Omidyar Network’s Matt Bannick is barnstorming for good ideas to do good

The Omidyar Network, a social impact investing fund, brought its annual gathering to Silicon Valley this week, hosting panels and talks on how to change the world.

It’s a big order, fueled by big ideas. Between sessions I sat down with Matt Bannick, the Redwood City-based investment fund’s managing partner. He explained the Network’s innovative approach to promoting world-changing good.

Here’s Bannick’s Forbes piece on working with moguls who’ve signed the Giving Pledge.

The Omidyar Network’s biggest innovation is the practice of investing in both non-profit and for-profit efforts to do social good. The buzz words — social enterprise, impact investing, strategic investing — are beginning to sound familiar, but when eBay founder Pierre Omidyar launched his effort nine years ago, it was cutting-edge stuff.

“He felt constrained,” Bannick said of Omidyar’s view of the purely non-profit world. “He said, ‘I created all these jobs and a $60 billion company with eBay and that’s a for-profit having a social impact.”

The Network was in the news this week for funding, which in turn was a player in the Boy Scouts of America’s decision to finally allow openly-gay Scouts to participate in the organization.

There is a place, of course, for non-profits, but Bannick says for-profits have all sorts of advantages that non-profits don’t. He explained a bit in this video:

When for-profits deliver value, he says, customers are willing to pay more for your product or service.

“When you earn the financial return, you can scale much more rapidly. You can tap the capital markets to grow even faster,” Bannick says.

Non-profits, meantime, often have to live from grant to grant, rather than relying on profits to keep the operation going and growing.

The Network, which has granted and invested more than $600 million since its 2004 launch, has split the money about evenly between non-profit and for-profit enterprises.

“The capital we’ve distributed is based on an entrepreneur with a fabulous idea that has the potential to change the world,” Bannick says. “And that goes back to our roots in the valley.”

Bannick says the idea is to make a big, big impact in broad areas, such as free expression, property rights, entrepreneurship, financial services for the poor, government transparency and the like.

For instance, the Omidyar Network has supported the “I Paid a Bribe” initiative in India that resulted in the website, which allows citizens to shine a light on shakedowns, which are far too common.

The breath and thoughtfulness of the Omidyar Network had me thinking of Pierre and Pam Omidyar as the Betty and Gordon Moore or the David and Lucile Packard or the Bill and Flora Hewlett of their generation.

Once eBay was up and running, Omidyar wasn’t content to only transform the world of buying and selling stuff. Soon after scoring his first billion or so, he turned his attention to philanthropy, figuring there had to be a better way.

And so while the Omidyars may have a ways to go before they are truly on the level of the valley’s philanthropy pioneers, they certainly seem to be headed in that direction — even if they are taking a different, more market based, route to get there.



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