Kathy Giusti Venture Philanthropy Done Right

How leading foundations are leveraging venture philanthropy to drive cures.

In our work at the Harvard Business School Kraft Precision Medicine Accelerator, one conclusion stands out: those disease foundations making significant progress in driving the development of treatments and cures have three things in common: a clear strategy, strong leaders—and the ability to catalyze a great deal of funding. Have no illusions: money matters. Developing treatments, conducting clinical research, and driving cures requires serious capital, not the type of funding raised through bake sales and walkathons.

Enter Venture Philanthropy

So how do nonprofit foundations that are focused on a particular disease go about attracting the serious amount of capital needed to make a meaningful difference in treating and curing a disease?

The answer lies in venture philanthropy.

The philanthropy element involves convincing high net worth individuals to make philanthropic donations to a disease-focused venture philanthropy fund. Interest in ven-ture philanthropy and impact investments is growing as an increasing number of wealthy individuals want to see their philanthropy generate a tangible impact.

But the key to venture philanthropy—and what makes it different from traditional philanthropy—is in the venture element. A venture philanthropy fund doesn’t operate
in the traditional way of making grants to fund scientific research. A venture philanthropy fund acts like a venture capital fund in making investments in for-profit entities with the intent of generating a financial return. (Or, if grants are provided, those grants come with terms than enable the venture philanthropy fund to participate in the financial upside produced.) The positive returns that are generated come back to the fund, which then reinvests the capital in additional opportunities.

Venture philanthropy is a win/win on multiple dimensions. It provides targeted funding to develop treatments for a specific disease, benefitting patients. It provides necessary capital to help commercialize promising scientific dis-coveries and bring these discoveries to market. It enables philanthropic donors to see the impact their contributions are having. And, the returns that are generated provide a source of sustainable funding for a foundation to take more targeted shots on goal.

Profiles of Venture Philanthropy Success

Highlighted below are four examples of disease-focused organizations with very different approaches to venture philanthropy, driven by their disease situation.

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