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Oxford’s Exploration of Venture Philanthropy
Hosted by Audrey Zhou, Henry Gonzalez, Keely Stevenson, Sujeet Kumar and Yandong Li (February 2005 - Closed)
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Special Guests
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A Warm Welcome to You! This week, a team of five MBA students from China, India, USA and Costa Rica has invited special guests and the Social Edge community to join them in exploring the challenges and opportunities for pioneering a Venture Philanthropy Fund at Oxford University. Venture Philanthropy (VP) is an investment approach to the funding of start-up and early stage social entrepreneurial organizations characterized by the high-engagement of funders in strategy, capacity building, performance metrics and governance. VP is growing as a practice in the UK and across Europe, and an active role of Oxford’s Said Business School and the Skoll Centre for Social Entrepreneurship could leverage and shape this effective investment tool for social change. As a part of Oxford’s MBA Program, a team of students has partnered with Rob John to carry out a New Business Development Project aiming to assess the viability of creating a VP Fund that would be used to pioneer and learn from a high impact philanthropic model in the UK which respectfully supports the accelerated growth of social entrepreneurial organizations. The purpose of the Fund will be two-fold:
Whether you are a seasoned philanthropist or someone who has never heard of VP, the team needs your help to shape the future of philanthropy in Europe by sharing your ideas for this investment tool and learning laboratory. To spark the conversation, here are a few questions:
To post a message for this discussion, type in the blue box below and push submit. If you are not a registered member, you will be led to a 5 second free registration process and then your message will be public. |
David Carrington
Lee Davis
Jed Emerson
Pamela McLean - Feb 12, 2005 5:24 am (# Total: 60) You invited introductions and questions
I am a volunteer with CAWD, as small UK charity that supports several grassroots community development projects in rural Nigeria. The projects are locally led. The UK link began through personal friendships - the charity registration came later. Details of how it started can be found on www.cawd.info Lack of resources has meant that the website has been neglected and is outdated – but it is a good record of the beginnings.
CAWD’s work has led to CawdNet. That network includes skills we have previously lacked. Within the next few weeks we plan to launch a new website (probably at www.cawd.net) to describe CawdNet – which is a “making things happen” network that has developed through CAWD’s networking.
CawdNet’s approach has been influenced by SocialEdge, by David Bernstein’s book, and by attending the 2004 Skoll Forum on Social Entrepreneurship. Until Social Edge we didn’t know the term Social Entrepreneur. We just knew that the way we were doing things didn’t quite fit in with the ways other people did things.
It’s hard to explain – we’d be using the same words – but somehow when it came to possible action, in their policy statements, and so on, seemed to want what we wanted. So we were pretty much on our own.
Personal friends “didn’t seem to get it” either… and it was hard to defend or explain the “Africa project thing”. It all fell into place and made sense when a speaker at the Forum started to describe things in terms of hybrid organisations – a mix of social/charitable initiatives and buisness enterprise. Exactly so! What a relief! At last we had words to explain ourselves.
Understanding our hybrid nature has led us to split CawdNet initiatives into CawdSocial projects and CawdEnterprise projects. People can relate to that. They know where they are with us now. We can simply say – “We are doing this as CawdSocial” or “This is going to be CawdEnterprise”. Then everyone knows which set of rules we will be working by and how to behave towards us. We would dearly love the brainpower and support of MBA students – working in the UK, or Nigeria, or a mixture of both.
We are based in UK and Nigeria. We make good and creative use of ICTs to maximise communication across the digital divide, and key CawdNet people travel between Nigeria and the UK. Site visits and field trips could be arranged if that was wanted, but good work of various kinds could also be done without them. “Information can go to students” if it is not judged cost effective or appropriate for “the students to go to the information”.
Much of the information related to CawdNet is as easily available in the UK as in Nigeria – although nothing beats a site visit for a proper reality check. Much of our work happens through ICT enabled meetings rather than face to face (not expensive leading video conferences etc – but affordable emails, yahoo chat, Skype and such like). Much of our work has to do with pushing available ICTs to the limits – and more - because we work in locations beyond the boundaries of the normal telecoms infrastructure - but that is a separate story.
So my question is – Do you have to limit yourselves to Europe – or could you stretch a point to include us? It’s not a big stretch, given that CawdNet was initiated by CAWD, which is UK based, and there is currently a genuine concern to address the issues of African welfare and development in new ways (CAWD: Charity for African Welfare and Development). Would you widen your boundaries and consider working with CawdNet? We would really appreciate working with you.
