Venture Philanthropy

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What does it mean?

This is high-engagement grant-making, which can be summarised as “grants plus advice”. Venture philanthropy takes concepts and techniques from venture capital finance and high technology business management to apply them to achieving philanthropic goals through innovative grant-making.

Who might use it?

This is an active form of strategic philanthropy in which the grant-maker not only provides money to the investee but also advice, access to specialist expertise and sometimes board members. It is most appropriate for organisations needing growth capital with ambitions for scaling-up. This approach began in the 1990s as philanthropists wanted to maximise the impact of funding for civil society organisations. Grants for specific projects rarely result in large social impact beyond the scope and life of the project, as an organisation will not be able to build sufficient capacity and invest in its infrastructure to expand.

Therefore, the venture capital model was adapted for the social sector. Venture philanthropy provides “unrestricted” grants but this  is integrated with tailored expertise and management support to assist the organisation to grow and improve its social impact.

In the US, this approach predominantly uses grant finance. However in Europe, loan and quasi-equity finance may be used alongside grants. Recipient organisations do not have to be registered charities but must have a positive social or environmental impact.

Who provides it?

• CAN Breakthrough provides funding and management support to help established social enterprises scale up and maximise their social impact.
• Impetus Trust provides unrestricted funding of between £200,000 and £500,000 over a longer term (4-6 years on average), combined with hands-on management support and specialised expertise.
• UnLtd provides practical and financial support to social entrepreneurs in the UK with awards between £500 and £15,000.
• Venture Partnership Foundation provides unrestricted grants from £15,000 to £35,000 per annum for 3 to 5 years, along with long term tailored financial and pro bono support to facilitate growth.
• Private Equity Foundation forms partnerships with organisations, focused on impact for young people, for over 3 years, providing trust, funding, incentives, expertise and support.

Case study - Impetus investment in St Giles Trust

Impetus, the UK pioneer of venture philanthropy, backs innovative, ambitious charities and social enterprises that have the potential to scale up and help many more people. When Impetus was first introduced to St Giles Trust, it had been providing services for homeless people in South London for over 20 years, in an increasingly competitive and cash-strapped environment. St Giles wanted to expand, but it wasn’t sure how. 

Over four years (2004 – 2009), with a support package from Impetus, St Giles went from working in 2 prisons to working in 24 prisons, more than trebled its annual income, and grew the number of people it was able to help by 1500%.

The support package provided by Impetus included

• £522k of grant funding
• £132k of management support, and
• £454k of specialist expertise to build capacity in areas such as business planning, media profile, bidding and tendering, team building, etc.

The focus of the work was on developing St Giles’s innovative peer advisor programme, which helps offenders into employment and housing on release from prison. Over the period of the investment, Impetus worked with St Giles on more than 14 projects addressing strategic, organisational and operational challenges, to help build the capacity and focus of the organisation.

During the Impetus investment, important systems and processes, such as long-term strategic and financial planning, business development, impact assessment and reporting were put in place. It was having these key systems and processes that, in part, later allowed St Giles Trust being able to become one of the key delivery partners in the world’s first social impact bond.

Read the full story of the work Impetus did with St Giles Trust on the Impetus website