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~ Posted here with permission from the Ottawa Citizen ~

Investing in our future

'Venture philanthropists' offer hands-on management expertise and money as their contributions to social change

The Ottawa Citizen
Monday, March 01, 2004

Maria Cook

Bruno Schlumberger, The Ottawa Citizen

Coralie Lalonde, in blue scarf, now invests her time and money in organizations like Junior Achievement, where young people such as these Gloucester High School students learn business skills. The students formed a company called Frosta Wear and manufactured and sold fleece scarves with built-in hand-warmer pockets. Before Christmas, Frosta Wear, recently named Junior Achievement's Company of the Year for 2004, made extra scarves for the Snowsuit Fund.

In 1999, Coralie Lalonde made a "big win" on a technology investment and found herself with enough money to retire at 33.

Soon after, the Ottawa businesswoman closed her company, Integra Solutions, and started an angel investment firm called Katsura Investments. She also turned her attention and talents to charity.

"Everybody wants to win the lottery, right?" says Ms. Lalonde, one of the lucky investors in Sybarus Technologies, which was acquired by Lucent Technologies Inc. in a multimillion-dollar deal.

"If you don't need to make a steady paycheque anymore, there's a lot of other things you can do. I can invest in companies, but I can also invest in the future and the community."

Ms. Lalonde, 38, fits the profile of a new style of giver known as a venture philanthropist. She is chairwoman of the board of Junior Achievement of Ottawa-Carleton and sits on the boards of the Community Foundation, Volunteer Ottawa and Tech Venture Challenge.

She injects management expertise as well as money, and is bent on seeing her investment grow.

Venture philanthropy was launched in the late 1990s in Silicon Valley by suddenly rich new-economy entrepreneurs keen to apply results-oriented business principles to social problems. It's variously called strategic, engaged or social-change philanthropy.

Venture philanthropists approach non-profits much the same way they would if investing in new startups: They put a chunk of money in. Get involved. Get a seat on the board. Start developing more business-like practices and a business plan that has measurable outcomes. They see themselves as investors in social change rather than as traditional donors, who keep their distance.

"If we want to have a strong community we have to get involved in that community, and that means not just putting money in, but putting in time and energy and skills," says Ms. Lalonde.

Bruno Schlumberger, The Ottawa Citizen

Grade 10 students Sabina Syed, 15, first photo above, and Abdullah Akbar, 15, above, are two of 20 Gloucester High School students participating in a Junior Achievement of Ottawa-Carleton program, part of an international organization that teaches young people about business and economics. The students founded a company called Frosta Wear, a profitable enterprise that makes fleece scarves with built-in pockets to warm your hands. Frosta Wear won Junior Achievement's Company of the Year for 2004 award, which was presented at the Young Entrepreneur Business Awards on Friday night.

Chris Mikula, The Ottawa Citizen

Coralie Lalonde, above, Junior Achievement's chairwoman, is working to increase the number of students participating in the program.

In 1997, a Harvard Business Review article by three American academics, Christine Letts, William Ryan and Allen Grossman, helped spark interest in a new style of giving.

There are no statistics, but estimates of the amount of giving they account for range from less than one per cent to five per cent of Canadian charitable donations, which total about $5 billion a year.

Among them, the Tides Canada Foundation is a $20-million organization that links donors with grassroots groups concerned with social justice and the environment.

In Calgary, software entrepreneur Brad Zumwalt set up Social Venture Partners with $250,000.

It consists of people who donate $5,000 per year for a minimum of two years, and commit to volunteering their time, expertise and contacts to help community agencies focused on children.

Mr. Zumwalt's inspiration came from pioneer desktop publisher Paul Bainerd, who started Social Venture Partners in Seattle in 1998. It invests, not just money, but entrepreneurial talent in non-profit organizations and expects measurable results in return. The phenomenon has spread to 20 North American cities.

In Toronto, Bill Young founded Social Capital Partners in 2001, with $10 million in personal stock-market gains. It helps non-profits that run small businesses employing people on the economic fringe.

