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Feature: European Venture Philanthropy and Social Investment 2011/2012: The EVPA Survey

Posted on by EVPA

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On March 1, EVPA released its second annual survey of European venture philanthropy (VP) and social investment (SI). It reveals that the European VP/SI sector continues to evolve rapidly and is becoming more sophisticated in the use of instruments to generate greater societal impact. In the second survey, the average annual financial spend per VP/SI organisation was €5.2m – a 27% increase on the previous year (€4.1m).

The objective of the survey is to provide independent data and to raise awareness about the impact of VP/SI originating in Europe. The report provides detailed analysis of the financial and non-financial investments made, and the investment strategy and investment practices of Europe-based venture philanthropy and social investment organisations (VPOs). The following are some of the trends detected.

  • A striking evolution is the shifting balance in return objectives: while societal returns remain the primary focus, more VPOs are now looking for a financial return (48% in 2011, compared with 38% in 2010) or are putting societal and financial return on an equal footing (25% in 2011, compared with 10% in 2010).
  • VP/SI organisations have become more sophisticated in their use of the entire range of tools to generate greater societal impact, including a focus on impact measurement, due diligence, co-investment, capacity building, effective non-financial assistance and exits, and further use of tailored financing. The use of tailored financing is evidenced by the significant increase in the use of equity and debt instruments, and in the variety of financing instruments. Debt and equity emerge as the most commonly used financing instruments, closely followed by grants.
  • European VPOs are increasingly focusing on social enterprise as a target investee and are continuing to invest in small organisations with limited track records. This indicates they are taking their role as risk-takers very seriously.
  • VP/SI is clearly filling a market gap by focusing on early-stage social enterprises and non-governmental organisations with financing tailored to their needs, rather than aiming to achieve market rate returns. In this sense it is complementary to the impact investing space surveyed by J.P.Morgan/GIIN. Although resources in the VP/SI sector have increased, more funding is needed for VPOs to create an even greater societal impact. EVPA is pleased to see an increased sophistication in the use of the entire range of VP/SI tools, but we have also identified some areas where more work is needed to develop best practice. EVPA is committed to continuing the research and promotion of best practice in the key components of the VP/SI model and reiterates the importance of a collaborative approach to develop and attract further resources to the sector.

    The survey collected data from 61 VPOs from July to September 2012. Many questions on general practice and strategy referred to the current status in 2012 whereas the key financial data provided was for the fiscal year ending 31 December 2011. The report is available to download free on the Knowledge Centre publications website. A printed copy can be ordered by contacting info@evpa.eu.com. European Venture Philanthropy and Social Investment 2011/2012: The EVPA Survey is available at a price of €25.

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