Houston Chronicle, July 15, 2002: New donors give time, expertise and money
Philanthropy group blends venture capital risk-taking with do-gooder ideals
By JEANNIE KEVER
Copyright 2002 Houston Chronicle

Rafael Alvarez needed money, but that alone wouldn't be enough. He needed business savvy, too.
With a dream but no track record, Alvarez easily could have seen his plans stalled.
Instead, Genesys ITS Inc. became a reality this summer when 10 students walked into a classroom at Southwest High School and began working toward their futures.
For some, it's already made a difference.
Gilbert Gonzalez had figured he'd become a mechanic after high school. Now he's dreaming of his own computer repair business.
"It's opened doors for me," the 16-year-old said. "I had thought about college, but I thought it would be too expensive."
Now, he said, he plans to work his way through college by doing computer repair.
But many of his classmates end their educations after high school.
"Seventy-five percent of these kids don't go on to college, so what do they do?" Alvarez asked. "The fast-food business, construction, maintenance. ... They start the cycle of underachievement."
Maybe, he thought, a two-year program to teach teens about technology and then pay them to perform basic information technology services could keep students in school and, even if they didn't go to college, prepare them to earn more than minimum wage.
Enter Houston Social Venture Partners.
The group is part of a national movement to donate time, as well as money, to nonprofit organizations. Houston Social Venture Partners is the latest high-profile example, but the trend has been building throughout Houston for several years.
It is about developing passion in the people with something to give, as well as delivering services to those in need.
"People want to be much more involved in their philanthropy," said Stephen Maislin, president of the Greater Houston Community Foundation. "They want to know it has results."
The shift is generational, as well as philosophical.
There are still plenty of old-style philanthropists around, offering big-buck donations and trusting the recipients to spend the money, said Anne Murphy, executive director for university advancement at the University of Houston-Downtown and a 25-year veteran fund-raiser. But she also sees more people who want to follow their money.
"People who are 40 to 50 years old, they grew up during Vietnam, they grew up during Watergate," she said. "Those realities set their way of looking at the world."
Recent fund-raising scandals may have accelerated the shift in attitudes, Murphy said. William Aramony, president of United Way of America, was convicted in the early 1990s of defrauding the organization out of $1 million. Other questions arose about how the Red Cross used money donated for victims of the Sept. 11 terrorist attacks.
Those issues don't really matter to Matthew Stockton and his classmates.
They're focused on their own careers, often for the first time. "Computers are the future," said the 18-year-old Stockton. "If I wasn't here, I'd probably be home asleep."
And when he first heard about the program, he assumed he wouldn't be part of it. "Me, being the type of person I am, I'm always in trouble. I never get picked for anything."
But something about it appealed to him, and he pushed to be accepted. His persistence paid off.
Houston Social Venture Partners pledged $50,000 to Genesys ITS, as well as help in applying for nonprofit status. A member of the partnership will serve on Genesys' board of directors.
Alvarez, who previously worked at Compaq, said he hopes to spread the project to other schools in Houston and the nation.
Southwest High School, located on the Southwest Freeway, is one of several dozen charter schools here; almost 70 percent of its students are Hispanic, and it has an "acceptable" rating from the Texas Education Agency.
High-engagement philanthropy groups like Houston Social Venture Partners have cropped up in dozens of cities, blending venture capital risk-taking with do-gooder ideals.
Rick Cohen, president of the National Committee for Responsive Philanthropy, has watched these groups develop, and he gives them mixed reviews.
"On paper, it looks good," he said. "The problem is the performance.
"Venture philanthropy talks about taking high-risk positions with nonprofits, and in many cases you look at their giving and it's not all that risky," Cohen said. "They talk about providing extensive assistance to their (nonprofit) partners and it grows thinner ... as the problems of the nonprofits challenge the expertise of the for-profit benefactors."
In addition to the $50,000 Genesys grant, Houston Social Venture Partners awarded $10,000 to YES College Preparatory School to begin planning for a second campus.
YES, a well-known local charter school, has 450 students, and enrollment will grow to 600 when the current freshman class reaches its senior year, said Ryan Dilibois, director of development at YES. More students might overwhelm quality, but there are 300 students on a waiting list, he said.
