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Venture Philanthropy: the Evolution of High Engagement Philanthropy in Europe

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Venture Philanthropy: the Evolution of High Engagement Philanthropy in Europe SKOLL CENTRE FOR SOCIAL ENTREPRENEURSHIP WORKING PAPER VENTURE PHILANTHROPY: THE EVOLUTION OF HIGH ENGAGEMENT PHILANTHROPY IN EUROPE ROB JOHN JUNE 2006 2 VENTURE PHILANTHROPY: THE EVOLUTION OF HIGH ENGAGEMENT PHILANTHROPY IN EUROPE 04 06 CONTENTS ACKNOWLEDGEMENTS 1. INTRODUCING VENTURE PHILANTHROPY US origins Definitions Three pillars of venture philanthropy Grant making or venture capital? Editing: OPEN ACCESS. Copyright Department Alex Nicholls SOME RIGHTS RESERVED. Skoll Centre for Social Entrepreneurship Rowena Young Saïd Business School As the publisher of this work, the Skoll Centre for Park End Street Social Entrepreneurship has an open access policy Production: Oxford which enables anyone to access our content Sumeeta Maheshwari OX11HP electronically without charge. Liz Nelson United Kingdom We want to encourage the circulation of our work as Design: Tel +44 (0)1865 288 838 widely as possible without affecting the ownership of Loewy Email: [email protected] the copyright, which remains with the copyright holder. Printing: You are welcome to ask for permission to use this work Users are welcome to download, save or distribute this Talisman for purposes other than those covered by the Skoll work electronically or in any other format, including Centre open access licence. in foreign language translation, without written Skoll Centre for Social Entrepreneurship permission subject to the conditions set out in the Saïd Business School The Skoll Centre circulation licence is adapted from Skoll Centre open access licence which you can read Park End Street the ‘attribution/no derivatives/ noncommercial’ at the back of this publication. Oxford OX1 1HP version of the Creative Commons licence. To find United Kingdom out more about Creative Commons licences go to Please read and consider the full licence. www.creativecommons.org The following are some of the conditions Tel +44 (0)1865 288 838 imposed by the licence: Email: [email protected] I The Skoll Centre for Social Entrepreneurship For full details of the Skoll Centre’s work, and the author(s) are credited see www.sbs.ox.ac.uk/skoll I The Skoll Centre website address (www.sbs.ox.ac.uk/skoll) is published together with a Venture philanthropy: the evolution of copy of this policy statement in a prominent position high engagement philanthropy in Europe I The text is not altered and is used in full (the use of © Skoll Centre for Social extracts under existing fair usage rights is not affected Entrepreneurship 2006 by this condition) Some rights reserved – see copyright I The work is not resold licence for details. I A copy of the work or link to its use online is sent ISBN: 1-90-5551-51-9 to the address below for our archive. SKOLL CENTRE FOR SOCIAL ENTREPRENEURSHIP ROB JOHN JUNE 2006 WORKING PAPER 3 14 20 26 34 36 2. THE EUROPEAN DIMENSION 3. CRITICAL ISSUES FOR THE CASE STUDIES RESOURCES APPENDIX The United Kingdom DEVELOPMENT OF VENTURE Case study 1: Impetus Trust, UK Bibliography Venture philanthropy PHILANTHROPY IN EUROPE Continental Europe Case study 2: BonVenture, Germany Web resources organisations in Europe The United Kingdom Case study 3: MDLF, Czech Republic Continental Europe WHO WE ARE WHAT IS SOCIAL ABOUT OUR SHORT PAPERS The Skoll Centre for Social ENTREPRENEURSHIP? The Skoll Centre publishes two Entrepreneurship is an Social entrepreneurship series of papers. Its working international academic research encompasses a range of papers are derived from its and teaching centre at the dynamic management research projects and authored Saïd Business School, at the strategies for pursuing optimal by in-house researchers. Their University of Oxford. It was social and environmental purpose is to lay out key issues established in 2003 with a impact. Social entrepreneurs in advance of detailed research, generous gift from Jeff Skoll, are therefore organisationally or to test and refine work in founder and Chairman of the promiscuous, harnessing progress. By contrast, its Skoll Foundation, and founder individual and collective short papers offer a wide and CEO of Participant action through non-profits and range of authors greater Productions. social purpose businesses, flexibility to disseminate The Centre aims to develop cross-sectoral alliances, private practical innovations, insight and understanding to or public sector platforms. What ideas and examples, or bring greater legitimacy to is distinctive about them is their to contribute think pieces social entrepreneurship and perpetual pursuit of higher designed to highlight questions find points of inflexion through impact and their ability to put of policy. For further details which it can accelerate