The 'value add' of venture philanthropy

Venture philanthropy is attracting increased attention from all those interested in voluntary sector funding and the practice appears to be growing (the European Venture Philanthropy Association has nearly doubled since 2006 to more than 65 members from 15 countries). Venture philanthropy combines growth capital with hands-on advice and takes its name from the practice of venture capital in the private sector. I find it helpful to think of it as an extreme form of engaged funding.

This paper by Rob John at the Skoll Centre for Social Entrepreneurship examines the advice that VCOs receive from venture philanthropists (the 'value add' of the relationship) a previous paper explored the origins of VP and its development and expansion in Europe). Based on surveys and case studies, Rob finds that:

Venture philanthropy funds in Europe are providing a wide range of non-financial, advisory services that are generally valued by the social entrepreneurs whose organisations these funds invest in. It is too early to tell whether supply and demand of services are well balanced in a market which is supply-driven. There are very few active VP funds in Europe, and in many countries just a single known fund exists. It is highly likely that demand for VP by social entrepreneurs and others wishing to bring their organisations through a period of rapid growth or development is greater than supply. VP funds work with only a handful of SPOs at any one time, often committed to individual organisations for several years, further constricting the supply of VP capital and services. Venture philanthropy is a relatively new practice and most funds would claim to be still experimenting with their support packages and are still building the capacity to deliver high-quality consulting services.

Rob also wrote an excellent think piece in our latest Voluntary Sector Strategic Analysis, comparing venture philanthropy to private equity.

Last updated at 15:08 Mon 18/May/09.
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