The stellar rise of the new philanthropic intermediary

Cathy Pharoah

Undeniably the rapid rise of a new and innovative breed of intermediaries is driving the recent rapid growth in the social investment or ‘philanthrocapitalist’ movement. These are agencies such as Venture Philanthropy Partners, Impetus, New Philanthropy Capital, Geneva Global, Ark and many others who have emerged within the last few years to attract and support a new type of donor, the ‘social investor’.

The new intermediaries have increasing power to affect the future shape of major philanthropy, creating the field as well as supporting individual donors. What are the new bodies offering? Can we compare or benchmark one with another? How will the emerging intermediary infrastructure increase the impact of philanthropy? Its costs will be well justified if it brings in new generations of donors and provides a more effective way of allocating scarce philanthropic resources.

Who are the new intermediaries?

Many come to this role from a background as intermediaries in the world of finance and global investment. They bring new investment cultures and tools to philanthropy. ‘Venture philanthropists’, for example, are specifically importing the venture capital model of a more hands-on engagement with the success and growth of recipients than traditional philanthropy has seen, tailoring the type of financial and other business support to suit different stages of development. They seek out high-quality projects for their donors to invest in (give to), and aim to prove that high social and economic returns can be achieved when funds are allocated appropriately to carefully selected projects. Venture Philanthropy Partners, for example, brings a full-blooded venture capital approach. They say ‘they are applying the same entrepreneurial spirit that brought them success in the for-profit arena to their innovative philanthropic efforts’. They talk of their ‘investment portfolio’, of ‘philanthropic investments in high-potential nonprofit organizations’, of ‘investment for different stages of the investment cycle’.

What is the role of the new intermediaries?

New philanthropic intermediaries are playing a wide range of different roles, including information, advice and philanthropy management services. Some also create, manage and distribute funds. They aim to help a new generation of donors/social investors to identify their philanthropic investment strategy, options and potential returns.

But the new intermediaries are not simply service-providers: it is important to understand their role, to borrow another financial term, in leading the market. They are raising expectations of what social investment can achieve, and generating a demand for more specialized and detailed information about the nature, activities and prospects of the NGO sector. They are the real philanthrocapital market-makers.

Of course the new intermediaries have introduced a discipline into the cuddly world of philanthropy in areas where it did not exist before, but this means that the NGO sector has to understand, trust and influence the new influencers. It is important to keep philanthropy in front of capital.

Social intervention is an expert business. Peter Singer, the Australian philosopher who is currently Professor of Bioethics at Princeton University, is likely to have spoken for many when, referring to the injection of significant amounts of capital into social programmes by Bill Gates and Warren Buffet, he asked in the New York Times last December whether ‘it was troubling that such momentous decisions are made by a few extremely wealthy individuals?’ Warren Buffet demonstrated massive confidence in the Gates Foundation’s ability to invest his money effectively.

The new landscape of intermediation

It is not difficult to see the extent to which the scale of intermediary provision has developed and grown. A whole range of new types of support and service has emerged. These include considerably more detailed information and research on potential recipients, from the broad-brush financial and comparative information provided by GuideStar to the detailed subsector analysis and case studies carried out by New Philanthropy Capital.

There is also a range of advisers providing clients with detailed portfolios on potential investees, with characteristics carefully matched to donor preferences and giving potential. Intermediaries also provide information and advice on ways of giving, and on the services of intermediary agencies such as CAF, which provides a wide range of international giving options.

A number of intermediaries provide individual private client fund management services, or build up new generic or ‘venture’ funds to which investors can subscribe. Some of these funds are targeted at specific interventions, such as GEXSI’s focus on micro-entrepreneurs and the environment. Others may be invested in a small number of selected NGOs. Finally, there are the venture philanthropists, described above, who share the risk of social investment to a much higher degree than is traditional in philanthropy. The European Venture Philanthropy Association has just published the first Directory of European Venture Philanthropists.

The table below sets out examples of services and providers. The examples given are not exclusive to each category, but are quoted simply to illustrate the range of what is on offer.


Intermediary service examples Examples of providers
Generic NGO information platforms GuideStar
Detailed subsector analyses New Philanthropy Capital
Measurement of social return New Economics Foundation
Online advice and brokerage Investing for Good
Online giving platforms GlobalGiving, GiveIndia, Greater Good South Africa
Donor advice/portfolio planning Rockefeller Philanthropy Advisors, wise, The Philanthropic Initiative
Total client management Geneva Global, GEXSI
Venture philanthropy NESsT Venture Fund, Impetus, New Profit Inc
Social investment funds Venture Philanthropy Partners, ARK, Venturesome, Social Venture Capital Foundation, Ashoka
Intermediary and donor networking and information-sharing Global Philanthropists Circle, The Funding Network

Why so much intermediation?