Pamela McLean - Feb 12, 2005 5:38 am (# Total: 60) The "hard to explain" pragraph should have read.....
It’s hard to explain – we’d be using the same words – but somehow when it came to possible action, the link wasn’t there. It was as if the words had different meanings for the people who were writing official documents and for us. It was odd, because in their policy statements, and so on, they seemed to want what we wanted. So we were pretty much on our own.
Keely Stevenson - Feb 13, 2005 9:25 am (# Total: 60) Royal Bafokeng Economic Board
Hello,
Thank you for sparking the discussion, Pamela-- its wonderful to see you on Social Edge. Your example is an important part of the issues we need to consider as we design this model, and I look forward to exloring it further.
I wanted to begin by thanking our Special Guest thought leaders and by warmly welcoming each of you who have joined us for this special online event. Please don’t be shy, jump in and share your opinions. We learned a lot from the Ready,Set,Engage discussion on Social Edge in October as well as from the launch of the Satter Social Entrepreneurship Fund @ Stern School of Business in NYU. These resources might be useful to people trying to understand the type of issues we are considering.
My component of the business plan is focused on the financial projections and modeling. This means that I am considering the best strategies, forecasts and limitations for capitalizing & growing the Venture Philanthropy Fund at Oxford as well as examining the various investment instruments we can use to support social ventures and manage our operational costs associated with that support.
We are most keen to hear where you believe the challenges and opportunities are in launching such a plan. My team and I look forward to exploring some of the possibilities with each of you over the week.
Warm Regards,
Keely
Yandong Li - Feb 13, 2005 6:15 pm (# Total: 60) Oxford MBA Student
Hello,
Welcome and thank you for joining the discussion. I am one of the five Oxford MBA students who launch this event. I came from China, a place where VP is most needed.
My responsibility of the business plan is to draw the organizational design of the VP funds. I am trying to find the best organizational structure enabling the VP fund achieve its two folds goal: an active VP fund and a teaching vehicle.
I am looking forward to sharing your insightful idea regarding the business plan.
Best Regard,
Yandong
Bruce Sievers - Feb 13, 2005 11:43 pm (# Total: 60) Hi Keely et al.,
I am checking in as one of your guest commentators with a couple of very brief questions about the nature of your new fund. As someone who has written critically of venture philanthropy in the past but also serves on the board of an organization that supports social entrepreneurship (NESsT), I am curious about your vision of the operation of your investment vehicle. Do you see it as sponsoring quasi-commercial income-generating activities within nonprofit organizations that you are assisting, or viewing the entire investing process as guided by venture capital principles? I am much more enthusiastic about the former than the latter, because I think establishing new forms of income generation for nonprofits is generally positive (assuming they can avoid "mission-creep"), while the attempt to translate the techniques of for-profit venture capital into the nonprofit world is fraught with problems, such as pushing organizations toward inappropriate and counter-productive performance measurement. So, can you say a bit more about what you mean by "providing financial and managerial support . . . for launching or scaling social ventures."? Thanks, Bruce
robjohn - Feb 14, 2005 2:09 am (# Total: 60) Rob John, Skoll Centre, Said Business School, Oxford
Thanks for the contributions so far. Early bird stuff, as Valentine's Day is only just dawning here in UK. I guess I'm the originator of this project - that my able team of MBA's is now pursuing with considerable energy and innovation, so I'd be happy to respond to Pamela and Bruce.
I've spent most of my professional life working for international development charities (so I have a strong resonance with Pamela), the last five of which were with a global microcredit network. The UK part of that network was set up in the early 1990's using (what today) we might call venture philanthropy. A long term, hands on engagement with a funder who added considerable value above and beyond the 7 years of grants. To those from the business world it looked like venture capital, except the return to the funder was social value not financial. To those from the charity sector it looked like a new and exciting way of working with a social entrepreneur, providing risk capital together with advice on strategic planning, marketing, communications, and access to networks of other funders. I was later asked by its trustees to run that VP fund, and for 4 years helped grow and develop the mission of social entrepreneurs using this powerful form of philanthropy.
