Venture Philanthropy Goes Into Politics

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Falk thinks the problem is that many of these people don't have an easy way to find groups that are meaningful to them. Therein lies an opportunity. By setting up NPC as a business, she hopes to be able to grow the matchmaking service to a size that will make it a one-stop shop for anyone interested in making a political donation to a liberal cause. "I think a lot of people have gotten stuck thinking every organization needs to be a for-profit or non-profit," says Falk. "Innovation doesn't really happen unless you break these silos down. It's less about the legal structure and more about what you want to accomplish."

Michael Kieschnick is president and co-founder of Working Assets—and one of NPC's biggest investors. During the 2006 election cycle, he asked NPC to identify groups that were doing cost-effective work on issues rather than candidates. The search turned up VoteVets.org, a PAC that strives to put into Congress war veterans of Iraq and Afghanistan who are critical of the war's execution. VoteVets has been part of NPC since its launch. Kieschnick gave the PAC $100,000 and continues to support its efforts. "I've been an activist and donor on many issues. NPC is the only place that brings the two together," he says.

Great Resource

Meanwhile, membership organizations are just starting to reap the rewards of their affiliation. Roz Lemieux, executive director of the New Organizing Institute, has renewed her membership for a second year, paying $500 in 2006 to be a member of the NPC. The Washington (D.C.)-based, social welfare-focused nonprofit trains young political organizers on how to use technology to further progressive causes. Last year, one investor referred by NPC walked in the door two weeks before a large training, wrote a check for $10,000 on the spot, and volunteered full-time.

Beyond such donations, Lemieux has also relied on NPC for professional support. "They donated their space for an event we did in San Francisco, offered assistance finding a contract fundraiser, and forced my hand on tracking metrics," says Lemieux. "They're useful as a resource for operations and management and planning that help us be more fundable."

Political Return on Investment

NPC has been running in beta since October, 2005, but it is just starting to gain momentum. In late March, the business was accepted into the Women's Technology Cluster, a prominent San Francisco tech company incubator, and Falk is preparing to hit Sand Hill Road for a second round of funding for NPC in the next month. Rappaport hopes that the for-profit model will pare down funding inefficiencies and allow the group to be self-sustaining. "Most progressive organizations struggle because of the fickleness of donors," he says. "Like a traditional startup, if we can get it to cash-flow positive, then an initial influx of startup capital is all it needs."

NPC plans to grow its staff from nine to 15 in the next couple of years, while its business plan talks about attracting 8,000 investors by 2011. Right now, the organization is focusing on expanding its product line. It recently launched a proprietary "political return on investment" tool, designed to measure success in six sectors: advocacy/organizing; electoral; idea generation/dissemination; infrastructure/capacity; leadership, and media.

It will include 54 measurements that cover everything from the average years of experience among the senior leaders to the percentage increase in the budget or revenue from the previous year. This will help investors to gauge which groups will most effectively use their donations. In the fall, they hope to launch political mutual funds. These will be pre-screened portfolios of organizations to which donors can contribute.

These are promising ideas, but it's still too early to say how successful NPC will be. Even Rappaport agrees, saying, "The ability of the organization to really deliver the goods is going to be a function of how fast it grows its membership."

Hempel is BusinessWeek's Innovation editor in New York.