Venture Philanthropy Insights from Europe

Date

November 24, 2016

AVPN organized a study tour for Asian Foundations to Berlin, Brussels, Paris and London from Oct. 31st to Nov. 8th 2016 and visited some of the most prominent Foundations in Europe including the BWM Foundation, the Bosch Foundation, The King Baudouin Foundation, Esmee Fairbairn among many others.

All of these foundations had their own mission and vision, different strengths and focus areas but their venture philanthropy practices were aligned. The key common characteristics were the following:

  1. Combination of Financial + Non-Financial Resources

The Foundations annual budgets were not as large as the Asian delegates would have expected, approximately €10-60 million a year.  All of them emphasized the importance of non-financial resources as one of the main differentiators and value additions to the organizations that they support.

  1. Long Term Commitment

Investments made in the social sector need to be long term and if the main driver for making such investments is the financial return then this is not the right type of investments to be considering.   

  1. Trust and Transparency

The relationship between the funder and the grantee/investee must be one of trust. All of them expressed the importance of keeping a close relationship with the partnering organization and their willingness to help and come up with solutions together in times of difficulty. KPIs are set up as a guideline to measure the progress of a project but these can also be subject to change should there be valid reason to do so.

  1. Collaborative Spirit

All of foundations expressed their openness to share their models and learnings with others as well as their willingness to find opportunities to collaborate.

  1. Learning from Failures

It is acceptable to fail and similar to the commercial world where there are many cases of failures, this also applies in the venture philanthropy space. The importance is to be able to learn from these cases, review what could be improved and try again.

  1. Range of financial tools available not solely grant making

All of these foundations have a range of products available to offer their grantees/investees and not merely grants. The appropriate mix of debt, quasi-debt and equity will depend on the grantee/investee’s development stage and the assessment of the funder in what this mix should look like.

The study tour provided great insights into some of the latest challenges and innovations that foundations in Europe are experiencing. Several of the foundations are now experimenting with impact investment for part of their portfolio with a clear understanding that the social mission is always first and financial returns are second.

Policies in Europe also seem to have played an enabling role in encouraging foundations to engage in blended finance.  In the UK for example, all of the foundation’s financial returns are tax exempt. Similarly, in France, there is a special type of fund set up whereby capital gains are tax deductible if more than 60% of investments are made into long term investments of more than 6 years.

Foundations in Europe have also been on a learning by doing journey and are becoming better and more professional as they have grown from these experiences. A few of the foundations shared with us the fact that they had recently revised their strategies as well as their impact measurement frameworks.

The overall take away is that giving away money well is a challenging task. There are definitely many learnings and concepts from Europe that can be useful in Asia. Having said that, there are significant cultural and political differences which means that these models need to be internalized and adapted in order to be useful.

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The delegation participants all came from senior leadership positions within corporate and family foundations. They all had genuine interest in making an impact in the social sector; showed great admiration for the work being carried out by the various European Foundations we visited which is why I am confident that some of the learnings will help to ignite new initiatives in Asia.  Stay tuned.


About Author
Patti Chu
Patti Chu Membership Services Director AVPN

Patti Chu is AVPN’s Membership Services Director. Patti has over ten years of experience working on international development issues with particular focus in the areas of financial inclusion, microfinance, education and sustainability.

Patti started her career in New York with the Bank of Tokyo Mitsubishi and has also worked with the International Finance Corporation and Citigroup in Latin America and Asia. In the last few years, Patti has been providing consulting services to various foundations around strategy, program evaluation and impact assessment.

Patti is a native of Argentina and has working experience in Latin America, the United States, Asia and Europe. She has a B.A. in Business Administration and a Master’s in International Development and Economics from the Johns Hopkins School of Advanced International Studies. She speaks Spanish, Chinese, Portuguese and Danish.