European Venture Philanthropy Association

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Setting up a VP Organisation

Before setting up the VP organisation (VPO), the main question to be answered is whether the VPO will work with instruments other than grants or focus on grant funding. In many European countries, tax and legal regulations distinguish between grant funding and social investment. In general, when the primary activity of the VP organisation is to provide grants to social purpose organisations, “grant funding”, it tends to be set up as a foundation. If the VP organisation mainly invests in social purpose organisations, using a spectrum of financing mechanisms, it is usually set up as a fund. Some VP organisations, including Noaber in the Netherlands and BonVenture in Germany, have mixed structures that include both funds and foundations.

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Fundraising

Fundraising is a key challenge for any start-up VPO. It requires vision, clear communication, persistence, passion and optimism. The founder will often need to introduce the principles of VP to the investors and to convince them that VP funding can deliver greater impact than other forms of social investing. Having a high-caliber CEO in place, investing personal capital in the fund and identifying a handful of initial high-quality SPO investments can help build credibility and encourage commitment from investors.

HR management

The composition and capabilities of the management team are critical to the success of the fund. Among the desirable attributes, recruits’ ability to share the vision of the VPO is as important as their analytical and people skills. Recruits should ideally combine social and private sector backgrounds, but at the start-up stage, fostering a learning culture and building a complementary team will be the first imperatives.

Governance

If the governance model of mature VPOs is likely to resemble the private sector one, the board will play an important executive role during the start-up phase, according to the specific needs of the VPO. The role of the board and its articulation with the management should be determined early on and may include:

Investment strategy

A carefully designed investment strategy will enable the whole organization to adopt a driven, focused and consistent approach on the operational level.  The items to be covered should include:

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