[Congressional Record (Bound Edition), Volume 147 (2001), Part 13]
[Extensions of Remarks]
[Pages 18404-18405]
[From the U.S. Government Publishing Office, www.gpo.gov]



              THE INTERNATIONAL VENTURE PHILANTHROPY FORUM

                                 ______
                                 

                            HON. TOM LANTOS

                             of california

                    in the house of representatives

                        Tuesday, October 2, 2001

  Mr. LANTOS. Mr. Speaker, I would like to ask my colleagues to join in 
me in recognizing a landmark event that will take place next week in 
Budapest, Hungary. The International Venture Philanthropy Forum (IVPF), 
sponsored by the Nonprofit Enterprise and Self-Sustainability Team 
(NESsT), will bring together social entrepreneurs, corporate leaders, 
and donors to discuss methods for advancing venture philanthropy in 
developing nations. This mission merits the attention of all Members of 
this House, as it is inextricably linked to the role of civil society 
organizations as advocates for freedom and public welfare in emerging 
democracies.
  We all remember the euphoria that accompanied the collapse of the 
Iron Curtain a decade ago. We recall the joy of seeing democracy and 
human rights restored to long-suffering peoples, of watching Berliners 
dance on the Berlin Wall and Czechs celebrate in the streets of Prague. 
These revolutions inspired us all; nevertheless, they did not eliminate 
our fear that these miraculous changes might prove fleeting. The 
tragedies of the twentieth century justified this concern. As Slovak 
hero Alexander Dubcek told the celebrating throngs in Wenceslas Square: 
``An old wise man said, `If there once was light, why should there be 
darkness again?' Let us act in such a way to bring the light back 
again.''
  During the years after the demise of the Warsaw Pact, the governments 
of the United States and Western Europe helped to keep the beacon 
shining. Billions of dollars in aid and expertise flowed into these new 
democracies, much of which went to strengthen the work of budding 
nongovernmental organizations (NGOs) across the region. These NGOs 
served as the ``glue'' of civil society, looking out for public 
interests that otherwise might have been underrepresented in the 
cacophony of change: environmental protection, small business 
development, rights for children and the disabled, freedom of the 
press, and a host of other vital causes.
  Mr. Speaker, this international financial assistance helped NGOs to 
smooth the transition from communism to more vibrant societies. 
However, the need for nonprofit community support continued to grow 
throughout the 1990's. The planned doctrines of yesteryear were 
supplanted overnight by new sets of uncertain rules and unanswered 
questions: How can social guarantees--albeit unpopular ones--be 
replaced without dramatically increasing poverty levels? How can 
entrepreneurship be nurtured in lands that had previously regarded this 
trait as criminal? What role should enterprise play in encouraging 
growth, upholding worker rights, and protecting natural resources? NGOs 
throughout this region often bear the responsibility of answering these 
questions and helping to fill the gaps passed over by social change.
  To this day, available financial resources fail to satisfy these 
mounting needs. The discretionary income of populations in most 
emerging democracies is generally not high enough to support 
philanthropy, especially given the lack of a recent local traditions of 
private charity. Consequently, many NGOs still depend principally on 
foreign aid sources, reflecting a lack of financial diversity that 
foreshadows an array of real and potential difficulties:
  As the demand for capital grows, some governments and private funding 
institutions have reduced their commitment to foreign aid. Given their 
financial dependence, NGOs are subject to the consequences of these 
choices. Available funds are often earmarked for specific projects, 
leaving NGOs with limited resources to built organizational capacity. 
Given the short-term commitment that such grants usually entail, 
nonprofits may feel the need to ``go where the money is,'' even at the 
expense of their missions and operating goals.
  Mr. Speaker, the call to expand the nonprofit capital market in 
emerging democracies is one that must be heard throughout the 
international community. The IVPF--by exploring the potential of 
venture philanthropy models and their practical application to 
developing economies--will address this ever-growing mandate.
  What is venture philanthropy? Quite simply, it involves applying the 
tools of the for-profit sector to expand the reach of the community 
organizations. Practitioners stretch the nonprofit capital market by 
asking beneficiaries to act like business people. Venture 
philanthropists often offer loans and equity equivalents rather than 
traditional donations; engage nonprofit managers with an array of 
technical and strategic advisory service; build organizational capacity 
through the development of skills and networks; and, most important of 
all, set clear performance goals and expect ``portfolio members'' to 
achieve concrete social and/or financial returns on investment.
  Mr. Speaker, I am proud to say that the Roberts Enterprise 
Development Fund (REDF), recognized worldwide as an innovative force in 
this field, operates in and around my Bay Area congressional district. 
Principals from REDF and a wide array of venture philanthropy 
trendsetters will be featured at the IVPF, and their contributions will 
be melded with those of George Soros, Karl Schwab, and dozens of 
leading corporate and humanitarian voices from across the international 
community. The tragic events of September 11th will make it impossible 
for me to join them; nevertheless, I am excited by the Forum's role as 
a catalyst for the expansion of the nonprofit capital market in 
emerging democracies around the world.
  Above all, I would like to pay tribute to the principal sponsor of 
the IVPF, the Nonprofit Enterprise and Self-Sustainability Team. From 
its offices in Budapest and Santiago, this organization has emerged as 
an international leader in the effort to foster social entrepreneurship 
and venture philanthropy in developing

[[Page 18405]]

nations. NESsT's co-directors, Nicole Etchart and Lee Davis, direct 
initiatives that clearly address the challenges and needs of NGOs in 
Central Europe and Latin America.
  Last year, NESsT launched the NESsT Venture Fund (NVF) in Central 
Europe, which seeks to assist a portfolio of NGOs as they diversify 
their financing sources through entrepreneurship. The NVF invests both 
financial and capacity-building assistance to expand these social 
enterprises and generate new, sustainable income for NGOs to supplement 
philanthropic support. I am pleased to note that the United States 
Agency for International Development (USAID) is in the process of 
making a $300,000 award to support this work. Given the innovative 
nature of this project as well as the outstanding track record of 
NESsT's leaders, I can think of few better uses for USAID resources.
  During the Forum, NESsT will also introduce ``Not Only For Profit: 
Innovative Mechanisms for Philanthropic Investment,'' a book analyzing 
the unique contributions of eleven pioneers to the development of the 
nonprofit capital market. These organizations--all of which will be 
represented at the Forum by founders and senior staff--include: The 
Calvert Foundation, The EcoEnterprises Fund (The Nature Conservancy), 
Endeavor, the Environmental Loan Fund (Environmental Support Center), 
FOLADE, Integra Ventures, Investors in Society (Charities Aid 
Foundation), the Local Investment Fund, New Profit Inc., REDF, and the 
South-North Development Initiative. I look forward to reading--and 
learning from--this book.
  Mr. Speaker, for all these reasons and many more, I urge my 
colleagues to join me in recognizing the important mission of the 
International Venture Philanthropy Forum and the outstanding 
contributions of its principal sponsor, the Nonprofit Enterprise and 
Self-Sustainability Team.

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