With a background in fundraising and philanthropy, I’ve been on both sides of the fence. I’ve thought about how to convince people to trust me and my organization with their money, and I’ve thought about how to determine whether an organization could be trusted with money I was stewarding.

If you’re finding yourself in a situation where you’ve got cash you’d like to see working for you in a way that will make the world around you a better place, think about these three criteria before you decide:

Return on Investment
It’s true that money donated to a philanthropic cause isn’t an investment in terms of bringing cash flow and/or assets back to you (unless you’re considering a loan situation like Kiva.org), but it can be an investment in making changes that you think need to be made.

When checking out a new organization for a potential donation, consider what they’ve delivered in the past month, year, and decade. Take the time to look at their Guidestar.com profile and at their past 990 forms. Read their annual reports, their websites, and their social media streams. If you can, sit down with their executive director or Board chairman. Speak with other donors to the organization.

Overall, learn how your money will be used, and determine whether you consider their track record to be a good investment.

How Can You Get Involved?
A great way to see how well an organization is doing is to become a part of it in some small or large way. Consider becoming a volunteer or taking a seat on the Board of Directors. If you have particular expertise in something the organization deals with internally — finance, real estate, organizational psychology, human resources, etc. — think about donating your time and services if needed.

There’s no better way to see “how the sausage is made” than to be part of the assembly line. Dig in. Get dirty. Learn where the real holes are in the organization. And decide if your money can really make a difference, or if you’re throwing good money after bad.

Gut Instinct
Honestly, from my experience, one of the best ways to figure out whether an organization is worthy of your hard-earned dough is through gut instinct. Quite often, you can take a quick snapshot look at a non-profit and figure out whether or not they have the ability to really go somewhere. The main indicators of this, in my opinion, are:

• Executive Director. Does he or she have the passion and the skill set (networking, organizational management, subject matter knowledge, experience) to move the organization forward?
• Board of Directors. Are they invested? Are they contributing significantly to the fundraising campaign from their own pockets. Are they contributing significantly to the fundraising campaign via their time and energy? Are they “show up once a month” kinds of people, or are they “in the trenches” kinds of people?
• Organizational History. Have they been successful before? Have the people that work for the organization been successful in their previous endeavors? Are the right people “on the bus?”
• Business Plan. Is there a living document business plan that’s followed? Is there an earned revenue component to the business plan? Are they serving a purpose that other organizations aren’t already serving well?

If your gut tells you this isn’t the right place to invest, it probably isn’t.

Would love to hear YOUR thoughts on this topic!

Do the folks who are submitting ideas and voting for their favorites over on RefreshEverything.comknow that they’re taking part in one of the most forward-thinking forms of philanthropy currently being practiced or that they’re taking part in an experiment that many nationally branded companies would find extremely risky? Who knows. What we do know is that America loves voting for things, and they’re jumping in with both feet on this one.

Premise

The basics of the program are the following: Pepsi is accepting up to 1,000 wannabe grant projects each month throughout 2010 via online submission. Submissions are accepted between the 1st and the 15th of each month. Voting on each month’s submissions takes place in the subsequent month. For example, you can vote on April submissions in May.

Each month, up to $1.3 million will be awarded in the following amounts: 2 Grants at the $250,000 level; 10 Grants at the $50,000 level; 10 Grants at the $25,000 level; and 10 Grants at the $5,000 level.

For more information — check out the program’s FAQ page.

Is This Wise?

The arguments here are the same as they are with any experimental crowdsourcing philanthropy project:

• A Proponent Would Say: The mass market usually has a good idea of what needs to be fixed, so we can trust the general public to allocate funds appropriately; the majority voting together will discover the greatest need — a bell curve theory. Also, crowdsourcing exposes more people to philanthropy and the organizations working to provide needed goods and services. This is an education that can only benefit how people approach social improvement.
• An Opponent Would Say: The mass market isn’t trained in the what types of programs succeed, what types of programs make the biggest impact for good, and what types of programs will leverage more improvements. Also, why would we trust the general public to choose who gets grant money when there’s clearly a danger of a “popularity contest” — the one with the most friends wins?

What do you think? Do we applaud Pepsi for introducing a mainstream philanthro-marketing program, or will this just end up with the wrong programs getting money that could make a better impact elsewhere?

For more examples of Crowdsourcing Philanthropy, check out the following posts:
More Examples of Crowdsourcing Philanthropy
Crowdsourcing Philanthropy

As part of our series on Longtail Philanthropy, I’m interviewing Stacy Caldwell of Dallas Social Venture Partners, and Ruth Jones of Social Venture Partners International. They’ve been kind enough to share with us some of the more nuanced details behind Social Venture Partners, as well as why they think the SVP model is one that will be sustainable and effective as Philanthropy continues to change.

