches and campaigning heats up, a wealthy Silicon Valley venture capitalist is applying these VC techniques to politics. August Capital general partner Andy Rappaport and his wife, Deborah, have invested $1.5 million in a for-profit venture called the New Progressive Coalition.

Making Connections

NPC bases its business model on the idea that the progressive movement has historically supported candidates, not organizations—donations rise and fall with political races, while between elections, ideas and issues lag. The right, on the other hand, benefits from a robust network of think tanks such as the Heritage Foundation and the Cato Institute that keep ideas alive even when there's no election in the offing.

NPC hopes to use the Web to build a similar kind of infrastructure by connecting left-leaning organizations—many of which are newly formed grassroots groups with inexperienced leadership—with investors who are keen to provide ongoing time and money.

To build powerful progressive-thought leadership, "We need to experiment by supporting a large number of small efforts," says Rappaport. "Some will succeed, and we'll be able to throw more money and effort at them and build them to scale." As with the philanthropic venture organizations, shareholders will be able to measure their profits using a double bottom line—the monetary return that will keep the business afloat and the political return that will eventually build powerful think tanks that can keep step with the right.

Information at Your Fingertips

Here's how the coalition works: Member organizations pay annual dues of up to $5,000 on a sliding scale, based on the size of their budgets. This allows them to be listed in the online "marketplace" and also gives them access to technical assistance and professional advice from NPC's 58-person advisory team, drawn from a variety of fields including marketing and finance.

So far, about 200 groups have signed on, including national pro-choice group Choice USA and independent online rag Alternet.org. Meanwhile, investors—so far, just 220—pay an annual membership fee of $250 for networking, events, publications, and help connecting to groups to which they can donate money and time. They can search the database online, or they can get more focused advice from NPC professionals.

The group's executive director, Kirstin Falk, worked on Wall Street and in a political nonprofit before she met the Rappaports and agreed to launch NPC, which is located in a former dot-com building in downtown San Francisco. Falk says there is a vast underserved group of potential donors who may lack the ability to write seven-figure checks, but who are nonetheless able to devote both money and time to the progressive causes they embrace.

Bang for Your Donated Buck

She points to 1.16 million people in the U.S. who both make more than $150,000 and self-identify as progressive (according to a September, 2006, analysis conducted by Ammo Marketing). Yet according to OpenSecrets.org, which tracks campaign contributions, just 130,000 individuals have given more than $2,000 to progressive candidates, groups, and political action committees (PACs).