For the third year running, the European Venture Philanthropy Association (EVPA) convened 24 leading venture philanthropy executives to Venice – the Davos of Venture Philanthropy. These thought leaders gathered to discuss the latest developments, tackle strategic issues and agree on a common agenda for the future of venture philanthropy. The Venice meeting is a unique opportunity for European VP leaders to network and debate with peers.
The event was hosted by Fondazione di Venezia and organized by the EVPA and Luciano Balbo, founder of Oltre Venture, Italy’s first VP fund and a founder of the EVPA. Participants travelled from across Europe and included many of the pioneers who initiated the VP ‘movement’ in Europe, as well as some new members who were eager to learn from the experienced players.
Participants represented VP organizations in various stages of maturity. Many reported that they are facing a step change in their organizational development. Some are in the process of changing to a VP model and still have to deal with cultural challenges both within their own organization and in investee organizations. Others are growing and need to recruit new staff and increase funding. More established VP organizations are tackling challenges such as improving key practices like social performance measurement and exit strategies.
A growing trend identified at the meeting is that VP organizations are increasingly investing in social enterprise. Venture philanthropy involves tailored financing, providing grants and loans to non-profit organizations or investing in the equity of social enterprises. But the motivation behind social investment for venture philanthropy is to recycle funds and make money work harder, not to generate a financial return per se. Everyone agreed that venture philanthropy should have a charitable purpose; any financial returns generated from social investment should be ploughed back into other social purpose organizations.
However, the appropriate balance between achieving social and financial return spurred some debate among participants. As one VP manager pointed out: ‘We have elevated money as the primary objective in our society. Even if we try for a social objective, we see ourselves as less good if we are not achieving financial objectives. Maybe we should question the model of necessity of growing financially?’
VP executives discussed how the funding structure should be adapted as much as possible to the needs of investees and their stage of development. Grants are especially useful at the initial stages in the investee life cycle. A piece of advice was to think about where in the spectrum (from charitable to commercial investee) to invest. Some investees may migrate across the spectrum, becoming more financially sustainable when supported by venture philanthropists. VP support may help create the infrastructure needed to grow and the connection to capital necessary to start a market-oriented operation. It was also noted that the skills needed as an investor may be different for different types of investee, for different financing techniques and for strategic guidance and business development assistance.
Another trend identified is for venture philanthropists to engage in partnerships and co-investment agreements. Advantages of engaging in partnerships include the possibility of operating at a greater scale, taking on more risk, and reducing the demands (reporting, etc) on the organization supported. Relatively new types of partner for VP players include government and corporate. Reasons voiced by participants included ‘It is difficult to change systems without involving government’ and ‘You need government and corporates to scale up’. A challenge of partnering with government is that the people in charge keep changing. Corporate foundations are interested in venture philanthropy because it uses a language that corporates understand.
Other topics on the agenda included the need to generate standardized measures of social impact, how to approach exit strategies, managing human resources, and more philosophical questions about the boundaries and future directions of the EVPA. The Venice meeting concluded that the time has come for venture philanthropy to expand as an established form of giving. As the sector develops within the public and private landscape, partnerships will be key to its success.
Lisa Hehenberger is Research Director of EVPA. Email LHehenberger@evpa.eu.com
For more information