From the Introduction:

In the first part of this article venture philanthropic practices are examined from a political economy point of view. By using the agency and transaction cost framework, the relationship between the foundation (donor) and nonprofit organization (grantee) is analyzed and its special characteristics are elaborated. The aim is to develop a better understanding of the relationship between both parties in order to evaluate if venture philanthropy principles are able to produce better social outcomes in comparison to mainstream philanthropy practices.

In the second half, the article intends to develop a new perspective on engagement in philanthropy. Since the discourse on the appropriateness of venture philanthropy has been held for over a decade now, it is time to move on towards a more differentiated picture about engagement. It is argued that the decision about the right level of engagement should not depend on ideological beliefs but only on its result in terms of the social outcome. For this purpose, a simple functional model is presented which highlights the influencing factors on the optimal level of engagement within the foundation-nonprofit relationship.