On a crisp October morning recently, more than 200 high rollers from the public, private, and academic sectors all over the United States converged on downtown Minneapolis to talk about a concept that might seem counterintuitive to most people: How to make charities and other nonprofits behave more like corporations.

The occasion was the 2011 convention of Social Venture Partners International (SVP), a three-day gathering devoted to bringing together the spheres of grant making, volunteerism, nonprofit capacity building and philanthropic education. SVP’s self-stated dual mission is to create communities of lifelong, informed and inspired philanthropists; and to make strategic investments that build long-term capacity for nonprofits so they can better fill their missions.

What’s new is how that’s done: Through not only drumming up cash and volunteers, but also via engaging professional consultants, encouraging leadership development, and making corporate-style management training opportunities available to executive directors and other leaders.

The New Reality

Marrying the best intentions of the nonprofit sector with what can be the cutthroat moneymaking acumen of the private sector might seem strange, but it’s the new reality in philanthropy, according to Dan Pallotta, author of the book “Uncharitable: How Restraints on Nonprofits Undermine their Potential” and a keynote speaker at SVP 2011.

“I think there’s a big difference between what’s going on with thought leaders and what’s happening in the general public,” says Pallotta. “If you ask the attorney general or a state representative or the man on the street what they think about social enterprise and the venture philanthropy movement, they’ll wonder what on earth you’re talking about.”

A Minnesota Coup

Brad Brown, executive director of SVP’s Minnesota chapter, said having the convention in Minneapolis was a coup not just for his chapter, but for the state’s nonprofit sector as a whole.

“It’s a great visibility and awareness builder to have the conference here,” he says. “It helps people to put a name and an organizational face to this kind of longing they have to have personal impact, and to work with others who want the same thing.”

Beyond Doing Good

The so-called new philanthropy seems to have its roots in the large, high-profile gifts from the likes of Bill and Melinda Gates that have made headlines in recent years. Now, the SVP is hardly the only national convention devoted to issues of social enterprise, and some corporations are even hiring philanthropic coaches to help CEOs how to engage a giving program that will have the maximum impact – and, not incidentally, make them look good while doing so.

Asked to define the new philanthropy, Jeff Edmondson--president of the Strive Network  a successful cross-sector collaborative achieving measurable results in children’s success in school, and the second of the recent conference’s keynote speakers--said the mission now isn’t just to give money away; rather, it’s to do that and get as many others as possible to do likewise.

“It essentially means that philanthropy is no longer just writing checks or doing good,” says Edmondson. “(Philanthropists are) looking to do good and have impact. That means playing other roles, such as convening partners in order to work collaboratively to have impact, as opposed to working independently, and finding creative ways to share credit for improved outcomes, and finding ways to really push data, not in punitive ways, but in productive ways.”

The New Rules

While addressing a crowded meeting room in the Windows on Minnesota conference facility in Minneapolis’s IDS Center, Pallotta remarked that those in the philanthropic sector must get used to playing by new, corporate-style rules when it comes to making money--and to convincing donors and the general public that it’s okay to do so.

“Most of what we’re taught about giving is extremely dysfunctional,” Pallotta told the conference audience. “We refuse to let nonprofits play by the same rules as the for-profit sector to rectify inequities in our society.”

Pallotta talked about his experience with Pallotta TeamWorks, a for-profit special events company he founded in the early 1990s. In its decade-long existence, the company raised more than half a billion dollars and netted $305 million in direct charitable contributions for AIDS and breast cancer organizations. It did so by exploding the rules of what a charitable act can be.

“We said, ‘Why are walkathons always 10 kilometers?’” he recalled at the SVP conference. “Why can’t it be a week-long, 700-mile bike ride? We found that people are tired of being asked to do the least they can do.”

High Overhead: A Good Thing

The new philanthropy will likely only grow in stature as government programs are cut and distrust of the government overall continues to grow. But Pallotta TeamWorks was done in by rancor and lawsuits. [Editor's note: read the story of PTW's demise here.] Is the public--not to mention corporate America--ready for a giving facilitator that raises tons of money, but keeps a hefty slice for itself?

“Nonprofits have to invest in overhead,” says Pallotta. “This idea that the best charities are the ones with the lowest overhead is ridiculous.

“You don’t go to the world’s best breast cancer researcher and give her $350,000 to do breast cancer research,” he continues. “That will buy you $350,000 worth of research, and then the money’s gone. Give her fund-raising and development departments $350,000 to develop a great idea that stands to multiply the money a hundred times, or even 10 times or two times. That’s where the real leverage is: finding the better program.”

A Matter of Sustainability

Edmondson sees the future of charitable giving as one where nonprofits become self-sustainable, thus attracting attention and dollars from corporations who understand and admire an outfit that can support itself and make money.

“Funders are looking not just to fund programs, but also to fund the capacity necessary to" support themselves, he says, “on top of the overly packed workload in supporting the populations they serve.”

Brown says that what he’s seeing locally is that, essentially, giving has become cool--and cooperative.

“What happened first was that people started feeling this need to have a more direct, personal, strategic approach to how they practice philanthropy,” he says, “and organizations started catching on to that to meet that need.

“The people who get involved with SVP aren’t lone wolves. They like collaborating to achieve their philanthropic goals.”

Dan Heilman's last article for The Line was a portrait of the South Saint Anthony Park Creative Enterprise Zone, in our May 18, 2011 issue.


Photos of keynoter Dan Pallotta addressing an SVP convention morning session by Bill Kelley