A venture philanthropist, says Mr. Young, is someone who has tough criteria for the organizations they fund. They look for those who are working on solving root causes rather than addressing symptoms.

"It's not just cutting a cheque," he says. "We're going to roll up our sleeves with you. We'll help you figure out how to do this, whether it's with our Rolodex or our human-resources capabilities."

At the Ottawa Hospital, two technology leaders -- Ron Zambonini, CEO of Cognos, and Jozef Straus, retired CEO of JDS Uniphase -- are playing out their version of engaged philanthropy by co-chairing the $100-million Ottawa Hospital Foundation legacy campaign.

Not only have Mr. Zambonini and Mr. Straus donated an undisclosed amount of money to the campaign, they are leveraging their financial investment with strategic assistance.

"They bring that business acumen, that drive for success," says Susan Doyle, president and CEO of the hospital foundation. "They're accustomed to making things happen."

(Last December, a group of current and former members of JDS Uniphase, Mr. Straus among them, donated $15 million to the Ottawa Hospital Foundation.)

"Ron felt this was the right thing for him to do," says Cognos spokesman Sean Reid. "He talks often about his own experiences with the hospital. He's had cataract surgery. Things really changed dramatically for him in terms of being able to see bright colours more brightly, and being able to see the golf ball better on the course."

The Cognos team has rallied to the cause. Rob Ashe, president of Cognos, sits on the hospital foundation's board. Employees piloted a workplace campaign that raised more than $100,000, and have helped with marketing.

"I try to bring to the foundation a sense of urgency that exists in business," says Mr. Ashe.

Ms. Doyle says venture philanthropy is "just an evolution of the way philanthropy has gone in the past 10 years."

"All donors, especially donors who give very significant gifts, want accountability, want involvement," she said. "They expect to know exactly what their support for the kidney care centre is doing, perhaps meet some of the physicians involved, and hear their vision for the future of nephrology. In the old days, they would just send a cheque."

Like Messrs. Zambonini, Ashe and Straus, Ms. Lalonde wouldn't necessarily have called herself a venture philanthropist. But she agrees that her approach fits the description.

Born in Calgary, Ms. Lalonde grew up in a middle-class family, the daughter of an army officer. After graduating from Carleton University with a master's degree in psychology in 1993, she started Integra Solutions, an instantly successful product design and research company in the high-tech sector.

Now she runs Katsura Investments, which pools money from half a dozen private sources and directs it toward startups.

She sees parallels between investing and her work with charities.

"You see something that's interesting. You do an evaluation of it and determine if it is of interest. All of this is volunteer, as well. When you're an angel investor, you don't get paid for what you do."

In a business venture, she wants reporting on the progress of her investment. In the charitable realm: "I want reporting to be 'How are you dealing with your challenges and how are we going to be more successful?'"

Two years ago, she was invited to a dinner held by Junior Achievement of Ottawa-Carleton, which is part of an international organization that teaches young people about business and economics.

"I had never heard of JA," she says. "By the end of this dinner I was hooked. This strengthens our workforce. It's about giving kids so many advantages to being successful in life. I was passionate about it.

"I thought, 'I can write a cheque, but what I want to do is to help this organization grow and reach more kids and be stronger.'"

Ms. Lalonde joined the board, and last fall became chairwoman of Junior Achievement. She has given the organization $25,000, spread the word among her high-tech network "ad nauseum," and set up advisory committees of well-connected people to bring needed expertise to the organization. At times, it has been almost a full-time job.

Among her goals are to raise the profile of Junior Achievement and to increase the number of students involved in the programs.

Last year, Junior Achievement delivered programs to 5,000 students. Her aim is to involve 6,000 this year.

"Often in a non-profit you have to find ways to move mountains," says former JA chairman Elliot Burdett, vice-president of business development at PointShot Wireless, an Ottawa technology firm.

"She's got that can-do attitude," he says of Ms. Lalonde. "She appreciates why we need to have a stream of savvy, motivated people coming into the workforce. She realizes the investment in her time is important."

Ms. Lalonde has established a $200,000 fund at the Community Foundation of Ottawa that generates close to $10,000 a year for grants for agencies that support children and education.

