Charitable Giving: How to Donate like a VC

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Charitable Giving: How to Donate like a VC

How do you allocate your donations fund? At OpenView, we designate our charitable giving similar to our investments.

It’s the season of giving, and if your mailbox is anything like mine, you’ve received solicitations for a end-of-the-year donation from nearly every charity or non-profit you’ve ever been even remotely involved with. Again, if you’re like me, you’d like to help them all. Sadly, a) you can’t; and b) you want to feel like you’re doing more than simply throwing darts at a dartboard when it comes to choosing the organizations most in line with your passions and priorities.

While I have yet to discover the solution for optimizing my personal donating habits, I have been able to help OpenView do so at a firm level.

In 2013, OpenView replaced its historical practice of impulsive, ad-hoc donations of time and money with a process that more resembles what we do here as investors. By setting aside an allocated fund for charitable donations this new strategy has allowed us to be more thoughtful in selecting charitable causes that best reflect our goals as an organization. It also has helped us get more people actively involved in fostering a workplace that encourages philanthropy and volunteering amongst its staff.

Given the extra emphasis on charity at this time of year, I wanted to highlight some aspects from our charitable giving initiative below in the hope that these tidbits will help other firms and companies make the most of their donations.

3 Strategies for Making the Most of Your Charitable Giving and Donations

1) Create a Committee

One of the things I’m most proud of with regards to the culture at OpenView is our dedication to being great community citizens: as a firm, we make it a priority to support worthy charitable causes. However, our inconsistent methods left room for improvement, a fact that led my colleague Brandon Hickie to see the opportunity to create a more strategic approach to our charitable investments. An important first step in his vision was to create a committee to source, evaluate, and execute charitable investments from our charitable giving fund, a function that bears a strong similarity to that of our investment team at OpenView. Unlike the investment team however, the Charitable Giving Committee (CGC) is made of a small cross section of the firm so that the point of view represents that of the whole group rather than that of an individual or one team within the whole.

2) Set a Donation Criteria

At OpenView, we have well-defined criteria for the companies that we invest in. The CGC took a hint from this approach and created criteria for donations that we felt were in line with our firm’s culture. We ultimately decided to focus on charities that hit on one or more of the following targets: Boston-oriented, technology-centric, promotes education, and has participation by at least one OpenView member outside of work. These criteria helped guide us decide whether or not the cause was a good match for OpenView and, if so, how much to give. These criteria proved to be extremely helpful in developing a consistent firm donating process.

3) Research

Similar to our process in the investment team, the CGC went about trying to find charitable causes that fit our criteria. We did this in two ways:

  1. Through submissions from OpenView staff members.
  2. Through our own independent research.

Evaluating every opportunity we found, we considered how the cause aligned with our donation criteria: the more criteria the cause fulfilled, the more money we allocated towards it.

Wrapping Up

Overall, we were very happy with the “portfolio” of charitable investments we made in 2013 and feel that approaching the fund through the eyes of a VC allowed us to make targeted and deliberate allocations to causes that are a great reflection of the firm’s values. A special shout out to our two major causes this year, The One Fund and Year Up — I recommend giving them a look if you’re considering another donation this year.

What are your strategies for making the best of your company’s charitable giving?

Image by Tax Credit

MA Candidate- Department of Nutrition and Food Studies