VP focus is on building the charity's capacity to grow and develop, to get more mission out through the door. In my experience VP works well when the charity is ready for some degree of step change and positively values what the VP can offer beyond funding. A VP engagement may involve many years of funding and partnership, as the major provider of funds for organisational development (as with the microcredit network); or it may mean a more modest engagement in helping the charity exploit a new idea or income stream initiative - a little seed capital and some business planning advice. My experience shows me that VP funders need to be geographically close to their portfolio nonprofits. In the case of an international development charity this will primarily mean working closely with the UK part of that organisation (as with the microcredit example above). If the Oxford fund becomes a reality, I think we should initially focus on working with geographically near, relatively small charities, helping them develop a new idea which works towards their goal of extending and deepning their mission.
Bruce, I take on board you initial queries. Even calling this VP fund invites a lot of criticism before we're off the blocks - reflecting the trenchant debate in this area the last few years. I am talking about a grant based seed fund which adds value to its modest financing of a charity through releasing the business planning, marketing, communications and coaching potential that the School has in its MBA's and faculty. I would never stretch the venture capital model too far, this is about social return not financial. It may be that the best kind of fit for this Fund is in helping a charity expolit a new income stream, perhaps by developing an untapped commercial possibility. We could set up a small social fund and give away £5,000 grants to small charities; or we could set up a VP fund and make that £5,000 work much harder by bringing in the skills of the School and motivated MBA's.
Let's develop what these 'skills' are, and how they might be delivered, as the debate continues this week.
Best
Rob
Pamela McLean - Feb 14, 2005 4:15 am (# Total: 60) Ref your mention of: “grant based seed fund…. releasing the …….. potential that the School has in its MBA's and faculty…… set up a VP fund and make that £5,000 work much harder by bringing in the skills of the School and motivated MBA's.”
What is described above is what I understood the relationship to be about i.e. # The social entrepreneur brings knowledge of the issues - the problem to be addressed and the practicalities of how to solve it, local knowledge, networks and enabling skills within the community etc. # The MBA students bring the organisational and business skills that are needed to set things up and get them running efficiently. # The VP fund ensures that the money is there to make it happen.
As I understand it the fund is the vital ingredient to make the collaboration a worthwhile practical exercise, rather than simply a theoretical one. The VP fund would enable action to be taken. If the money is not there to carry through what the MBA students suggest then such a collaboration could turn out be a useful exercise to the MBA students, but just a big tease to the social entrepreneurs.
Without money to follow through, the collaboration could even be counterproductive because of the disruption caused; the opportunity cost to the social entrepreneur of enabling the students to really understand what is going on; and the difficulty of living with the subsequent disappointment of falsely raised hopes. How horrid to know what transformation would be possible given the MBA insights, skills transfer and structures “if only we had the money……”. And I mean real money – not pointers to potential funding sources that take time and skills to apply for and may or may not lead anywhere in the end.
I hope the VP fund will enable MBA student expertise to translate into long-term reality and experience for their host social entrepreneurs.
hgonzalez - Feb 14, 2005 7:35 am (# Total: 60) Oxford University -Said Business School-
Dear all: I am a member of the MBA team who will benefit greatly from this discussion, and also hope to contribute in the on-going discussion of financing the citizen sector.
In this specific debate, we are keen to learn from the experiences of people who have beein around the setting up venture funds as well as from those who have received them and created social value as part of this funder-recipient partnership.
The goal of our team is to design a "business plan" to set up a Venture Philanthropy Fund" based at Oxford's Business School. We hope to gather a lot of the information we need from this discussion, and Bruce's, Pamela's and Rob's comments are already on this way.
Bjorn - Feb 14, 2005 11:07 am (# Total: 60) SV2 (Silicon Valley Social Venture Fund)
So, my name is Bjorn and I manage a venture philanthropy giving circle in Silicon Valley. I have a few points…
1) While bright ideas are the lifeblood of the social sector, money is like Oxygen. Whatever you do, you need to provide enough funding to make it work. You need more than just a business plan, more than a marketing plan, you need the resources to implement those plans… fewer relationships at higher funding levels is probably much better than the broad and shallow approach.
2) Remember, your alumni are not the service providers, not the one's doing the work (most likely). Your interactions need to be respectful that the orgs you are helping are probably the experts in their areas... the social sector works differently than the for-profit world and the main criticism of the field has come from people who come in with an "I know best, listen to me, change according to my input" kind of mentality.
3) I have a personal bias against funding capacity based on a written proposal. Proposals are a polite fiction that are really not well suited to getting at the root of capacity weaknesses. McKinsey has a great capacity assessment tool that could be used to identify those issues, but you probably need to commit to an organization before they let you see all their dirty laundry.
