What Exactly is a Philanthropic Mirror?

To those on this list who missed my first post introducing the unique approach to venture & philanthropy that Rise Together Ventures is testing out, I invite you to do some light night reading here.

In that newsletter, I briefly introduce the concept of a “Philanthropic Mirror” (thanks to my partner Taylor Adams for coming up with that term):

A “Philanthropic Mirror” is a pool of philanthropic capital that is allocated alongside an equity investment in a for-profit company collaboratively deployed in support of a strategic impact initiative on behalf of said company.

I usually get quite a few follow-up questions to this concept, so I’ll answer some basic FAQs below and walk through two high level examples we’ve put into place so far.

What is the purpose of a Philanthropic Mirror?

The purpose of a Philanthropic Mirror is to jumpstart — or amplify — the social impact capabilities of a for-profit company. The most successful startups are building services or products that are moving our society forward, in some way — and we want to empower these businesses to leverage their unique skill sets to do more good in the world.

Where does the philanthropic budget come from?

Think of our fund as being two separate pools of capital: 1) a bread and butter venture fund that takes dilutive equity positions and 2) a separate “donor advised fund”, or DAF, that donates the philanthropic capital to a certified charitable organization.

Do you take equity from the company from your investments?

We take equity in exchange for the investment from our venture fund; however, the philanthropic capital is deployed separately and does not impact the balance sheet or cap table of the company.

Does the company you invest in need to be in the “impact” space?

Definitely not — we love companies that might not be considered a classic “impact” business but embody the ethos of giving back. We also believe that the most (financially) successful companies build services or products that make the world a better place in some way, so we could go into a long discussion of what “impact” really means…I will save that for another day though.

What can companies use the Philanthropic Mirroring budget for (and what can they not)?

The philanthropic budget needs to be deployed in collaboration with a public charity or foundation and is most strategically valuable when deployed in strategic or thematic alignment with the company’s mission. We work alongside our portfolio companies to decide the best use of the philanthropic capital and we can get creative on how to deliver the best outcome. In some cases, it will be a donation to a mission-aligned nonprofit; in other cases, it will be a bespoke in-house initiative that we co-create and collectively find the right charitable partners.

This sounds like a lot of additional work for a founder. How much time does a company need to dedicate to deploying the philanthropic budget?

Although we aim to keep the time commitment to a minimum, the companies we work with are quite passionate about the model. We have found that companies with, for example, a Chief of Staff or even a part-time impact personnel that can dedicate time to this initiative are the best fit. It’s not for everyone/every stage. RTV has a vast network in philanthropy and broad experience with non-profits, so we can offer close guidance throughout the relationship.

What are some examples of Philanthropic Mirroring that you’ve completed with your portfolio companies?

Flexport is a for-profit digital freight forwarder. In short, they help move goods around the world. If you own a pair of AllBirds, they most likely helped get those to you. The company was founded in 2013, and they launched Flexport.org only 4 years later, in 2017. Rise Together donated to the Flexport.org Fund, which pays for transportation costs for nonprofits and mission-driven organizations; and Flexport coordinates these shipments for free. RTV’s donation went on to support the shipment of over 1 million pounds of aid (hospital beds, emergency medical equipment, hygiene kits) to Ukraine, Poland, Moldova, Hungary, Romania, and Slovakia.

Formative is a for-profit edtech company. The co-founders began their careers as high school teachers in the Compton school district, and were compelled to create a technology product that made teachers better and more efficient at their jobs. They have a special community of innovative teachers that use (and pay out of pocket for) their product, and that are uniquely situated to experiment with other teaching methods. RTV and Formative co-created and seeded a teacher fast grant program in partnership with the Vela Fund to empower 30 of these special teachers to boldly reimagine education.

I’ll dive deeper into one of the above case studies in a future blog post for those interested in learning more.