Yesterday, The NY Times website had a short article on venture philanthropy.  I should say that I do not like the term venture philanthropy, as most of these firms are venture capital firms, but have double or triple bottom line philosophy.  The article talks about Jumpstart, Inc., a firm which provide capital and business planning assistance to firms and entrepreneurs looking to make their mark in struggling Cleveland.

Jumpstart, inc. is an interested hybrid venture philanthropy firm as they leverage funds from donors as opposed to a pool of investors.  In addition, the profits do not go back to these donors, however, donors can experience the appreciation that their dollars are improving the economic and social capital of the community.

This “home-grown” approach of raising entrepreneurs in depressed communities also prevents cities from fighting and bargaining over companies.  Moving companies from one city to another means that one wins and another loses.  Growing small businesses locally means that these businesses are more likely to stay and invest.  Here’s a snippet from the article on this point:

Robert Litan, director of research for the Kauffman Foundation, a nonprofit organization focused on fostering entrepreneurship, is among those who see great value in Jumpstart’s approach. “The traditional model for helping relatively depressed areas of the country is smokestack chasing, where a city provides incentives to attract companies or to keep them from leaving,” he said. “But the problem with that approach is that it is very expensive and it is a zero sum game from the point of the country as a whole, because if I attract a company to my city, then I win, but the city where the company used to be from loses.

If you are interested you can find the article here.