Kurt Peleman - CEO of European Venture Philanthropy Association
There is an African proverb: “If you want to go fast, go alone. If you want to go far, go together.”
This is one the fundamental premises on which EVPA, a European community-based association for social investors and venture philanthropy, was founded ten years ago.
The Venture Philanthropy (VP) and Social Investment (SI) sector has come a long way together in the past ten years, but of course we could go farther.
To go further, we should strengthen our links with those corporate and investment players that have the knowledge relevant to build the field and move it on.
The soul of philanthropy and the spirit of investing
The terms venture philanthropy, philanthropy; social investment and impact investment mean different things in different regions and depending on who you ask. For us, EVPA, we look at venture philanthropy as a combination of the ‘soul’ of philanthropy (private initiatives for public good) with the spirit of investing (taking an investment approach to create social profit).
Hence, Venture Philanthropy, we define as working to build stronger societal purpose organisations by providing them with both financial and non-financial support in order to increase their societal impact.
The last ten years
Where did it all begin? After the first experiments with venture philanthropy by US entrepreneurs, the European form of Venture Philanthropy took off in the early 2000s in the UK. Spearheaded by private equity and venture capitalists, the idea was to take the experience private equity and venture capitalists had in building for profit organisation, to achieve social impact.
Fast forward ten years later, and the rise of social enterprise in Europe -coupled with their demand for flexible financing and, in many cases, business support- has spurred on a rise in venture philanthropy. The field offering this finance, VP and SI, has seen €2.5 billion invested since its inception, but is tipped to grow exponentially. In fact, speaking in the words of the G8 taskforce looking at social investment, there is €1 trillion waiting to be set free to tackle the words problems.
In the past years, more and new actors have entered the field of VP and social investment; traditional foundations, finding their philanthropic resources of insufficient scale to address social and environmental problems- investors (banks, asset managers, venture capitalists, business angels) championing socially responsible investing, for themselves and clients- corporate foundations, viewing enterprise-based models as a cost-effective way to support inclusive economic development.
Moreover the interest of policy makers worldwide has started to unlock funding for intermediaries supporting social enterprise, leading to favourable policies and, increasingly, legislation, to enable the growth of the field. The launch of the EU Social Business Initiative, aimed at creating a more favourable environment for social entrepreneurs, is one such example and will hopefully facilitate the work of venture philanthropists.
As all early stage sectors, the venture philanthropy and social investment sector is in a critical growth phase. To spur on this growth, EVPA hopes to see more and more players from the investment and corporate space use their skills and knowledge to move the practice on.
The same principles that have guided the venture capital industry, we are now seeing applied to social impact initiatives. Professionals in that field can therefore offer critical experience with investment in the early stages of an organisation in order to build a strong foundation, as well as experience with active board involvement, growth strategies and risk taking.
Similarly, within Europe, corporates are increasingly demonstrating interest in social investment and venture philanthropy. Interested in innovating and diversifying with new business models which bring solutions to societal/environmental challenges, corporates also see the credibility and reputational upside of these VP/SI models. Looking forward, corporates can offer exit possibilities to social or venture philanthropy investments, and access to substantial networks and knowledge sharing.
So where are we now? While VP is strong in markets such as Germany, France and the UK, it is yet to take hold in Eastern and Southern Europe. Here social investment and venture philanthropy organisations are few and far between, with the exception of a few early adopters. And within these regions they are yet to develop the legal and policy structures that will support the growth of the sector, and remove the fiscal and other barriers that new kinds of social enterprises, and their funders, face.
Finding effective ways of reaching and supporting practitioners in those markets will therefore be key if Venture Philanthropy is to really become a pan-European success story.
And, if VP and SI are to become an integral part of the broad philanthropic and investment field, now more than ever measuring success, learning from each other and collaboration, will be crucial.
What is clear though is that, if we do this well, in the next ten years there is the potential for enormous societal benefits throughout Europe.
Kurt Peleman is CEO of EVPA. EVPA’s Annual Conference will be held on 17 and 18 November in Berlin. Themed ‘Collaborating for Change; the next ten years’, it offers a forward looking programme to all those interested in or practicing social investment, venture philanthropy and impact investing.
City Philanthropy readers can get 20% of the registration for EVPA's Annual Conference using the code "Partner20"