In the third of his occasional series exploring the lessons that can be learned from beyond the arts, Tim Joss introduces venture philanthropy and tells the story of how it has changed a charity working with offenders and homeless people.
Venture philanthropy (VP) is an American import, which first reached the UK about five years ago. A very early use was in 1969 by the philanthropist, John D Rockefeller III, but it was in the late 1990s that VP really took off in the US. Since its arrival here, interest has grown rapidly and now the rest of Europe is paying attention. The European Venture Philanthropy Association was launched in 2004 and attracted 270 delegates from 20 countries to its 2006 Paris conference. So what is it and why now?
The venture bit is inspired by venture capitalism where the investor is highly engaged with the investee. Some venture capitalists became wealthy. They turned to the charity world seeking to put something back, and philanthropy attracted them. However, their background meant they wanted a highly engaged relationship with charities. VP was the result. It applies venture capital methods to the needs of the charity sector and looks for a social, rather than a financial, return on investment.
Aim for change
Here are some of the features. The engagement is with the whole organisation, and not just a particular project. The aim is to achieve a major change: for example, realising the full potential of an idea (taking to scale), turning an organisation around (with its arts world echoes of stabilisation) or achieving a merger or new alliance. Venture philanthropists are also interested in performance and its measurement: of outputs, outcomes and wider impact.
To get started, a VP fund is created. While founders personal wealth is likely to be crucial for starting the fund, further contributions are sought from other venture capitalists, as well as more established sources such as foundations. Another aim, therefore, is to draw new funds into the charity sector. Support is over an extended period and mixes the injection of financial, intellectual and social capital.
The use of the finance raised is not limited to traditional grant-making. It can also include loans of various kinds and the taking of equity in a commercial subsidiary. Intellectual investment ranges from advice and consultancy delivered by VP staff or trustees or third parties. Involvement can extend to taking a seat on the board. High engagement has a social aspect, too: the venture philanthropist will leverage additional finance or advice from their networks and peers.
Impetus
The 2005 launch of the Impetus Trust attracted much interest in the charity world. Created by venture capitalists, it was the first high profile VP fund. It now has six investments including a three- and-a-half year partnership with St Giles Trust. When St Giles approached Impetus, it was serving offenders and/or those with housing and additional needs. This overlapped with other charities but what marked St Giles out was its direct work with prisoners and ex-offenders.
In the first year of Impetus investment, the emphasis was on capacity building. Impetus engaged with business planning, performance management, management development and market positioning. Now in the second year, the focus has shifted to strategic planning and governance issues.
St Giles now engages with offenders as early as possible, helping them to find housing, support services, training and employment. Prisoners can now study for and take an NVQ Level 3 in Advice and Guidance and advise their peers on things many people take for granted, such as filling in job applications, interviews and dealing with prejudice about ex-offenders. St Giles has also broadened its geographic reach, scaling up from just a handful of prisons to nearly two dozen and starting to work in young offenders institutions.
VP and the arts
So far, UK venture philanthropists have engaged little with the arts. For example, Impetuss six investments are in the education and social areas. The Rayne Foundation has a trial VP project in the arts. It is working with South East Dance to address a gap in access to dance film. Britain is a leading player in the production of dance films but audiences have very limited access. Research is underway into building South East Dances capacity to distribute dance films on DVD and as downloads.
Tim Joss is Director of the Rayne Foundation. Previously he was Artistic Director and Chief Executive of Bath Festivals, Bournemouth Orchestras Senior Manager, and an Arts Council Music and Dance Officer.
e: tjoss@raynefoundation.org.uk
More information on Impetus Trust and St Giles Trust can be found at their respective websites: http://www.impetus.org.uk and http://www.stgilestrust.org.uk. The European Venture Philanthropy Association (www.evpa.eu.com) offers a useful overview on the continuing evolution of venture philanthropy.