By Carolyn Said
Chronicle Staff Writer
December 20, 2005

Bill Draper and Robin Richards Donohoe

When venture capitalists Bill Draper and Robin Richards Donohoe decided they wanted to give back to the community, they came up with a grant-making foundation modeled on the same principles they use in their VC business.

The Draper Richards Foundation for Social Entrepreneurship provides early-stage grants of $300,000 over three years to social entrepreneurs with a vision of changing the world.

The partners rely on the same due-diligence process and business acumen that brought them success in the financial world. They're among a growing wave of executives and entrepreneurs who have taken business models into the nonprofit arena, not only giving money but providing strategic expertise, evaluating results and providing multiyear support.

This market-based approach to giving is called venture philanthropy and it isn't a new idea. John D. Rockefeller III is credited with coining the term in the late 1960s. While only 42 U.S. foundations identified themselves as venture philanthropists in 2004, more and more foundations are adopting their hands-on, results-oriented approach, said Laura Arrillaga, who teaches strategic philanthropy at the Stanford Graduate School of Business.

"I could just write a check to someone doing good works," said Draper, 77, who was one of the earliest venture capitalists in Silicon Valley. "But that would be different."

Instead, the foundation is closely involved with its grantees, who are called Draper Richards fellows. One of its staff members serves on the fellows' boards. Fellows establish milestones they'll meet during the three-year grant period. The grants can be used for any purpose that furthers the social entrepreneur's work.

"We want to pick people who have a light in their eye," Draper said. The foundation seeks individuals just like those venture capitalists want to fund: entrepreneurs with a compelling vision, a plan for execution, and the drive and willpower to accomplish their goals.

Draper Richards concentrates on people whose ideas are still in an early stage so the award will help jump-start their organizations.

"There are big foundations to support you once you have proven your model, but there are not many (grantmakers) there to back you in those 'seed rounds,' " Donohoe, 40, said. "We like to be the first big money in."

Draper Richards is diminutive by foundation standards, making only six new grants a year. This year, Draper plans to set up a more substantial endowment by donating between $10 million and $25 million he earned from an early investment in Skype, which eBay bought this year for $2.6 billion. By careful selection of recipients, it tries to make its grants have a disproportionate impact.

"They are meeting a critical gap in the social market structure, which is funding these early-stage social entrepreneurs," said Stanford's Arrillaga. "The work Draper Richards is doing is really quite influential, not necessarily in terms of financial scope when compared with the much larger institutional funders, but rather in being proactive in meeting the needs of nonprofits at a particular stage."

Draper Richards has funded projects that existed only as a business plan. But more typically, most fellows have already tested the waters with their concept.

Dave Wish was a teacher at a Redwood City school with no music program when he started giving free music lessons to students. The class was so popular that he started another and soon had a flourishing after-school music program.

He recruited and trained other teachers in his curriculum, which teaches kids to compose their own music and improvise in a pop idiom. "I only half-jokingly describe it as the Suzuki method meets the Rolling Stones," he said.

The program, which became a nonprofit organization called Little Kids Rock in 2002, trains teachers and provides instruments for participating students for free. Teachers generally donate their time.

Wish had already expanded the program to serve 4,000 children in several states when he became a Draper Richards fellow earlier this year. While the money has already helped the program grow, the venture-philanthropy-style support has been just as valuable, he said.

"The funding and the organizational support from Draper Richards have been instrumental," he said. "It has contributed immeasurably to the organization's brain trust because they placed one of their staff on the board of directors. They have helped (us) reach milestones through their expertise and coaching."

Other Draper Richards fellows span a variety of disciplines. John Wood started the Room to Read program to build schools and libraries in Southeast Asia and award scholarships to girls. Niko Clifford's Girls for a Change supports girls tackling community problems, while Aaron Hurst's Taproot Foundation matches teams of professionals who want to donate their skills with nonprofit groups that have specific needs such as building a Web site.

One thing they have in common: All the projects have the ability to expand.
"We really want to back people who have a big vision, not just a one-off effort that's local and not likely to scale," Draper said.

The foundation is also exploring ways it can expand.

"We do have a good formula," Draper said. "We would like to see it have a broader impact."

He and Donohoe are tossing around ideas such as finding like-minded philanthropists in other cities who would like to replicate their model, setting up an East Coast office of their own or inviting other donors into their fund.

Foundations have mushroomed in the past few years, along with a new generation of donors. Roughly half of the 66,000 U.S. grant-making foundations were established since 1990, according to the Foundation Center in New York. The biggest growth spurt came in the late 1990s, as a new cohort of dot-com millionaires was minted.

"With the newly created wealth, people had money earlier in their careers and more of it than they ever expected," said Julie Juergens, director of the Center for Social Innovation at Stanford Graduate School of Business. "A lot said, 'This is enough for me, now I'll take this and try to do something really meaningful for society and personally fulfilling as well.' "

Draper and Richards slightly buck that model in that they haven't stepped down from the VC business but simply added the foundation.

Draper comes from a family steeped in venture capital. His father, Gen. William Draper, became the first professional West Coast venture capitalist in 1958, after having overseen economic reconstruction of Germany and Japan under the Marshall Plan. His son, Tim Draper, founded prominent Sand Hill Road firm Draper Fisher Jurvetson.

Bill Draper started his first VC firm in 1962 and formed Sutter Hill Ventures in 1965. He took a hiatus from the field in 1981 to serve as president and chairman of the U.S. Export-Import Bank, and then in 1986 became administrator and CEO of the United Nations Development Program, the world's largest resource to help developing countries attract and use aid.

"I discovered the world through the U.N.," he said. "I got to visit 101 developing countries, met with Fidel Castro and Deng Xiaoping. When I came back, I didn't want to do traditional venture capital. I was interested in the world."

At the same time, Donohoe had just graduated from Stanford Business School, where she had researched early-stage business financing in developing countries.

The two were introduced by a common friend and found their world visions meshed. They formed Draper International in 1995, one of the first U.S. VC firms to focus on investments in India. A domestic fund, Draper Richards L.P., followed in 1996. They started the foundation in 2001.

Donohoe said the foundation has turned out to be the most fulfilling aspect of her work.

"The portfolio is a way for me, my husband and young children to have philanthropy be a way of life," she said. "It's truly joyful when you see results of where your money is going."

Draper Richards Foundation for Social Entrepreneurship

• Founded by Bill Draper and Robin Richards Donohoe.
• Provides up to six grants a year to social entrepreneurs with a vision for changing the world.
• Applies principles the founders used in their VC business.
• Grant recipients include such nonprofit groups as David Wish's Little Kids Rock program, John Wood's Room to Read program, Niko Clifford's Girls for a Change program and Aaron Hurst's Taproot Foundation.

Please direct media inquiries to:
GHF Press press@globalheritagefund.org or (650) 325 7520

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