I’ve had a social conscience for as long as I can remember, ignited perhaps by two years spent teaching English in Madagascar immediately after university. But for many years thereafter, I was too busy with my business life to develop it further. In those years, I did contribute to some charities, but in a totally reactive, random way.

One of the main reasons I set up Impetus Trust was because those previous experiences as a donor had been most unsatisfactory. I was frustrated that I had no idea how effective or efficient these charities were and suspected that my money made no real difference to the charities or their beneficiaries. Feedback was nil in almost every case.

In 1997, I read the seminal Harvard Business Review article Virtuous Capital: What Foundations Can Learn From Venture Capital, which is arguably the intellectual basis for venture philanthropy. I was not in a position to do anything about it but I filed it away.

When I was retiring from venture capital company ECI, time became available, and also money, which opened up enormous possibilities. Doing something in the charity world was something that had been in the back of my mind for many years and I dug out that HBR article. I began to think about whether there was a way I could transfer my experience investing in small- and medium-sized businesses to helping charities in the same way.

In 2001, I started doing research and began talking to people about … well, it wasn’t even recognised as ‘venture philanthropy’ in the UK at the time. Impetus was created in 2002, to provide strategic core funding and expertise to high potential charities.

The Impetus model is like a magnifying glass, focussing resources onto an organisation, for a finite period of time. This is great because everybody involved feels part of an exciting journey, bringing together our donors, co-investors, pro bono experts, and our capacity-building investment directors. It encourages a feeling of excitement in the charity, of urgency.

During that time – typically three-to-five years – we help the organisation achieve a set of specific objectives, including building its income generation capacity. Once our agreed investment period is over, we are then able to move on to work with other organisations. That works well, and avoids having organisations become dependent on us.

We look for organisations that have ambitious leaders, a good model, and which are going places or have a good chance of going places. A lot of charities do a lot of good work, but without an economic model that’s scalable. At Impetus we want to see fairly rapid results, so we are looking for established organisations with a scalable model and where it is possible to measure the impact our investment is having.

I think it’s important to measure impact at two different levels. At Impetus, we have some quick summaries of performance that we compare across the portfolio, based on two very simple measures each organisation in our portfolio tracks: income growth and the number of people they help. This is great for our donors, because they can instantly see the really big impact their money is having. Secondly, with each organisation we have a project that helps them to work out the key indicators that are important for them and for their beneficiaries, so they can demonstrate their impact to their supporters.

We are not satisfied with this though. We are always trying to find better ways of measuring outcomes. It’s relatively easy to measure outputs, for example, the number of people who have been on a training course; it’s much harder to measure the effect on that person’s life, whether it has helped them to get a job or a skill that will make a long-term difference to their life. We are working on measuring social return on investment, which potentially could be applied across the board to our charities to give a richer feel to impact beyond the two very simple measures of income growth and people helped.

Our long-term vision is for our work with our charities to drive change not only within the charity, but to inspire change across an entire sector or system. That’s when we will know we are achieving the really big impact we dream of and we believe venture philanthropy can deliver.

It’s very satisfying to look at the charities we are working with, seeing the progress they’ve already made and how they – and the 186,000 people they will help this year alone - are being transformed. Hearing some of the stories of the people who have benefitted is what brings it all to life. Even if there’s not a direct causal relationship between what we’ve done and helping ‘Fred’, you can see the chain and I know that a lot more Freds are being helped than would have been otherwise without this initiative.

It’s been an exciting journey. It’s a gift of time and money and a big chunk of my life, but it has been enormously satisfying.

Stephen Dawson was Chairman of venture capital company ECI before founding Impetus Trust with Nat Sloane, in 2002. Impetus invests in 3-4 new charities addressing economic disadvantage each year. There are 13 charities in the Impetus portfolio, which is valued at £11m. www.impetus.org.uk