There are those who think that venture philanthropy will turn out to be no more than charitable giving by another name. But I am optimistic about the potential it offers the sector, even if it doesn't trigger a major step-change in the volume of donations.
There are two reasons to be optimistic. First, in offering potential donors an opportunity to "invest" in charitable activity, venture philanthropy provides a new means of encouraging charitable giving. Second, it offers an incentive for charities to be more thorough in examining the impact of their work. While charitable activity cannot be reduced to a set of measurable social transactions, there is merit in encouraging a closer examination of what charities achieve.
In a few months, the UK's first general venture philanthropy fund will be launched. The Impetus Trust will immediately confront the sceptics who claim that applying venture capital techniques to charity fundraising will simply make rich charities richer. The trust will deliberately target its resources at sectors that are under-funded and will concentrate on supporting charitable activity that benefits people.
Venture philanthropy throws a gauntlet down to the sector to pay more attention to evaluating its impact. It will require charities to articulate their "added value" more clearly and to be stringent about setting goals and monitoring performance.
But venture philanthropy also begs the question: what makes most difference, campaigning for change or delivering it? Funding campaigning or advocacy work in order to try to change public policy can benefit tens of thousands of people when, for the same price, far fewer could be helped through the direct provision of services. But putting money into policy and campaign work is inevitably more risky than funding action on the ground.
At a time when the sector faces many new opportunities to expand its services, charities will have to fight harder to make the case for policy and campaign work. Venture philanthropy provides an opportunity to put this to the test.