The school wants to open a second campus in the Third or Fifth Ward. The $10,000 grant will cover some start-up costs, along with business expertise from the partnership.
"We know how to do school," Dilibois said. "We don't necessarily know how to do business."
And philanthropy is big business -- Independent Sector, a national organization to encourage philanthropy and volunteerism, estimated private charitable giving at $190 billion for 1999.
But for people like financial consultant Mark Russell, simply writing a check felt a little hollow. Venture philanthropy allowed him to give more deeply.
"Like many people, I've written checks to go to (fund-raising) balls, to do other things," he said. "What seemed more interesting about this was, you can make more impact. ... It's, for me, much more rewarding than I had anticipated it being."
Along with other members of the partnership, the 41-year-old Russell learned something new about Houston when he visited nonprofits that had applied for funding.
"That was really exciting, to see the spirit of volunteerism and public-mindedness that I'm not exposed to so much on a daily basis."
Houston Social Venture Partners officially launched this spring, but it had been incubating for more than a year.
Calene LeBeau had left her job as development director of United Cerebral Palsy and, casting about for a new direction, attended a conference sponsored by Fortune magazine in October 2000.
Inspired by a workshop on new styles of philanthropy, she began planning a group modeled after the granddaddy of the genre, Seattle Social Venture Partners.
The Seattle group started in 1997 and within a year had grown to 101 partners, most from the high-tech world. Since then, Social Venture Partner groups have been created in more than 15 cities, bound by a set of basic principles but otherwise independent.
In broader terms, the idea of mixing money with hands-on involvement has been growing for years.
People have always donated time and money individually and through groups such as the United Way. Most don't consider themselves philanthropists but simply good citizens.
For people who can give significant amounts of money to charity -- from $500,000 on up -- there has been an increasing push to stay involved. "We've seen a real explosion of it in the last couple of years," Maislin said.
Community foundations manage and distribute money for people who create a fund within the foundation. The Greater Houston Community Foundation, which has been around for eight years, manages assets of about $68 million; it doled out grants of about $8 million last year, Maislin said.
Traditionally, people simply transferred money to a community foundation and counted on the foundation board to determine where it was needed, he said.
No more. Almost everyone who funnels money through the Greater Houston Community Foundation wants to help decide how it is used, he said.
Some people, like the members of Houston Social Venture Partners, go a step further and offer hands-on help. "They see that perhaps there are some areas where they can lend expertise," Maislin said.
Houston Social Venture Partners, bolstered by $250,000 in start-up money from venture capitalists Jim Woodhill and Peter Schaeffer, now has 14 partners, each required to donate a minimum of $5,500 for at least two years; most will also donate time.
The $5,500 contribution allows people who aren't super-rich to become involved and, pooled with money from the other partners, creates a big enough pot to make a substantial donation, LeBeau said.
The group voted in December to focus on children and education and began soliciting grant proposals from local nonprofits.
The plan is to offer money and expertise for up to seven years. "If all a nonprofit wants is money, they should seek (funding from) a traditional foundation," LeBeau said. "Our partners want to be involved."
That was the prime attraction for Roger and Judy Rolke. "Not just sending money, but being able to be involved in the activities that our money was going to," said Roger Rolke, 61.
(Two people -- married couples, co-workers, friends -- may join together, although they receive only one vote for each two-year, $5,500 commitment.)
After 34 years at Shell Oil Co., Rolke is accustomed to sophisticated management systems and a lot of support structure. Most nonprofits don't have that, and he hopes volunteers from the for-profit world can provide it.
Money and business expertise can't guarantee that Genesys ITS will take off, or even that YES College Preparatory School will be able to translate its success at one location to another.
Long-term problems require long-term solutions, Cohen said, an idea that may not resonate with today's successful entrepreneurs. "I think they're used to a speed of activity that doesn't necessarily address the realities of social problems that go back generations, that have roots that are simply beyond changing your behavior or your mindset," he said.
Successful businesspeople can also overestimate their ability to help nonprofits, he said. "It's not always easy to take your experience in the for-profit world and apply it to ... solving poverty in the Fifth Ward of Houston."