‘A great add to the philanthropic toolbox’

The aim of the now one-year-old European Venture Philanthropy Association (EVPA) is to create a Europe-wide network of venture philanthropists. The long-term vision is to help create a diverse marketplace for non-profits at all stages of development, with venture philanthropy complementing the role played by more traditional funders such as foundations and government. Refreshingly, EVPA lacks the missionary zeal – the belief that this is the new way to do philanthropy – that proponents of venture philanthropy have sometimes seemed to have.

According to EVPA, there are probably 10-15 organizations in Europe currently practising venture philanthropy (VP), but interest is growing rapidly. The 135 participants at EVPA’s first Europe-wide conference in London in June came from 13 countries and included representatives of foundations, companies, non-profits and venture capital firms.

Where does venture philanthropy fit in?

Where does VP fit within the wider philanthropic scene? This was the question to be addressed by keynote speaker Luc Tayart de Borms, Managing Director of the Belgium-based King Baudouin Foundation.

His view was a positive one. Although there is already considerable diversity in the philanthropic sector, VP is ‘a great add to the philanthropic toolbox’. On the financial side, VP thinks in terms of ‘investment’ rather than grantmaking, using various types of loan and equity finance as well as grants. On the non-financial side, active partnership between VP fund and non-profit is a key aspect of the model. Other useful contributions of VP, in Tayart’s view, are its use of market mechanisms; its emphasis on individual leaders – though he felt their role could be exaggerated; a greater willingness to take risks; the focus on outcomes; and, importantly, the fact that it brings new people into the sector. Interestingly, Tayart felt that VP could be one important tool in the toolbox of a more traditional foundation, rather than necessarily being the province of a separate organization.

However, he pointed out, there are some ‘red flags’: despite the range of techniques it uses, VP often in fact focuses on service delivery. He felt that advocacy and the potential to change policies that affect the social sector were equally important. He warned against a possible over-emphasis on measuring outcomes as opposed to overall societal impact assessment.

How different is venture philanthropy?

Of course, Tayart admitted, ‘traditional’ philanthropy and VP have much in common. The financial instruments used by VPs are all used by some traditional foundations, many of which also offer non-financial support to their grantees. ‘After this morning, I’m not sure if we’re a traditional foundation or a VP fund,’ said Peter Hesketh of Gatsby Charitable Foundation.

It’s undoubtedly a question of emphasis rather than an absolute distinction. VPs are more likely to use a broader range of financial instruments, though many at present use only grant funding.[1] While many foundations do offer some non-financial support to their grantees, few if any will get involved to the extent of attending regular planning and monitoring meetings – something which would be perfectly standard for a VP fund.

What next?

Doug Miller, founding trustee and Chairman of EVPA, closing the conference, stressed the need to move ‘from connecting to engaging’. How to do this? ‘You can engage with an EVPA member at local, country level,’ said Miller, ‘and offer skills, or become a donor or a co-investor. Or you can become an EVPA member, full or associate.’[2] Another practical option is to take part in one of the three working groups EVPA has set up – on finance, on non-financial advice, and on measurement of performance and impact. Some groups may even want to establish their own VP fund, and EVPA is prepared to offer a package of support for those who are suitably qualified and committed.

While almost everyone at the conference felt that collaboration between VP and other funders was ‘a good idea’, no one was very clear what this might actually look like. Would it be a matter of joint investment, or would it mean some sort of division of labour, with involvement at different stages and in different ways? Should foundations perhaps be funding VP organizations?  Miller stressed that all options were open and it would be a matter of individual members working out the best relationship with foundations that were interested.

Rob John, EVPA Adviser, will be leading a roundtable discussion in Brussels on 30 September, hosted by the European Foundation Centre, where these issues will be discussed with a group of foundations.

1 NESsT and New Profit Inc provide two very different examples.

2 Membership opened in February and by 1 June EVPA had 20 members. It is hoped that it will have 30-50 members by the end of the year.

See www.evpa.eu.com

EVPA 1st Annual Conference
Date 15 June
Venue London