Alliance Online - December 2007

Reflections on the development of venture philanthropy across Europe

David Carrington

EVENT EVPA Annual Conference
Date 25 October
Venue Madrid, Spain
Organizer European Venture Philanthropy Association

These reflections were made to the concluding session of the EVPA conference. Full details of the conference can be found on EVPA’s website www.evpa.eu.com

Learning from the USA

I’ll start with someone else’s reflections – those of Mario Morino in the USA. Commenting on the initial explosion of activity and hype about new philanthropy and how it was going to transform the charitable sector, he observed, somewhat ruefully, that ‘venture philanthropists have been too strident, too “pushy” about the wonders of running non-profits like businesses instead of focussing on the importance of strong leadership and good management, too quick to offer solutions to non-profits and too anxious for fast results.’[1]

Here in Europe, we have the benefit of the USA’s experience of the 1990s. It is clearly important that we do not adopt similar hype or some of the attitudes that were prominent then – and that we do listen to others in the philanthropic arena and respect their experience. As someone observed this morning, we must demonstrate humility about our ‘offer’ to the charity/social enterprise sector and a genuine willingness to learn from our encounters with people running social purpose organizations. Above all, we must avoid the ‘dance of deceit’ where organizations seeking funds distort, even subvert, their mission in order to fit in with the aspirations of potential funders.

The influence and impact of EVPA

It’s also important, I believe, to acknowledge and to celebrate the achievements – and the influence on contemporary philanthropy and the funding of civil society across several European countries – of the work of EVPA and the individuals and organizations involved with it. I don’t think that any of us who attended the first, slightly tentative, EVPA gathering in December 2004 would have predicted that we’d be here today, in the company of 300 people from nearly 30 countries from across and beyond Europe.

We talk of a ‘silo mentality’ to describe people and organizations who are locked in (or lock themselves into) narrow boxes, not engaging with or listening to people who work elsewhere or think differently. One characteristic, I suggest, of all the EVPA meetings held so far has been the admirable enthusiasm of people from completely different work and social sectors to converse ‘across silos’ – indeed to take some of them apart. Such conversations can be personally and professionally educational and productive. Some genuine new understanding and mutually beneficial partnerships can emerge and grow.

Some challenges

I start with three fairly obvious ones, relevant both to venture philanthropists and to the organizations they support:

We must fund to succeed. Too much funding of the charity/social enterprise sector has been accused of ‘funding to fail’ – of leaving organizations weaker than they were before the funding was provided. Money is at the heart of venture philanthropy. We must get that bit of the deal right – the amount, the type of finance and its focus, the timing and the period of committed support. And we must keep checking with those that we fund that our reading of their financial position and prospects is the same as theirs. If we don’t, tears are guaranteed, I suggest – and failure likely.
We must continue to explore how venture philanthropy can become more resonant in more countries. The Anglo-Saxon model cannot be imported wholesale into very different philanthropic traditions. This is a continuing challenge to EVPA as it seeks to expand further.
We must look at how we can achieve multiple impacts through venture philanthropy. Beyond effective support of individual organizations, we must look at how, working with them, we can use our resources, networks and skills to influence those who could help the social issue or cause that we are trying to address – through advocacy, lobbying, and the dissemination of learning. If we want to achieve lasting social change, we have to be prepared to invest at several levels of activity simultaneously.

Climate change – the environmental challenge to philanthropy

A fourth challenge is addressed specifically to EVPA. This is the first philanthropy conference I have attended this year at which climate change and tackling environmental issues has not been a central theme. Whether at a national, European or global level, the question of how philanthropy can effectively engage with this issue is a constant and high agenda item. Beyond climate change, almost all aspects of philanthropy have an environmental dimension – in the social sector, at community levels, in education, in health, and in work to tackle or prevent poverty. Yet it seems to be almost entirely absent from the agenda of venture philanthropy. If philanthropy is intended, first and foremost, to be an expression of concern for our fellow citizens, how can that be?

