May 14, 2008 | Read Time: 1 minute
Is “venture philanthropy” really just a “high-end shell game”?
So wonders Kelly Kleiman, on her blog The Nonprofiteer, in response to a comment on the 501cFiles.
Back in February, Tom Durso, who writes the 501cFiles, posted a critical analysis of a New York Times article lauding venture philanthropy. On Tuesday, somebody posted a comment to his blog raising the idea that start-up businesses use nonprofit organizations to buy credibility for their companies.
“What reporters should be questioning about venture philanthropy is whether it’s one of the last few tax write-offs or tax advantageous schemes – or ways to help buddies get rid of dogs or other unwanted investments,” says the blog writer.
He lays out this scenario: A start-up company needs an investment from a “known brand” to get started. So the company’s primary backer — a venture capitalist — might donate a few million dollars to a nonprofit that also engages in for-profit ventures (for example, National Geographic). Then the established organization turns around and gives nearly the same amount to the start-up company.
“There should be far more critical analysis of what’s going on with venture philanthropy,” he concludes. “Yes it can do a lot of good. But, yes it opens up more schemes to help a few buddies out.”
What do you think? Have you seen examples of this?