Pamela McLean - Feb 14, 2005 11:07 am (# Total: 60) Bruce mentioned “pushing organizations toward inappropriate and counter-productive performance measurement.”
As I think about the realities (potential benefits and disadvantages) of MBA student collaborations with social entrepreneurs, I replay, in my mind, various experiences that our organisation has had in linking with “outsiders” from organisational structures unlike our own. I won’t detail the examples here but just the resulting observation.
It may be worth emphasising that social entrepreneurs work with all kinds of “invisible capital and currencies” (goodwill, shared vision, commitment, hope, trust, persistence, voluntary help, in-kind donations, etc) that can be disrupted, and which have to be managed and maintained just as carefully as other more visible currencies such as our cash-flow. These currencies are hard to quantify or explain; yet we have to balance all of them. There may well be hidden costs in improving the bottom line
Pam CawdNet
audrey_zhou - Feb 14, 2005 5:27 pm (# Total: 60) Oxford Business School
Welcome to Oxford VP Fund forum.
I am in the Oxford MBA team working on this business plan. My responsibility is to design a business model to run the Fund, which covers the issues of how to become a partner, how to apply to be an investee, and selection criteria.
We would very much like to have you involved in our discussion. Your contributions are highly appreciated.
Serena_Porcari - Feb 15, 2005 3:02 am (# Total: 60) CEO Fondazione Dynamo
I am Serena and I am managing as CEO a Venture Philanthropy foundation, born in Italy in April 2003. The name of the Foundation is Dynamo - Engine of Philanthropy. The founder is a Venture Capitalist who, in his early 44, realised that after several experiences in sustaining non profit organisation, wanted to build up his own foundation inspired to the model of venture philanthropy. Even if the foundation is pretty new to the non profit world, it has been a steep learning curve. The initial intuitions and then the critical success factors of Dynamo are: - the founding Venture Capitalist company covers the operating cost and the initial set-up capital for Dynamo. There is no investment fund dedicated to grantmaking. - Dynamo aggregated several professional partners, who donate pro-bono hours to manage projects (Bain &Co., TBWA, ASA Executive Search, several legal firms, KPMG and many others), covering various business skills. The idea is to engage their competences with the help of Dynamo to sustain social entrepreneur and existing organisation in exploiting their mission and/or their non profit ideas. - Dynamo potentially covers all the life cycle of the idea-project- initiative. I am saying potentially as our work is just at the beginning. Every project/initiative would have a dedicated fund-raising with a committment of Dynamo to cover from 10 to 20% of the capital required. Usually the investment campaigns aims at covering the seed capital and at least 3 years of operarating cost. I personally joined Dynamo in April 2004, after some experiences in Venture Capital and 8 years of career in IBM, in Italy, France and UK. By the way, I love to be part of this online discussion, as I personally strongly believe in the power of technology to enhance communication and to boost many social ideas.. I agree with Bruce. The Venture Capital model should be reviewed and applied correctly to non-profit initiatives. Dynamo believes on the importance of providing all the skills to sustain development and growth and on the sustainability of what we support in the long term, which often is related to economic and commercial activities.
robjohn - Feb 15, 2005 3:50 am (# Total: 60) Rob John, Skoll Centre, Said Business School, Oxford
Just to pick up on Pamela's point. The whole time I've spent working in VP, I see the combination of smart money (i.e. not funding the projects but funding the core cost needs of developing the organisation) and the right kind of advice/support as the synergy which makes VP work. There are funders that provide cash only; there are some providers that offer advice/support only. Either's good, but the combination, in VP, is powerful. To be realsitic, this Oxford fund is not envisaged to be a full blown VP operation. The sums of cash available will be modest, but none the less I think valuble, when leveraging skills, advice and support from the School.
Absolutely agree with Bjorn's comments. Any 'we know best' attitude will fail from the start. It's the hubris that caused so much early criticism of VP. All we bring to the table is a combination of skills and cash. The real capital comes from social entrepreneurs, which as Pamela says, is often an intangible kind. We need a mutual respect, humility and real understanding of what each brings to the table.
hgonzalez - Feb 15, 2005 5:27 am (# Total: 60) Oxford University -Said Business School-
In just our first day of discussion, we have gathered provoking ideas regarding the limits and opportunities of Venture Philanthropy. This is just great since it is part of our intention.
