In particular parts of the United States, Philanthropic investments are closely related to gambling in regards to the risk of each philanthropic investment being made. For example, choosing a color of either red or black in the game of roulette will give people a fifty percent chance of winning money on their gambling investment. The process for a philanthropic investor is similar in some situations, which require a philanthropic investment of a certain amount of capital, into a new organization. The catch of this new organization in which the philanthropic investment will be made is the organization has no track record and has yet to experience any real time market initiatives.
In a situation like this, a philanthropic investor may as well be flipping a coin in order to see if the investment is a winner or a loser! Yet, philanthropic investments such as this are being made every day in the United States but the question is why. In order to answer this question, a scenario will be drawn up in order to visualize the relationship between an investor and an investee. An investor, like http://finance.yahoo.com/news/jason-hope-explores-internet-things-090000898.html, plans to make a philanthropic donation of fifty thousand dollars in order to speed up the production of cars being made at a car selling organization in Arizona. The only information the philanthropic investor has about the fifty thousand dollars investment is the money will be used to cut the amount of time it takes to make each car by half.
This is great news because more cars are going to be produced at a faster pace, however, this is only fifty percent of the business. The other fifty percent of the business is the organizations ability to sell the vehicles once they are made, which is something the philanthropic investor has zero control over. In this particular situation, the investor is taking a risk in regards to the fifty thousand dollar philanthropic donation into the car manufacturing organization. This philanthropic investor has a fifty percent chance of seeing a return on the investment, while the other fifty percent is reserved for the possibility of the business failing to sell enough cars. These type of fifty/fifty philanthropic investments are investments which are usually being made by people who do not mind losing a potentially large amount of money in the process of investing into an organization.