In addition, she sponsors a four-year, $20,000 scholarship at Carleton University for a graduate psychology student.

"I've had a successful career and an incredible amount of support from the community along the way, and now it's time for me to also support other initiatives in the community and share what I've learned," she says.

Alan Broadbent, a prominent Toronto investor (chair and CEO of Avana Capital Corporation) and philanthropist (chair of The Maytree Foundation) has been doing engaged, strategic philanthropy for years.

He has pointed out that each wealth-creating boom since the Industrial Revolution has produced new people entering the philanthropic arena with a clear sense of purpose and strategic design -- from Andrew Carnegie to Henry Ford and John D. Rockefeller. The new generation includes Ted Turner, George Soros and Bill Gates.

When Mr. Broadbent wanted to address the problems of poor people through public policy changes, he didn't simply hand out research money to academics to write papers.

Instead, in 1992, he started the Ottawa-based Caledon Institute of Social Policy, a think-tank that has helped design the national child benefit, and influenced other policy areas such as child care, supports for people with disabilities and pension reform.

"Their impact as an institute is absolutely incomparably greater than spending millions on this, that, and the other thing," says Paul Reed, senior social scientist at Statistics Canada. "There's a focused impact and a multiplier effect."

"Alan Broadbent has a very businesslike approach to philanthropy," agrees Ken Battle, CEO of the Caledon Institute. "He regards it as another investment."

Another significant example of making a huge impact comes from the Tides Canada Foundation, whose slogan is "Thinking Big, Giving Wisely."

In 2000, the foundation, together with the Toronto-based Atkinson Foundation, financed research at St. Christopher House, a Toronto community agency serving low-income seniors.

After several weeks at the agency, policy analyst Richard Shillington of Ottawa, discovered that roughly 300,000 low-income seniors were missing out on $500 million per year in benefits they were entitled to (the guaranteed income supplement), because the federal government was not notifying them that they were eligible.

Now, eligible seniors are automatically informed they can apply for the benefit.

"We have donors who are able to understand that it is important to provide resources to organizations to delve into root causes," says Tim Draimin, executive director of Tides Canada.

"They're not looking for how many meals were served, they're interested in progress in terms of the number of people falling out of the social safety net."

Venture philanthropists, he says, recognize that too many non-profits spend too much time chasing short-term funding for specific projects to the detriment of their ability to carry out their mission.

They are prepared to invest in the infrastructure of an organization and ask questions such as: Are the people well trained? Do they have state-of-the-art equipment? How strong is the board of directors?

Last year, Tides Canada, which has more than 50 donor-advised funds, gave $4.5 million to some 80 organizations.

It also pioneered Canada's first "social investor fair" in Toronto (with the United Way), which was based on a model of a venture fair for new businesses seeking investors.

They selected 10 charities and helped them prepare a 10-minute PowerPoint presentation to an audience of people capable of making a donation of $2,500 or greater.

Natasha van Bentum, a professional fundraiser in Vancouver and author of the online Venture Philanthropy Guide, says the only downside of philanthropy is if a donor gets too involved.

There have been examples in the United States where enthusiastic donors redesigned what the charity did, not necessarily for the better. "The last thing charities want is donors interfering," says Ms. Bentum. "The donor has to trust the people running the charity. I wouldn't say this has been a major issue," she says.

"We in Canada are more inclined to go easy on these things," agrees Barbara McInnes, president of the Community Foundation of Ottawa. "It's been a gentler approach. The high-tech entrepreneurs have become involved in the community. They have not tended to go in full steam and taken over boards."

Ms. Bentum says engaged giving is the future of philanthropy.

"Donors are increasingly frustrated or feel incomplete by simply writing the cheque," she says.

"They're self-made, savvy and have clear ideas about root causes. They want to be involved. People who are self-made are innovative in their thinking. They can look at an organization and in a glance see what's wrong with it."

There is a greater sense of urgency to solve social ills such as homelessness and environmental degradation, she says.

"People are overwhelmed by the extent of problems. By becoming directly involved, they can witness change and measure outcomes.

"This gives donors more satisfaction."