Giving something back, helping society improve

Why did you and your fellow trustees set up the EVPA?
The aim was and is to raise awareness of the fact that venture philanthropy can be a hugely effective way of leveraging one's time, network and capital in order to bring about social change. We are promoting the VP model and feel that by acting collectively, we can make more impact. There is no question that governments will remain the main providers of mass social services. But there is also the point that these services can be improved through private sector engagement, and venture philanthropy can be a great way of developing social markets and maximising their impact. Promoting effective venture philanthropy across Europe is the point of the EVPA.

How much progress have you made so far?
Our main achievement has been in getting venture philanthropy and social enterprise on the agenda of a number of different participants including private equity groups, foundations, universities, private banks et cetera. But I do want to stress that this job has only just begun. Within private equity for example, I'd say we're visible to about 25 percent of the industry, and roughly one to three percent are actively engaged. We have a very long way to go.

We have also started to break down the silos between the various active players in the non-profit field, particularly venture philanthropists and foundations. As these groups get to know each other, they discover synergies such as access to deal flow, cultural learning, co-financing opportunities, and due diligence assistance.

What are the main lessons have you learned?
First, individuals do want to get engaged – they all have mothers, fathers, grandparents and children, and they are members of broader society. They see that significant problems exist. These problems are not only large but also very complex, and there are no easy answers. The EVPA is promoting just one of many solutions.

Second, we learned that the business skills you find in well run companies, including those backed by private equity, really can be adapted for certain charities and social enterprises. Combining these skills with the right kind of funding is a powerful mix for helping these organisations grow sustainably.

The aim was and is to raise awareness of the fact that venture philanthropy can be a hugely effective way of leveraging one's time, network and capital in order to bring about social change

What has been your greatest frustration?
It has been very difficult to get people to come out from under cover and say, here's what we're doing. There is still huge reticence among financial professionals to talk openly about their charitable activities: they worry that their motivation will be questioned. We do have some role models such as Sir Ronald Cohen, Ramez Sousou at Towerbrook Capital, and Chris Hohn at The Children's Investment Fund, but there are many others who are also doing good work and have chosen not to talk about it. We need them to go on the record, because when they do, they will inspire others.

What role does the media play in this?
Journalists have come to us with different objectives. Financial journalists are usually interested in the business strategies that venture philanthropists are looking to apply. Journalists specialising in covering charities and foundations were initially cautious until they understood our aims and realised that we weren't going to be imposing our methodology. Some journalists have come looking for stories about bad capitalists with a guilty conscience, but of course they didn't find anything. We're committed to transparency and disclosure, and we've always been careful to demonstrate the substance and collaboration of what we're doing.

Are European governments doing enough to help venture philanthropy achieve its goals?
Depending upon the individual country, government ultimately funds between 75 and 90 percent of all social sector spending, whether it's in education, medical, homelessness, drug abuse, and so on. The non-profit sector will never supplant what government does, and so we do need to strive for a deeply collaborative relationship, where we work closely alongside governments and get their support for innovative ideas. This is one of the reasons we are now re-locating the EVPA head office to Brussels, where Serge Raicher of Pantheon Ventures will take over as EVPA chairman in September.

You have nearly 90 members now, and more and more financial groups, especially private equity firms, are starting philanthropic activities. Do you see a need for consolidation of some kind?
I believe the industry is still in its infancy. There will certainly be groups that appear but then either their business model, financial sustainability or proven impact does not justify their continued existence going forward, just as we have seen private equity firms come and go over the past 20 years.

The issue is that for many people, philanthropy is a very personal, often sector-specific driver. On the other hand, it takes experience and dedicated people to do VP correctly. The EVPA is looking at such issues as sector interest groups, country interest groups, and the ability to transfer good ideas across borders. Here the challenge is one of language, culture, legal differences, and so on. Ultimately we need to look at philanthropy as a service industry like any other, which means we need adequate human resources, sound organisational structures, a solid business model, clear objectives and sensible performance measurement.

What are EVPA's main objectives for the coming 12 months? Where do you see the group in 2013?
There is a lot to do. For the coming year, we expect further rapid growth enabling us to reach 115 members in 20 countries by March 2009. We're going to hire at least two additional staff to add to our infrastructure. We will continue to further develop membership services and place greater emphasis on working groups and education.

There is still huge reticence among financial professionals to talk openly about their charitable activities: they worry that their motivation will be questioned

For the medium term, I am very, very optimistic. I believe we've reached a tipping point where people have started to come to us and say, I want to be involved. As a result, we can realistically grow at a rate of 20-30 members per annum and get to 175 members by 2013. On top of that, we want to be recognised as a source of excellence with regard to our ideas, transparency in terms of what works and what doesn't and our value-add to our members. We also need to be financially sustainable.

Good point: how are you going to fund all this?
Finances are always an issue. Some of our members have large incomes and therefore are capable of paying a large membership fee but the majority of our members are smaller. We don't want membership fees to be a barrier to joining and interacting with us. We therefore need financial sponsorship. We're very grateful to our existing sponsors KPMG, 3i, Barclays Private Equity, Natixis Private Equity and Pantheon Ventures, and will be looking for new ones. We also rely upon pro-bono support, which we've received from SJ Berwin, Monitor Group and others.

We're also debating whether a relationship with government would be an appropriate funding source, and, very excitingly, we are considering a seed fund, which will help people establish new venture philanthropy platforms throughout Europe.

What is your favourite EVPA project to date and why?
Our pilot project, The Good Deed Foundation in Estonia, has been a great success. We were able to help the founder shape his ideas and attract capital, and our network members have been very supportive of the project in helping train some of the staff.

So far, the Foundation has organised three projects: first, it has backed a furniture re-cycling operation, which takes old furniture, refurbishes it with the aid of otherwise unemployed people and then sells it cheaply to lower income groups. Secondly, it is working with major businesses in Estonia on educational projects to reduce the spread of AIDS – Estonia has one of the highest AIDS infection rates in Europe. Thirdly, The Good Deed Foundation is involved in the Teach First project, which takes college graduates who work for up to two years to help improve the local educational system. For a fairly small amount of money, and with use of the EVPA network, I believe The Good Deed Foundation has already achieved major impact.

Once you've stepped down as EVPA chairman, what will your personal priorities be?
I'll be busy, getting involved in setting up a Venture Philanthropy Association for Asia for example, as well as leading the seed fund effort! Conversations are already under way, so do watch this space.