It also took venture philanthropists time to realize that many charities did not need sophisticated strategies more than they needed funds. “It’s good for a philanthropist who has the skills to be ready to engage when it’s helpful,” says Paul Brest, president of the William and Flora Hewlett Foundation. The foundation is the nation’s seventh largest with $6.5 billion in assets, and it underscores the importance of measurable results and operational support. But Brest warns that some venture philanthropists are more like retirees looking for ways to keep busy. “If there are times when organizations don’t need your help and the best thing you can do is invest in them,” he suggests, “then don’t be engaged.”

The question of involvement—how much power should charitable donors have?—is not just a practical consideration, but an ethical one that continues to dog venture philanthropy. Critics say even the new generation of engaged grant makers too willingly crosses the line. “One description of that is high-engagement; the other description is intrusiveness,” says Bruce Sievers, former executive director of the Walter and Elise Haas Foundation (not a venture philanthropy) and visiting scholar at Stanford University. He points out that many nonprofit organizations welcome the expertise that venture philanthropies offer, until helpfulness turns into pushiness. “There’s a huge amount of deference in the nonprofit world to moneyed resources. So a single grant maker sitting at the table can have inordinate influence over the organization.”

Grantees have always been reluctant to criticize their funders. Paradoxically, this deference only increases when their benefactors suddenly start peering over their shoulders. But the venture philanthropists who have survived to this day claim that high-engagement does not equate to meddling. “We’re not there to say, ‘Here’s how to run your programs.’ We’re not saying, ‘Here’s how to run your mission,’ ” says Paul Shoemaker, a former Microsoft executive and director of Social Venture Partners (SVP). “We’re here to look at your technology, your infrastructure, your marketing. We’re looking at your branding.”

To its credit, SVP’s plan is working: Its national network comprises one of the fastest-growing philanthropies in the country. One reason for the success of SVP’s model is that it seems to have figured out when to pull out the spreadsheets and when to stay out of the way. Roxanne Hood Lyons, the founder of a children’s after-school program, New Futures, set in a poor Seattle suburb, says Shoemaker came to the rescue when she was receiving so many different grants from various funders that she could not manage her accounting. Shoemaker recruited chief financial officers and software programmers who helped Hood Lyons build a customized accounting system. He also helped her persuade a stubborn landlord to upgrade the organization’s counseling space. Since then, New Futures has more than tripled its reach and attracted larger funders. Throughout the process, says Hood Lyons, SVP never interfered with her programs.

Some organizations, including SVP, now try to balance their relationship with grantees by not taking board seats at the nonprofits they support. But others continue to sit on these boards. Kim Syman, a partner at New Profit in Boston, says taking board seats helps make both parties more accountable to each other and is often a more honest strategy than pretending that grant makers do not exert influence over grantees. The NewSchools Venture Fund in San Francisco started joining its nonprofit boards after some grantees made decisions that it did not agree with.

Unhappy Returns
Meanwhile, critics of venture philanthropy are speaking out about what they see as inequities inherent in the model. They argue that it is impossible to quantify so-called social returns when the outcomes—psychological relief for battered mothers, for example—are intangible. By overemphasizing numbers, opponents add, grant makers tend to support causes that can be easily measured, such as pregnancy prevention programs. This trend also encourages nonprofits to skew the results by “teaching to the test.”

Some venture philanthropists are now taking the concept of social returns even further by attaching themselves to nonprofit organizations that can “go to scale”—or have the potential to expand and serve more communities. The NewSchools Venture Fund, cofounded by private equity partners John Doerr and Brook Byers and entrepreneur Kim Smith, for example, explicitly funds fledgling charter schools with models that can easily be replicated around the country.