On the other hand, benefiting from Bjorns experience in managing a VP giving circle I wanted to ask how donors evaluate/assess the impact of their giving? This question rather than addressing a model per se, would hope to learn from specific metrics (probably several ones) that have satisfied various donors.
I am sure that Serena also has ideas to share regarding impact assessment, and we would also be interested in learning from Dynamo's governance structure since this particular issues is being discussed by our group.
Thanks to all for sharing such great ideas, and will follow closely to your comments.
schiles - Feb 15, 2005 9:46 am (# Total: 60) NYU Stern School of Business
Hello All-
My name is Sarah Chiles and I am the director of the Satter Social Entrepreneurship Fund at NYU Stern School of Business. We launched the Fund last academic year with $300,000 in seed funding from a Stern alumnus. NYU Stern's Satter Fund has been set up to support and foster social venture creation among members of the NYU Stern community. The Satter Fund, modeled on a venture philanthropy fund and a first among business schools, operates as a competitive market run by highly engaged grant makers. Project proposals compete for grant funds based on their measurable return on investment, both financial and social. The Fund provides start-up assistance to promising Stern-affiliated social entrepreneurs, including students, faculty, alumni and staff. In addition to grants of $25,000 to $100,000, the Satter Fund provides management assistance to the grantees. An Advisory Board comprising practitioners, faculty and administrators awards grants annually to support new projects. All applicants are required to submit a Letter of Inquiry and Full Proposal using our online system, and then our Board hears presentations from the "semi finalists" to meet the management team face to face.
The management assistance we provide comes in several forms: we work with the grantees on their business plans and financials, link them with alumni mentors based on functional and industry need, give them pro bono legal, consulting and accounting assistance through our corporate partners, and monitor their progress through simple reporting requirements. We also keep them top of mind for networking opportunities and help them further potential future funding relationships.
This year, we have also added a new Social Venture Fund Practicum course which allows Stern MBAs to manage a $100,000 social venture fund of their own. As part of this course, the students are working with our new set of applicants to the Satter Fund to assist in their business planning and presentations to the Board.
Obviously, there are more details from our experience thus far I can provide, depending on the specific issues the group is interested in discussing. Having read through all the previous posts, I'm eager to learn from this discussion and be a part of further the discourse around how b-schools can support social entrepreneurship.
Thanks!
Bjorn - Feb 15, 2005 10:58 am (# Total: 60) SV2 (Silicon Valley Social Venture Fund)
Often times there is a two-way benefit for Venture Philanthropy, where the person volunteering their time/expertise is seen as deriving a great deal of personal fulfillment or personal growth from the act of volunteering. For SV2, we look for the success of the grantee AND the growth of the donor, so success has two dimensions.
This would be very much less the case with an institution like the Edna McConnell Clark Foundation, where professional program staff are the ones working closely with the grantees. Their success is going to be solely derived from the success of the grantee..
Yandong Li - Feb 15, 2005 3:23 pm (# Total: 60) Oxford MBA Student
Thank you for insightful ideas!
Agree with Bjorn,money is like Oxygen. To bring Oxygen in, VP funds needs to prove their add value capacity to win donation as VC funds do to attract investment. We are trying to design a small yet unique organization which would ensure this capacity, an organization allowing a group of people, including VP experts, social entrepreneurs, and scholars and MBAs…., work efficiently, innovatively, and passionately.
This brings my question to Sarah Chiles: As the leader of the first VP fund ever established in a business school, what you think is the major success in term of organizational design for NYU Stern’s Satter Fund? What will be the difference, in your view, between NYU model and Oxford one, given the differences in vision and location between two?
Thanks,
Alex Nicholls - Feb 15, 2005 4:53 pm (# Total: 60) Skoll Centre for Social Entrepreneurship
Hi everyone. I am Alex Nicholls, the university lecturer in social entrepreneurship at the Skoll Centre in Oxford. It has already been my pleasure to work with Keely, Henry, Rob and others on various social entrepreneurship projects at the Said Business School and I want to congratulate the Oxford VP team for catalysing this useful and interesting discussion.
I have a couple of quick observations.
Firstly, it is worth noting that there is an established track record of financial support for socially focussed business projects at the Said that goes back to 1998. This has largely taken the form of an alumni-supported resource called the Community Fund. Indeed, when I did my MBA at Oxford in 1999-2000 this fund covered the costs of our travel to Belize to do some fieldwork on an eco-tourism project. Consequently, there is an important tradition of Oxford MBAs putting their money where their social mouths are and I see this putative VP fund as being the logical – and very welcome -conclusion of this tradition.
