Policy Venture Capital

Abstract

This article seeks to understand how foundations decide to invest their funds in social programs and, in particular, what role government policy plays in that decision. The article develops the concept of foundations as venture capitalists who invest in particular communities and government programs expecting a return on their investment. It analyzes the risks and rewards of the investment decision, given the vagaries of the public policy decision process. The concept of foundations as policy venture capitalists is applied to child care programs to illustrate these policy investment strategies in a concrete way. The findings show that in seeking to achieve their policy agenda for children and families, only a few foundations have acted as policy venture capitalists to lead and innovate in child care. Most foundations have played an important but targeted investment role of partnering with government, filling in gaps and inconsistencies, and evaluating the implementation of government initiatives.