There are a number of reasons why the services of such intermediaries are becoming increasingly important. One is that the potential share of global wealth which might be given to philanthropy over the next couple of decades is so great that it cannot be managed effectively without intermediary help. Another reason is that most wealth is now generated by successful entrepreneurs and not the traditional property-owning elite. Some of the new major donors have more demanding expectations of how their donations will be used and accounted for, based on their business perspectives. The new intermediaries have brought a business discipline to several aspects of the giving process which barely existed before: seeking detailed comparative information on the track record and effectiveness of potential recipients or investees, comparative measures of performance on a range of output factors, greater accountability, more regular and detailed monitoring and evaluation.

The big new challenge is measuring both financial and social returns. Accounting fully for the range of social returns which a project might yield can be difficult and time-consuming. Little consensus exists on how this can best be done. While most major donors will be familiar with the language of financial investment, many will need help with translating this into successful social investment. So, notwithstanding the undoubted business abilities and confidence of a few exceptionally wealthy donors such as Bill Gates, the growing role of expert intermediation in the application of major social investment funds is important.

Getting the right approach

So how can we know what is the right approach to social investment? Is there a right approach? It is important that funds are placed in such a way as to reflect the best interests of all the key stakeholders – funders, recipients and end-beneficiaries. After all, the quality of today’s decision-making will determine the outcome for tomorrow’s social change.

There are many different ways of addressing social change, advising donors, investing funds, and designing social investment strategies, and intermediaries vary in their approaches. In some ways, this is just what a new social investment market might expect – choice of provision. But when it comes to investment in people’s lives, it is important to go beyond individual preferences.

All those advising professionally on the placement of funds attach the highest importance to due diligence procedures, with comprehensive assessment of, for example, governance, compliance, accounts and financial health. A noticeable area of variation between intermediary approaches to overall assessment, however, is the importance attached to hard quantitative measurements of financial and social returns and the term over which these are achieved. Some intermediaries are highly oriented towards projects with fairly immediate measurable financial and social outputs. Others are more development-oriented, looking to nurture social innovations with the promise of sustainable long-term impact. Both orientations exist in the US, and have been taken up by the major business schools, with Stanford emphasizing social innovation and Harvard seeing social enterprise more as a subsector of business.

Results-oriented approaches

The following intermediary models illustrate differing approaches to appraising results. NPC draws on results on a very broad range of organizational performance indicators, mixing hard and soft outcome measures. Venture Philanthropy Partners is highly oriented to measurable outputs, and provides quarterly monitoring reports as well as detailed annual reports on the aggregate outcomes of their fund and on individual organizations. Ashoka is best known for identifying and supporting individual social entrepreneurs, but it has recently launched a venture fund. And, despite the developmental nature of its initiatives, it has developed a quantitative social impact measurement methodology and provides donors to its venture fund with detailed reports.

Venture Philanthropy Partners (VPP)
VPP is a US group of social investment advisers from financial and business backgrounds. It is highly oriented to results and performance measurement by a range of indicators. It is designed on the venture capital model, and has built a social investment fund which is lent out only to a few carefully monitored high-potential projects. Key features include:

  • a highly engaged model of support for investees;
  • investment for the long term;
  • active seeking and selection of investees;
  • rigorous comprehensive organizational assessment;
  • assessment by output indicators;
  • monitoring to targets;
  • donor monitoring reports;
  • assessment by financial sustainability and funds leveraged;
  • quarterly as well as annual monitoring reports.


New Philanthropy Capital (NPC)
NPC is a group of London-based researchers and donor advisers. Many of its staff have backgrounds in the City of London and investment management. NPC assesses charities for evidence of results on social impact and for financial, managerial and programme risk. It has developed a very comprehensive approach to assessing investees. It uses financial and other hard output or outcome measurements, but these are mixed in with other softer types of assessment. Its main features are that it:

  • provides generic research on charity subsectors, so organizations can be assessed within class;
  • provides tailored donor social investment portfolios;
  • believes giving should be results-oriented;
  • has a detailed organizational assessment tool called ChAT;
  • takes a rounded approach to performance.


