Venture philanthropy works to build stronger social purpose organisations by providing them with both financial and non-financial support in order to increase their societal impact. EVPA purposely uses the word societal because the impact may be social, environmental, medical or cultural. The Venture Philanthropy approach includes both the use of social investment and grants.
As VP spreads globally, specific practices may be adapted to local conditions, yet it maintains a set of widely accepted key characteristics. These are: high engagement, tailored financing, multi-year support, non-financial support, involvement of networks, organisational capacity-building and performance measurement. Learn more on how to Practice VP.
VP is one tool in the social investment and philanthropy toolkit. It has emerged in Europe during the present decade as a high engagement approach to social investment and grant making across a range of organisations with a societal purpose (SPOs), from charities and non-profit organisations through to socially driven businesses. Social investment refers to funding that may generate a financial return, but where the societal impact comes first; so-called Impact First strategies. Grant funding on the other hand is the provision of non-repayable donations to the social purpose organization supported; an Impact Only strategy.
Finance first strategies, where the financial return is maximized and the societal impact is secondary, are not included in EVPA’s definition of venture philanthropy. The relatively newer term “Impact Investment” includes both impact first and finance first strategies. The following diagram aims to clarify the differences and overlaps of this terminology.