Why venture capitalists should invest in nonprofits the same way we support tech startups

Many executives will tell you that they “have a corporate social responsibility strategy” or that they personally “donate to charity” based on the proceeds they get from an acquisition, initial public offering, or other liquidity event. Whatever their motivations are, their charity of choice will benefit from that money, which is a huge win. What’s often harder to give, and just as valuable, is time.

In the VC world, when startups receive investment dollars, they also gain access to a network of support, the expertise of senior leaders in the sector, and a framework for how to scale their business with best practices for capital allocation, operations, marketing, and other areas. At a16z, we practice this approach with great success.

Now rock climber and climate activist Alex Honnold and I are bringing this approach to philanthropy and, more specifically, to the climate crisis—arguably the biggest challenge the human race faces today.

For Alex, championing climate action has always been a primary goal, and through the Honnold Foundation (which just celebrated its 10th anniversary), he and his network of donors are funding grassroots nonprofit solar energy projects across the globe that have a direct impact on their communities.

When I learned about Alex’s work, I immediately became a donor and adviser to the foundation’s leadership. But as I learned more about the challenges the foundation’s partner organizations faced with respect to capacity restraints and lack of services, I knew there was more I could do.

According to Alex: “The biggest challenge in climate philanthropy is getting the money and expertise to the people and projects that need it most. Big-bet tech projects are easier to fund with big numbers, but it’s a lot harder to put those dollars to effective use with global grassroots organizations. Money and time go much further with the smaller-scale projects and have a much larger human impact.”

In my work as a venture capitalist, I often look at smaller businesses that have an excellent proof of concept and see the opportunity to provide entrepreneurs with the funding to scale at a rate they wouldn’t be capable of on their own. Nonprofits usually have a longer runway, needing to establish a track record of long-term success before they gain access to any kind of large-scale institutional investment.

I saw a way to leverage the VC model to support Alex in addressing the equity issues many grassroots climate organizations face, and so the vision for the Levine Impact Lab was born.

Together, we’ve built a model where Honnold Foundation partners whose projects have the potential to scale can join the Lab and not only receive VC-level investment via funding I have personally donated to launch the Lab, but also gain access to resources and mentorship to help strengthen their deployment capabilities, including networking, government relations, recruiting, marketing, fundraising, strategic goal setting, board management, and finances—the goal being to support the partners’ long-term growth and the development of their model and impact.

The Lab’s initial cohort of four U.S.-based organizations are at varying stages of growth, but the idea is to meet them where they are and provide tailored support based on their needs. One of these is Native Renewables, founded by two Navajo women to address the energy inequity in Navajo and Hopi communities where 80,000-plus residents are still living entirely off-grid. This started with a Honnold Foundation grant that supported the installation of photovoltaic systems on six homes, as well as a paid workforce development program for a small group of local technicians.

Since the initial grant in 2021, the team has more than tripled, according to Suzanne Singer, founder and executive director of Native Renewables. Meanwhile, they’ve launched new programs, including additional workforce development opportunities, solar financing specifically tailored for Navajo and Hopi families, and more home installations.

Given the clear volume of need, coupled with a sharp leadership team of PhDs and engineers, it’s clear that Native Renewables has the potential to rapidly scale. Through the Impact Lab, Native Renewables and other cohort organizations will have access to one-on-one mentorship, along with tailored support on future-facing strategic planning, financial management, and HR resourcing, among other topics. Meanwhile, networking opportunities outside of traditional philanthropic spaces will deepen the nonprofit’s bench of advisers and donors. Combined with a three-year runway for unrestricted funding, the hope is that the Lab can help Native Renewables scale its solutions to meet its goal of solarizing 15,000 Navajo and Hopi homes.

In the South Side Chicago neighborhood of Englewood—one of the most under-resourced areas in the city—Southside Blooms grows flowers using solar energy technology across 10 acres of previously vacant land, employing local youth to learn to grow and sell their own product. This business model has the potential to be replicated in other communities and have a broad impact on both environmental sustainability and economic development.

Quilen Blackwell, founder and president, views the project as a way to demonstrate that the South Side of Chicago (and communities like it) are much more than guns, drugs, violence, and other negative headlines that they so often receive. As Lab participants, Quilen and his leadership team will have access to the resources, tools, and advisory expertise they need to further develop and launch their strategy and scale up their work.

Through the Impact Lab, each partner organization will receive unrestricted grant funding for the three-year duration of the program, enabling them to allocate funds where they’re needed most. We’ll also draw on top leaders and capacity-builders from the nonprofit community to ensure that as these programs grow, our partners are learning from leaders in both the for-profit and nonprofit spaces.

Given the varied sizes of the partner organizations, we know that their needs will also be varied; one might need marketing and communications support whereas another might need business planning, and a third board of directors development. It will be a bit like matchmaking for nonprofits, and as the Lab grows with a new cohort chosen annually, we’re hoping this expert network will grow too.

With a nod to a respected tech-sector practice, we plan to develop an open-source framework through the Impact Lab as a way to establish the most important business tools and key learnings for grassroots nonprofits. The playbook will be made available to all nonprofits, not just Lab partners, with the goal of establishing new models of resilience, independence, and growth among the sector so that we can meaningfully move the needle not just for these organizations but for the climate movement as a whole.

The commonality I’ve seen among all Impact Lab partners hinges on a group of community leaders who are tired of waiting for others to solve their energy inequities—innovators who have decided to take matters into their own hands. These projects have the best chance to succeed because they’re driven by passion, expertise, and a desire to change the world, not unlike the talented entrepreneurs I work with as a VC. The difference is that grassroots nonprofits like those in the Lab are chronically underfunded, and often struggle to rally public support around their important work.

As we launch the Levine Impact Lab, Alex and I are calling on the VC and tech community to help change this paradigm, and to work with us to bring new resources, visibility, and scale to the organizations that are solving the climate crisis, one community at a time.

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Peter Levine is a general partner at the venture capital firm Andreessen Horowitz where he focuses on enterprise investing.