Venture Philanthropy: transforming social investment into impact

During this event we discussed the Venture Philanthropy model and its impact as s potential form of investment.

Venture Philanthropy: transforming social investment into impact

Event report

What is the most effective way of giving to charity? What do the people who pioneered the concept of venture philanthropy 20 years ago think about today’s innovations? What are cutting-edge practices in impact measurement and social investment?

On the 4th December 2018, Philanthropy Impact and Farrer & Co hosted an evening to celebrate the work of the trailblazing investor and venture philanthropist Doug Miller and tackle these questions, along with some of the most respected voices in the sector.

The event kicked off with Chair, Mary Rose Gunn, interviewing Doug Miller - the highly renowned investor who was one of the pioneers of the concept of venture philanthropy over 20 years ago. Doug was a founding trustee of The Impetus Trust who has since founded the European Venture Philanthropy Association in 2004, the Asian Venture Philanthropy Network in 2011 and now the International Venture Philanthropy Center.  As the Chief Executive of The Fore, a new initiative helping corporations, foundations and philanthropists provide venture philanthropy-style funding to small charities and social enterprises, Mary Rose was ideally placed to find out more about Doug’s ideas and motivations.

Venture philanthropy differs from more traditional approaches due to its emphasis on impact measurement and developing successful organisations.  Right from the start Doug had recognised that he didn’t want to just be giving money, he wanted to inject the measurement rigour and skills of his day job into the charities and causes he was supporting.  He stressed that we must all be aware of the ‘capital continuum’, which ranges from grants, through soft loans with a social purpose, to investments which maximise financial return. Each part of the continuum is effective in different ways, and multiple varieties of capital are necessary for the social sector to flourish.  

Believing in its potential to create genuine social change, Doug has been mainly focused on venture philanthropy for a number of decades.  For Doug, the future is about building the infrastructure to support venture philanthropy on every continent. His newest umbrella venture, the International Venture Philanthropy Centre, is currently doing just this, as it works on building new hubs in South America and Africa.

While insisting that all his accomplishments were down to teamwork and that he had achieved nothing alone, Doug did admit that he is most proud of the number of people he has engaged in venture philanthropy over the years – with an impressive graph of growing EVPA and AVPN memberships only highlighting this. However, with only 1% of funding currently offered through a venture philanthropy model, Doug was fearful of complacency and called for more infrastructure and intermediaries to encourage the pooling of funds and provide advice to donors - mirroring the vast supply of these intermediary services for investments in the private sector.

Welcoming the speakers Julia Grant, CEO of Pro Bono Economics, Madeleine Clarke, Chair of EVPA and Louis Elson, Managing Partner of Palamon Capital Partners to the stage, discussion then got underway over how different philanthropists have different goals, and favour particular methods. Some want to find the single most effective intervention to solve a problem outright, and will throw all their weight behind that solution, while others want to support innovation, and will help effective models to scale regardless of sector. Madeleine Clark was keen to emphasise the need for corporations to stop viewing charity staff as soft and unanalytical, and for charity staff to stop viewing corporations as greedy and self-interested.

Julia Grant, an expert in impact measurement, was upbeat but realistic: charities do still have a long way to go in embedding impact measurement and data analytics into their operations, but the improvement we have already seen is substantial.  She asked why however, if environmental organisations have come together around a common objective and metric of success (net-zero emissions), nothing comparable yet exists for social change.  She also added a cautionary note on how large one-off donations can subsidise service provision by charities deploying social impact bonds, distorting the market price of their services and having negative consequences for other providers down the line.

Louis Elson‘s career in private equity was integral to his understanding of philanthropy. He asked why capital structures could not be segmented vertically rather than horizontally – so each creditor covers the whole range of the capital continuum (providing a mixture of grants, soft loans and hard loans), rather than having each creditor dedicated to a specific kind of capital.

Everyone agreed how vital it is to get people into a room together.  Venture philanthropy is at its best when people see and hear each other, especially when they come from such seemingly disparate worlds as charity and private equity. There is no question that after twenty years, venture philanthropy is not out of new ideas yet.

Written by Toby Gill, Programme Coordinator, The Fore

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