How is the Social Venture Partners (SVP) movement changing the face of philanthropy?
Ruth Jones: SVP is the largest donor network in North America, with some 2000 partners. Its dual mission is unique: partners seek to bring about significant, long-term positive social change in their communities through:

• Philanthropy Development: Creating communities of lifelong, informed and inspired philanthropists. SVP Partners are individuals who make meaningful contributions to nonprofit organizations by sharing their skills, time, and financial resources. The partners are organized within 25 SVPs across the US, Canada and Tokyo – a list is here at www.svpi.org.
• Capacity Building: Making strategic investments that build long-term capacity for nonprofits so they can better fill their missions. SVP grant recipients are nonprofit organizations that seek new resources and innovative approaches for addressing a variety of issues, including education, environmental protection, and youth development. Capacity building investments focus on increasing the ability of each grant recipient to achieve their mission and include cash grants, skilled volunteers, professional consultants, leadership development and management training opportunities.

The SVP model is different in contemporary philanthropy in that it combines investment and education in order to create sustainable nonprofit organizations and lifelong, informed philanthropists. Partners frequently express that one of the most appealing aspects of involvement with SVP is the sense of being a part of something larger than themselves, which allows them to achieve more than they could alone.

Through our work, we try to live these principles:

• Engaged Venture Philanthropy: Partners invest time, expertise and money in nonprofits. They seek collaborative relationships with nonprofits that last for at least three years.
• Entrepreneurial Spirit: Partners use innovative approaches to achieve leveraged results in their nonprofit partnerships and communities. They delegate decisions, resources, and authority to those closest to the work.
• Philanthropic Education: Partners educate themselves and become informed, effective, lifetime philanthropists. Ongoing individual philanthropy is catalyzed through hands-on experience and education.
• Community & Collaborative Action: Partners believe in the power of collective, self-organized effort. They encourage and maintain highly participatory, Partner-driven organizations that use non-hierarchical communications and operating practices. SVPs support an open exchange of knowledge and lessons learned, and avoid partisan, religious or political activities.
• Mutual Respect: Partners respect the expertise of community nonprofit organizations. They form close working relationships with organizations where Social Venture Partners is invested in the nonprofit’s success.
• Accountability & Results: Partners are mutually accountable to each other, their Grant recipients, and community. They achieve and document measurable results, both in their own work and through their nonprofit partnerships.

Stacy Caldwell: Social Venture Partners represents a broad gathering of stakeholders in their own community trying to create impact together instead of one person reacting to or supporting a pet project. The organization represents many different citizens in a community acting together so that they can sustain a larger portfolio of investments.

What is Venture Philanthropy, and what has SVP learned over its first decade about how venture philanthropy is different from venture capital?
Ruth Jones: I think the description of our model above gives some sense of how “engaged philanthropy” (which is the term we use to describe it) differs from traditional philanthropy. Our focus on building the capacity of the nonprofit — working with it to strengthen it internally so that it is more sustainable and better able to fulfill its mission — is drawn from venture capitalism, as is the assumption that change takes time. SVP “invests” in nonprofit organizations from 3-5 years and works with them intensively over that period. We also share with venture capitalism a strong focus on evaluation — are we achieving our mutual goals?

Some of the differences: we don’t take seats on the board of the nonprofits; we recognize that we (the partners) have a huge amount to learn from nonprofits about social issues and responses to these. And nonprofits can learn from the professional skills that our partners bring to the table. It’s a mutually beneficial relationship.

Stacy Caldwell: Dallas SVP has matured as an organization to realize its true value. Venture philanthropy is an opportunity to bring new resources to bear on ideas and innovation in the social sector that possibly couldn’t be executed without the infusion of this kind of capital.

• Strength in Collaboration: We have a lot of power in the portfolio we manage; we’ve just invested our two millionth dollar, and we’re realizing the strength we have as a network of individuals. Because so many social initiatives are inter-connected, we’re finding ourselves becoming a lot more collaborative outside of our investments, and leveraging experts outside of our network. We’ve realized we don’t have to do it all by ourselves, and are developing relationships with other networks and working on co-investment models as a result. We’ve also realized that a local SVP has to hit a sustainable partnership (more than 60 partners) to think about these types of collaborative relationships within the community.
• Trusting the Ideas: In the business world it’s a zero sum game – profits are key. In nonprofit, it’s more expansive and exponential, and it’s not zero sum. There’s an energy around projects. For example, if we have a couple of partners that have the interest, energy, and bandwith to get involved in an initiative, even if we don’t have the resources on paper, it can be realistic. Philanthropic social impact work creates more energy and outcomes when there’s a risk involved. What’s critical is empowering individuals in the community and trusting them when they need to move forward with a project. We know that sometimes we need to follow the passion to find the capacity.SVP gives both our nonprofit agencies and our partners the chance to try things they wouldn’t do on their own.

What makes SVP a viable and sustainable model for philanthropy?
Ruth Jones: We know that it gets results. We use sophisticated survey tools to see if we are on track. Network findings and results prove the SVP model is working well. SVP partners are giving more dollars, volunteering more hours and reporting a higher level of civic engagement. SVP grant recipients are giving SVP high marks for service and support and reporting that their organizations have benefited significantly from working with SVP.