the diverse resources together on submissions, see capacity and impact of the field differently to realise greater www.sbs.ox.ac.uk/skoll/research in furthering social justice and social value. overcoming the worst social and economic inequalities. SAID BUSINESS SCHOOL UNIVERSITY OF OXFORD 4 VENTURE PHILANTHROPY: THE EVOLUTION OF HIGH ENGAGEMENT PHILANTHROPY IN EUROPE ABOUT THE AUTHOR THE RESEARCH CONTEXT Rob John trained as a research chemist. This paper is one in a series planned to examine the emergence of venture After completing his doctorate at Oxford University, he held research and teaching philanthropy in Europe, and examine prospects for its future development. Issues posts in the US, Switzerland and under study include: Ethiopia. Witnessing first-hand the famine in the Horn of Africa in the The aggregated size of venture philanthropy activity across Europe 1980s, Rob switched career to the social sector, going on to manage refugee, relief The role for grants, loans, mezzanine and equity finance in building the capacity and development programmes in Africa of social purpose organisations to yield greater social impact and scale up; and Asia for the next fifteen years. After Leveraging financial resources through co-financing and syndication; spending five years in development What does ‘exit’ look like in venture philanthropy? microfinance, he was asked to direct an Oxford-based venture philanthropy What non-financial services are most useful and valued by social entrepreneurs organisation. when working in partnership with venture philanthropists? Since 2004 Rob has been How and when value added services are best delivered – in-house or by third party a freelance consultant specialising in the consultants? areas of venture philanthropy and social entrepreneurship. He is a Fellow at the Power dynamics and legitimacy in the venture philanthropy – social purpose Skoll Centre for Social Entrepreneurship organisation relationship; and is currently chief advisor to the Venture philanthropists’ approaches to measuring organisational performance. European Venture Philanthropy Association and a member of the advisory committee of UnLtd Ventures. He is a These working papers will together inform the Skoll Centre’s work on social capital trustee of Windle Trust International, markets. This research is designed to critically appraise the provision of finance for an Oxford-based educational charity social purpose activities and identify ways in which a better functioning social working in Africa. capital market may be encouraged, combining effective philanthropy, newer forms of social investment, and at times, the mobilisation of mainstream capital. The project begins with a survey of the landscape, following an intense period of innovation internationally. It is then likely to look more closely at the development of new financial mechanisms and undertake a feasibility study into aspects of social equity markets. At the same time, we will conduct a comparative study of the relative merits of common legal forms in facilitating access to capital, and the pluralistic strategies social entrepreneurs employ to maximise their opportunities using legal structures. ACKNOWLEDGEMENTS The author is grateful to the many individuals whose work and discussions have informed the views presented in this paper, and particularly to staff at Impetus Trust, BonVenture and the Media Development Loan Fund for providing case study material. EVPA have kindly given permission for material in Paola Grenier’s research paper, Venture Philanthropy in Europe: obstacles and opportunities, to be updated and appended here. The author would also like to thank Skoll Centre staff for their encouragement and support through writing and production. SKOLL CENTRE FOR SOCIAL ENTREPRENEURSHIP ROB JOHN JUNE 2006 WORKING PAPER 5 1 The term ‘social purpose organisation’ (SPO) is used throughout to describe an organisation whose primary purpose is to create social value in society and is generally independent of government or commercial sectors. These organisation may be otherwise described as charities, social enterprises, non-profits, not-for-profits and third sector organisations. For organisations which trade and generate profits, such profits are not distributed for private benefit. SUMMARY SPONSORS Venture philanthropy provides a blend of performance-based development finance This work has been generously supported by the UK Department 1 and professional services to social purpose organisations (SPOs) – helping them for Trade and Industry. expand their social impact. This is a high-engagement, partnership approach analogous to the practices of venture capital in building the commercial value of companies. In its modern form, venture philanthropy developed significantly in the US in the mid 1990s, took hold in the UK from 2002 and is now expanding
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