Risk

Another two challenges to venture philanthropists, individually and collectively: first, risk. I wonder if venture philanthropists need to be more alert to the potential reputational risks they face? In the UK, less than a decade ago, the term philanthropist was seldom used and was not a positively perceived label – especially among social enterprises and civil society organizations that were working on issues of social justice or poverty. Such organizations were not necessarily comfortable with the way some philanthropic funds have been generated. In the UK, this is compounded because personal philanthropy has been substantially increased by tax relief – a loss, in one sense, of resources for public expenditure. At present, in the UK, the private equity and hedge fund sectors are not universally admired among charities, social enterprises or the media. If a venture philanthropy initiative went badly wrong or even was just handled clumsily, it would attract media coverage that could harm the efforts of all who describe themselves as venture philanthropists.

The venture philanthropy ‘transaction’ is expensive – for the supplier and for the recipient. Certainly the costs to both are higher than transactions with other funders. There are, therefore, other reputational risks that should also, I suggest, be on the agenda.

The claim could be made that the venture philanthropist makes excessive process or reporting demands on the social enterprise that are disproportionate to the level of funding; and/or is not covering the costs incurred in meeting those demands.
External scrutiny of the operational costs of a venture philanthropy charity may prompt questions about whether it is an appropriate use of charitable funds for so much to be spent on what may appear to be the running costs of what is probably a relatively small scale grantmaking charity.

I raise these reputational risks to emphasize why I attach such importance to the need for venture philanthropy organizations, individually and collectively, to give a high priority to articulating clearly, effectively and with the endorsement of the organizations that they support:

what they do and why;
how they do it and why;
the social changes and impact they are trying to achieve.

Measurement

My second challenge to venture philanthropists is measurement. And I don’t mean measurement of whether or not the organization that the venture philanthropist is funding is achieving the desired impact and outcomes. Those measurements are of course vital. But there is another aspect of measurement that I suggest deserves attention – the venture philanthropist’s own performance and behaviour.

In the USA, the Center for Effective Philanthropy has been publishing a series of studies of how foundations are perceived by the organizations they fund. They often make uncomfortable reading for foundations. I hope that venture philanthropy organizations will want to subject their own practice and behaviour to similar systematic and thorough scrutiny – and will also want to explore ways of measuring the impact of being a venture philanthropist on the venture philanthropist’s own behaviour, learning and civic engagement. Such information could also help EVPA promote its mission and the value of its efforts more broadly.

Relationships

Finally, for me, the overriding impression of today’s debate has been the concern about the nature and quality of the relationships that are at the heart of venture philanthropy. Not just the crucial relationship between funder and funded but those between:

the organizations that an individual venture philanthropist or venture philanthropy organization funds – the potentially immensely valuable peer to peer meetings and encounters and exchanges that a funder can convene;
individual venture philanthropists themselves – the potential for creating valuable mutual support and collaboration is huge;
venture philanthropy organizations and fellow funders who don’t choose to use the label but who may be co-funding organizations, or share a thematic or geographic focus. The venture philanthropist has a lot to contribute to, and to learn from, such relationships. Investing in strengthening those networks could generate very positive returns.

Last year at the EVPA conference in Paris, I noted that some venture philanthropy organizations seemed to be conservative in their giving and overly preoccupied with compliance (rather than achievement) in their relationships with those they fund. I encouraged them to be ‘adventurous philanthropists’. Given the strong emphasis of today’s discussions on the quality and centrality of the partnerships between the venture philanthropist and the organizations with which they work, I encourage them always to see venture philanthropy as a ‘joint venture’.

1 For more reflections by Mario Morino, see the website of Venture Philanthropy Partners: www.vppartners.org

David Carrington is an independent consultant working in the social enterprise and philanthropic sector. See www.davidcarrington.net Email davidcarrington@btinternet.com

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