I’ve mentioned the strong emphasis on accountability and results from the nonprofits we work with, but we apply the same standards to ourselves. I think that contributes to SVP’s sustainability and is one of the reasons why SVP is now acknowledged as an innovative and influential leader in philanthropy development and donor education.

Stacy Caldwell: I would suggest that more importantly, it is a sustainable model for community impact. This is a way for the citizen sector to intentionally and strategically improve the mission delivery system of nonprofits. By coordinating the time and contributions of a diverse group of partners (all donors), the Social Venture Partner model provides nonprofits with amazing access to highly skilled and passionate individuals that they rarely can manage or afford otherwise.

How do you think this type of hands-on support will change over the next decade?
Ruth Jones: I think we will see more and more of it: more people who want to put their professional skills and experience to work in solving community issues and who want to contribute more than money. Even during the recession, our network has grown — we just welcomed a new SVP in Sacramento, CA. In fact, I think you could say that the current economic climate has just strengthened the desire of many people to get personally involved.

What’s “in it” for an SVP member?
Stacy Caldwell: SVP is a community of like-minded individuals who want to create positive impact in their community, but we have fun doing it! This is their “passion” time. This is the time they set aside to volunteer and give back. We create the best experiences for that time.

As a result, we’ve built a network of individuals who really enjoy being with, and working with, each other. They tackle these projects with as much vigor and focus as if it was their job, but the attitude they bring is very open, collaborative, and energizing.

What are some checks and balances that have been worked into the SVP model?
Stacy Caldwell: The vetting process alone for an SVP is very powerful. Due to our broad crossection of stakeholders, we have partners with multiple areas of expertise looking at each investment. Also, because so many partners are involved in each investment, there are always several sets of eyes watching and analyzing each investment as it moves through the SVP process.

What is the average prior engagement in philanthropy for an SVP member?
Stacy Caldwell: Partners represent full spectrum of experience in philanthropy. Sometimes their engagement with Social Venture Partners is the first time they’re thinking about what impact they’d like to make with the resources they’ve accumulated. Sometimes they’ve been involved extensively in philanthropy and are looking for a way to work with like-minded individuals. Some have experience working with nonprofits and serving on the boards of nonprofits.

They all see Social Venture Partners as an opportunity to test-drive their philanthropy ideas in a safe environment.

Do SVPs offer philanthropy education to members?
Stacy Caldwell: People can get a much deeper education in philanthropy by working with Social Venture Partners; it’s a different experience from serving on a Board or being involved in other ways with the nonprofit arena. SVP encourages a neutral advisory position for members instead of serving on the Board — there’s a strong difference between being a fiscal guardian of an organization versus having the opportunity to stretch one’s wings when considering ideas to make an organization stronger.

SVP focuses on investment, engagement, and education, and each SVP is different in its educational opportunities. At Dallas SVP, we hold a monthly luncheon, bring in speakers, and learn about cutting edge tools in philanthropy as well as best practices in the nonprofit arena. We welcome our partners to share with one another about the work we’re doing at grantee agencies as a way to keep an eye on investments on the ground.

How can SVP members get involved with nonprofit organizations through SVP – do members do so often?
Stacy Caldwell: We really do use the skill sets and expertise of the partners. Over 97% of our partners in the Dallas SVP are engaged Social Venture Partners activities.

This engagement plays out in a variety of ways as well. Some serve as Lead Advisory Partners with our local nonprofit grantees, which requires a stronger commitment of time and energy; these partners become the eyes and ears of SVP with the nonprofit agency and serve as the broker between SVP and the agency. For others, engagement is attending educational workshops and getting a better sense of how they’re going to do their philanthropy.

We attract people who have achieved success in life (DSVP requires a $5,000 annual contribution), and we work with them based on what kind of time they have available. For example, if a partner travels all year and is home for only 6 weeks, we’ll find a place for her to volunteer during those six weeks. It’s a guilt-free experience.

Overall, the SVP model offers a way for people to be more strategic with their time. We give them the chance to target their experience with a nonprofit and use their skills in a way that can create the most value.

Tell us about the Texas Social Innovation Initiative and how it can serve as a model for national groups.
Stacy Caldwell: The Texas Social Innovation Initiative is in a very early stage, but bold move for Texas to claim and promote socially innovative ideas and leaders as an answer to the many challenges our great State faces.

One Star Foundation, Root Cause, and Dallas Social Venture Partners have started with a demonstration here in North Texas that has identified innovative nonprofits. One Star Foundation helped seed the search with awards valued at $25,000 each for seven nonprofits who are innovating in our community. Those organizations will be assisted by Root Cause to build a business strategy and “pitch.” Dallas Social Venture Partners will host a “fast pitch” experience in front of an audience of impact investors for those organizations to present. This collaborative activity makes the best of our individual strengths and draw from a national/state/local network. Our activities will culminate at an event (the bigBANG!) that is sure to be an amazing display of social innovations. We hope your audience will join us on June 10th at Dallas Union Station.

Thanks to our interviewees for clarifying some of the great work done by Social Venture Partners nationwide.