The Evolution of High Engagement Philanthropy in Europe
Author: Rob John
Date: June 2006
Venture philanthropy provides a blend of performance-based development finance and professional services to social purpose organisations in helping them 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 into continental Europe.
Although not without its sceptics, venture philanthropy has the potential to contribute to developing a more responsive and diverse capital market for the social sector. Its focus on building organisational capacity in entrepreneurial social purpose organisations, matching appropriate finance with strategic business-like advice, makes it a distinctive provider of capital.
Venture philanthropy in Europe has strong links to the private equity and venture capital community, giving it opportunities to influence the corporate social responsibility of a set of major players in Europe's financial services industry. Several new venture philanthropy funds have been established by philanthropists with successful careers in private equity.
Europe's transitional countries, in Central and Eastern Europe, the Baltic States and former Soviet Union, have under-capacitated social sectors and widespread, unmet social needs. Venture philanthropy may have a particularly valuable role to play in helping build stronger civil society institutions in these countries.
As a relatively young industry, venture philanthropy faces many challenges in communicating and marketing what it does; developing a menu of financial instruments and advisory services; measuring performance and social impact; collaborating with complementary capital providers such as foundations.
This working paper is the first in a series which explores the expansion of high engagement philanthropy in Europe.
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