“What’s the world we want to see?”

 

 Venture philanthropy. Angel philanthropy. Impact philanthropy. Catalytic philanthropy. Strategic philanthropy. These are some of the names that are being used to describe philanthropic models that go far beyond the writing of checks and often take a deep and long-term view of what it means to invest in solving global and/or local problems.

As noted in a blog post on the Rockefeller Foundation website, foundations have been experimenting with variations on the classic grantmaking model for at least half a century. But in the wake of the Great Recession, as government budgets continue to be squeezed, foundations and individual philanthropists are increasingly blazing new trails in funding models designed to yield social impact as well as a financial return on their investments.

The Rockefeller Foundation recently hosted the launch of a new report from the Organization for Economic Co-operation and Development (OECD) on venture philanthropy. The full 90-page report (with a seven-page executive summary) describes examples of many “hybrid” forms of philanthropy, some of which borrow from business thinking, most of which involve intensive up-front research, and all of which seem to move beyond the traditional “grant-giver/grantee relationship” into capacity-building partnerships.

The title of my article, is from the video posted on the “The Rockefeller Foundation” side by the COO Mr. Vanroekel

What is exactly the definition? As it is been mentioned above, I am sure there are many questions about venture philanthropy or impact investing. Our future generation is the Millennials. Unfortunately, I have passed the age limit! Many of the wealthy millennials, now are very keen to give back to the society from their earnings but they do want to know where their money is going. The last nearly 22 years I am working as a global wealth advisor and a performance coach. I am very much into charities and helping people. My Dad has always being saying to me in a funny way, that “we will set up a charity for you” because I was investing lot of money in my non-profit organization called MELISELLI whose purpose is to support and empower youngsters. The name of the foundations is dedicated to my parents Melis and Elli the Meliselli

Nadia Themis - Meliselli Logo

Few days ago, I have attended a STEP event organized to Charles & Stanley Co regarding Impact Investing. It was very interesting and an eye opener. Nearly the last 22 years I am working as a wealth management advisor, specializing in Corporate restructuring and tax planning.  At the same time the last 5 years I became a certified high-performance coach in the financial sector. So, these two worlds of mine, sometimes are in conflict and now with VP, I have found my perfect equilibrium.

Today, doing my research on impact investing I read the below article and I have quoted a part of it. Please note, below the link of the article which was published by the Financial Times https://www.ft.com/content/44c1331e-0232-11e6-99cb-83242733f755

“Emily Brooke, a 30-year-old designer based on East London, had her first taste of success with the Laserlight, an energy-efficient cycle light that is being fitted to Santander Cycles — the so-called Boris Bikes — that tourists and casual riders hire to get round London. Flushed with success, Brooke now wants to give back. She has signed up with the Founders Pledge, an organisation that enables budding tycoons to donate a percentage of their future earnings to good causes, once they sell or list their businesses.

Brooke has set strict conditions about how her money will be used if or when she cashes in on Blaze, the business she founded. Philanthropy, for her, is far from the stereotype of charity auctions or sponsoring the arts to gain social status. “My priority is seeing where my money goes and how it is spent,” she says. “My money needs to go to causes I choose, and I need to monitor its impact. I expect the sort of accountability I have shown my own investors.” Brooke is not alone in expecting to see results from her donation. Many young people of her generation are not satisfied with neither giving for their own sake — nor interested in gaining tax breaks — but are asking for more accountability in terms of the impact of their philanthropy.

For wealthy millennials, this “venture philanthropy”, as it has become known, has gained rapidly in appeal. By focusing on the impact of the donation, this form of giving involves the donor acting more like a venture capitalist, taking a seat on the board and seeking to cut costs and force organisations to run themselves more efficiently. In 2013, the most recent year for which data are available, £166m of venture philanthropy grants, loans and investments were made in the UK, according to a report by Factary, a consultancy. This might have only represented 1 per cent of charitable giving in the country but was double the previous year’s total.

Yet while the “vast majority of philanthropy” still revolves around charity auctions and gala dinners, according to Tris Lumley, director of development at think-tank New Philanthropy Capital, “this trend of wanting to give to small projects where your money truly makes a difference and where its impact can be measured is growing fast”.

 What to think about when you are getting into VP/SII?

There are many questions to ask yourself if you are thinking of getting started with VP/social impact investment; i.e. What governance models are tried and tested? In which way can I best work with co-investors? How should I fund my vehicle? Which management team do I need?

Here are some tips to consider on setting up:

The funding model:

In many European countries, tax and legal regulations distinguish between grant funding, and instruments that establish ownership titles, and the legal structure of your organisation or fund has to take such constraints into account.

In general, when the primary activity is grant financing, organisations tend to be set up as a foundation. In contrast, if, as in social impact investing, you will be mainly investing in social enterprises, it is usual to set up as a fund (or fund like structure) to accommodate the fact that you have a mix of financial and social objectives with different funding instruments. Funds can be limited in time or evergreen. Which timeframe you choose will be heavily dependent on when your investors want or expect to see a financial return.

