How to make philanthropists and startups work together? This is the self-assigned mission of Sarah Kearney, Founder and Executive Director of PRIME Coalition, a nonprofit, connecting philanthropists to investment opportunities addressing climate change. Sarah Kearney, a 31-year-old MIT graduate, advocates that companies aiming at reducing greenhouse gases are doing a social good thus they should be able to receive philanthropic funding. A visionary according to MIT Technology Review, she indeed figured in last year’s MIT Innovators under 35 list for urging foundations invest in clean energy!
Harnessing the power of Philanthropy
After graduating from the MIT Engineering Systems Division in 2012, Sarah Kearney who holds a Masters Degree in Technology and Policy, had a difficult decision to make: take a comfortable job or follow her dreams. Sarah finally took the second option as she was more thrilled to address the challenge for energy innovation by putting her MIT research into practice. This passion led her to found PRIME, which stands for Program-Related Investment Makers of Energy, in 2014. PRIME’s mission as she puts it bluntly – “empowering philanthropic investors with the critical tools they need to make direct, for-profit investments that address climate change”. With PRIME, Sarah Kearney, has redefined the traditional definition of charitable work and charitable giving. Ergo, she has been supporting President Obama’s call to action to encourage more private investors to fund clean-tech companies that can fight climate change.
When Philanthropists act like Venture Capitalists
How to foster social change with donations? According to Stanford Innovation Social Review, philanthropists who want to help change the world need to act more like venture capitalists. This is exactly what Kearney believes in and is achieving with PRIME. “By working with PRIME, foundations can fund the world-changing companies of tomorrow, enjoy best-in-class investment expertise without footing the bill alone, address climate change directly, and get their grants back to redeploy,” Kearney says. These days VC funding for early stage energy startups has all but dried up and therefore foundations have an important card to play. In fact, if you look at the “funding” as a grant, it is absolutely ingenious – a superior form of philanthropy – but if you look at it from the VC perspective, it is not an attractive investment. Consequently, if the grants provided by Foundations for “good causes” also happen to make a bunch of money back, well, then that’s a truly excellent upside.
Venture philanthropy (VP), could be a definition for this new kind of venture. It is based on similar concepts and techniques from VC but applying them to achieve a social, rather than a financial, return. “My MIT thesis suggested that it’s time to do the same thing for a different type of company that may not return capital in seven years, but whose product or service is critical to our society’s long-term future.” By and large, Kearney’s vision goes beyond VP as she aims at not only reducing greenhouse gas emissions by 2050 by vivifying the clean-tech sector with philanthropic capital but also making sure that “for-profit nonprofits” do not sound like an oxymoron anymore!
*prime the pump: stimulate or support the growth or success of something by supplying it with money
Should Philanthropists act more like Venture Capitalists? Share your thoughts!