GEXSI, the Global Exchange for Social Investment, is a small international organization that focuses on connecting donors, private and corporate, with developmental aid. In addition to identifying donor funds for investment in entrepreneurial projects in some of the poorest areas of the world, GEXSI has two initiatives to grow social investment more generically. These include promoting a global social investment re-insurance scheme, to provide donors/investors with security for social investment, and a ‘Social Bill’, a scheme to encourage donations to be made through utility bills. GEXSI is aiming to focus on sustainable change by supporting micro-enterprises through a business growth curve, moving them gradually from philanthropic to for-profit investment. Key features of its approach are that it:

  • identifies entrepreneurial projects in developing countries with the potential to grow from philanthropic seed funding to for-profit social investment;
  • links projects with donors with the capacity to move from philanthropic donations to for-profit social investment;
  • carries out professional due diligence on all projects identified;
  • provides brokerage;
  • provides regular reporting on performance, measuring social, economic and environmental returns.


Ashoka has recently built up a new venture fund. It is highly results-oriented and has a well-developed system for measuring and benchmarking the social impact of its investees. Key features are that it:

  • has designed its own impact assessment tool;
  • measures social impacts such as growth of programmes, identifiable impact on policy, whether the social change model has been replicated;
  • sends individual entrepreneurs a standard questionnaire for assessing their performance;
  • measures results for its programme as a whole as well as for individuals;
  • provides regular donor reports on funded projects.


More development-oriented approaches

Others place more emphasis on a developmental approach, as the following examples show, not relying on a hard-edged results-oriented model to stimulate interest in social investment.

The Philanthropic Initiative (TPI)
TPI in the US aims to generate philanthropy through channelling donors’ interests and commitment into giving programmes, whether individual, corporate or family. Its work with donors provides information, education and training and helps them develop giving strategies which build on their values and passions. TPI also supports financial advisers to build their skills and expertise. TPI’s approach is to build the field of philanthropy in a developmental and value-driven way, rather than target-oriented social investment. The Philanthropy Workshop – formerly based with the Rockefeller Foundation, now with the Institute for Philanthropy in the UK – takes a similar approach.

Venturesome is a UK social investment fund, established by the Charities Aid Foundation. It provides development and growth funding for a small number of entrepreneurial organizations, and is oriented towards organizational capacity-building and development rather than hard outcome measures. Its key features include:

  • flexible customized approach to funding packages;
  • risk-aware assessment of balance between economic outcome and potential social impact;
  • assessment of social impact through growth in organizational capacity;
  • assessment of strategic impact through general growth in social investment funds.


Institute for the Development of Social Investment (IDIS)
IDIS is one of the few intermediary NGOs in Brazil. It is aiming to build the social investment infrastructure. Its approach to growing social investment is to educate donors about how to use their funds for long-term capacity-building for sustainable social change, and to look for identifiable social results. They also look to grow new social investment funds and community philanthropy, partly through developing community leadership.

Philanthrocapitalism and social change

These different intermediary models, which include advisers and funders, present distinct and different orientations to using capital, or funds, in the most effective ways for achieving social change. For some, effectiveness implies much greater use of quantitative performance measurement to assess the achievements of philanthropic activity; for others, it means a more developmental emphasis on supporting social innovation models with the capacity to lead to sustainable and wide-scale social change.

However, they also have a number of important characteristics in common: they all emphasize the importance of providing donors with greater information and insight about what to fund; they are committed to organizational transparency and good governance; they take a hands-on approach to working with clients. Most significantly, they are all committed to convincing donors or investors that their funds can really make a difference to society. Perhaps the difference comes down to beliefs about whether the field of philanthropy can be grown faster through values, visions and influence or through bottom-line performance measurement?

The development of the social investment marketplace is still in the early stages. It is difficult to predict which intermediary model will become predominant in Europe, or perhaps prove to be the most effective. Undoubtedly the new wave of intermediaries is influencing philanthropy, shaping donor expectations and consequently their choice of what to fund. If donors increasingly look for hard evidence of quantifiable social outcomes and impacts, this may have a negative impact on funding for organizations whose work is more developmental and difficult to measure, aimed at building skills and confidence, changing perceptions or building community capital. A growing challenge for the future will be to ensure that NGOs have appropriate capacity and access to represent their work to intermediaries.

Inevitably information and intermediation come at a cost, either from grants or from client fees or from recipients. One of our most successful venture capitalists, Kurt Engelhorn, who recently founded Foursome, a social investment venture capital company, maintains that for him the best approach to assessing social impact is ‘gut instinct’. Or luck?

Cathy Pharoah runs an independent research consultancy Third Sector Prospect. She was formerly research director at CAF for 11 years. Email

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