Some organisations go for mixed structures that include both funds and foundations. Noaber Foundation in the Netherlands and BonVenture in Germany for example have foundations providing grants and funds making investment, thus offering a greater degree of flexibility.

As it is been mentioned above, the value of venture philanthropy grants, loans and investments in the UK has more than doubled in two years, to reach a total value of £166m, according to new research. Research and fundraising consultancy Factary revealed in its report that there are now twice as many players in the local venture philanthropy market as there were two years ago, when it last produced a survey of venture philanthropy in the UK. Total income is also up 171 per cent at £274.4m. New entrants had a total income of £92.9m in 2012 so make up a large percentage of this figure.

Venture philanthropy is the practice of being philanthropic while applying some of the methods and models of the venture capital industry.

The report shows that there has been a 221 per cent growth in the number of charitable grants, loans and investments. Almost half of this growth is the result of new entrants in the sector however like-for-like growth has also been strong and is up to 66 per cent.

Factary’s report accepts that the UK’s venture philanthropy sector is small, with its charitable grants, loans and investments only representing 0.8 per cent of the £21bn of total expenditure across 45,932 grant-making organisations in the UK. – See more at: https://www.civilsociety.co.uk/news/uk-venture-philanthropy-market-doubles-to–166m.html#sthash.eNPfShK2.dpuf

The impact investing or venture philanthropy is the future. The youngest generations of the millennials WILL NOT allow us to continue our classic capitalistic financial model anymore. They will enforce us to change direction.

VP is the perfect combination of business ethics and capitalism.  It’s the perfect plan, which satisfies people who care about the social impact and for the business world who cares about everything related to maximizing their profits.

 

Let’s think of this, for example the retail companies’ core source of profits is the consumers preferences, right? The most important factor for a business development strategy of any kind of company is to be able and forecast the trend of the markets, which will give them the advantage of being the pioneer or at least one of the pioneers. It is like the classic phrase first comes first served.

In order to increase company’s sales, the companies have to follow the markets’ trends. For example, in the United Kingdom the Vegan community is growing rapidly the last few years, therefore the market had the need for alternative food, so they could satisfy the vegans’ demand. Then, vegan food was introduced, which you couldn’t even think of its existence before. Now the organic and vegan industries are becoming the leading players in the food industry. All the big grocery shops like Waitrose, Whole Foods, Tesco etc. has specialized brands dedicated to “free from” ingredients. Recycling the grocery bags, bottles is another growing industry which is still related to this new trend of “saving the world and going green”.

In conclusion, my personal opinion is that Impact Investing or Venture Philanthropy is the future of business ethics & capitalists and I am very active on this, as I strongly believe it is the perfect combination which leaves everyone happy. I am sure that there will be probably a group of people who will question this, but as I am a positive driven person I prefer to focus on the solutions rather on the problems. The impact investing concept is the future and we all need to embrace it. If we explain the concept in a proper way to the investors, then I am 100% that they will support it. Making money by contributing to a better world? That is totally amazing! Of course, the non-profit organizations also need to be open to this opportunity as they will need to be more transparent and willing to share the management authority.

 

Fourteen billionaires announced they have signed the Giving Pledge, formally joining the 154 other billionaires who have promised to give away at least half of their vast wealth to philanthropic causes.

Started in 2010 by Bill and Melinda Gates, worth $88.5 billion, and Warren Buffett, worth $74.2 billion, the Giving Pledge is a commitment by wealthy individuals and families to give away more than half of their wealth to causes including including poverty alleviation, refugee aid, disaster relief, global health, education, women and girls’ empowerment, medical research, arts and culture, criminal justice reform and environmental sustainability.

Signatories of the Giving Pledge must be billionaires, if not for the money they are giving away. The goal of making a public pledge is to encourage others to consider philanthropy, too, even if they aren’t billionaires.

The Rockefeller Foundation and other foundations worldwide are already contributing to a better world. The world is changing, and we need to change along with it if we want to keep moving forward. FACE2FACE Consultancy Ltd, based in London, as Managing Director will promote and support the VP with our other services as a Business Development Agency concentrated in the Financial Sector in Europe, Africa, Asia. Yes, it is possible to make money, maximize your profits and fortune and I am in favor of that of course, at the same time you can save lives, the animals, save the planet, EMPOWER THE NEXT GENERATION! Honestly, I am writing this article feeling goosebumps all over my body. We are creating a database under the name DOERS GLOBAL Community of social entrepreneurs and investors. Whoever is interested in joining forces in this cause, please email me at nadia@nadiathemis.com

 

Thank you

Nadia

Wealth Advisor – TEP

High Performance Coach

 

Resources:

The Rockefeller Foundation

Financial Times

EVPA

STEP – Charles & Stanley Co.

CNBC

Leave a Reply

Your email address will not be published. Required fields are marked *