The Impetus Trust, one of the UK's venture philanthropy pioneers, has shown how its model works as it prepares for a fundraising drive. The trust has published a progress report on the charities it supports, and according to its Impact Report, the six charities that have been in its portfolio for at least a year have on average grown their income by 20 percent a year.
This is five times faster than the sector as a whole. Impetus says of even greater significance is the growth in the charities' social impact, measured by the number of direct beneficiaries served, which has risen by more than 50 percent a year.
Impetus focuses on growth potential in charities using private equity and venture capital management techniques and concepts. Like a venture capital investment decision, Impetus seeks ambitious organisations which can deliver innovative and sustainable responses to social problems, led by highly capable management.
Impetus Trust's current portfolio of nine charities is diverse by sector including adults with learning difficulties; homelessness; eating disorders; conflict resolution; and ethnic minority sexual health.
Leverage is central to the firm's model, although not necessarily in a form Henry Kravis would recognise.
In the last two years, for every £1 of Impetus cash given to a charity, Impetus has leveraged a further £2.50 from “coinvestors” and another £3 of pro bono expertise.
Total funding committed to Impetus has now reached £8 million (€11.5 million; $16.4 million), including £2.6 million in pro bono expertise and £1.5 million co-investment. Over 100 people, as individuals and through its corporate partners, have worked on pro bono projects.
Daniela Barone Soares, chief executive, said: “Following the successes Impetus has achieved so far, we have ambitious plans to scale up our investment rate. In the autumn we will launch a £30 million fundraising, targeting £10 million each in cash, co-investment and pro bono expertise.”