Secondly, as our friends at Stern have already noted, there are a number of other interesting student-lead support models for social entrepreneurs already in existence. Whether it is the Setter Fund or the more broadly focussed work of Net Impact and New Sector Alliance, new forms of campus-driven social entrepreneurship are emerging across the world. It seems to me that the Oxford VP group may have much to gain from networking some key learning across these diverse players to leverage more resources into social ventures in a coordinated way to maximise social impact. Several of the VP team will be travelling with me to the important social enterprise event at Harvard in March and I hope we can build some useful links then. It strikes me that this is an approach that a number of much bigger foundations could benefit from!
mrsujeetkumar - Feb 15, 2005 5:06 pm (# Total: 60) Oxford University
Hello,
Thanks for ur valuable insights. I am one of the five MBAs, working on the modelling of the VP Fund.
Performance measurement has always been a big challenge for the donors/ VPs, particularly given the myriad ways in which impact ( and I mean social impact & outcomes) can be described & quantified. In this context I am keen to know what are the "inappropriate and counter-productive performance measurement", as mentioned by Bruce.
Sarah, could u kindly explain, how does your Board finally decides which projects/ proposals to accept/ fund. I mean, what criteria does the Board adpot, before being satisfied that a particular proposal has the potential to add value to a social mission. Moreover, what reporting requirements do u adopt to monitor progress.
Thanks again to everyone.
hgonzalez - Feb 15, 2005 5:44 pm (# Total: 60) Oxford University -Said Business School-
It is great to see the discussion going so well. Alex brings a very interesting approach to the importance of leveraging existing networks into the VP model and the need to maintain synergies as more players get into the field.
Regarding VP Funds based at Business Schools, I believe that it brings enormous value to students, alumni, faculty and the community of social entrepreneurs as a whole. It can be used as a "hands-on" teaching vehicle where students can experience the due-deligence process to allocate a grant, create a new venture business plan, and even make an entrepreneurial idea into a reality.
However, there are some issues that we as "the team" working on this business plan have debated, and NYU's experience and everyone else's point will be highly appreciated in discerning the following:
-Niche: Where is the best place to locate this fund within the Business School? Should it exist with a separte indentity? Or can it leverage from existing research centres that share a similar mandate? If so, what structure would it be needed in order to ensure delivery and effectiveness
-Continuity: How can the VP structure maintain ownership from the students and alumni body given the high turnover of cohorts in a one-year MBA. Can any of the governance instances take care of this?
-Reality check: What mechanisms could be put in place in order to ensure a balance between academic interests and those of practioners as projects get funded? Shall we fund start-up projects only? Or can we also fund for expenses related to institutional and capacity building?
These as well as the issues of organization structure posted by Yandong, and performance indicators are of great importance for our team as we try to gather data to make the most feasible and "down to earth" business plan.
Many thanks for all the input and let's keep this discussion going!!
Cheers. Henry
Serena_Porcari - Feb 16, 2005 2:08 am (# Total: 60) CEO Fondazione Dynamo
Two comments on impact assessment and governance.
The main project we are managing is the design, construction and management of a Summer Village for children with chronicle illnesses. We have been working with the US Association (Association Hole in the Wall Camps) who has been managing such summer camps for children since 1988; with the help of Bain&Co. we started developing a business plan including all the aspects related to the village and the economic performance (start-up capital & operating expenses). In this specific case our board (made by several skills, from consulting to investment banking) decided to support the project for several reason, after two months of due diligence for the following reasons, which are very aligned with DYnamo's mission and capabilities:
- the project is absolutely innovative: in fact, this is the first project of its kind in Italy
- the complexity of the project requires careful planning and organization on multiple levels
- the project will involve various partners active within the Fondazione Dynamo network on an operational level
- the development of the project will create new partnerships between the public and private sectors
- the project will create the opportunity to collaborate with an international network on a high level
- With Bain we developed an impact assessment metrics based on the difference benefit of the stakeholders group. If you want I can provide an example.
I do not know if it helps, but it is a concrete ongoing example of how we are working as venture philanthropist.
In terms of governance some comments on how we are organised, which very much depends on local legislation. We set up a "Fondazione di Partecipazioni", with the following characteristics:
- the founders are defined at the beginning. The capitalise the foundation and they manage the important decision (fondatori promotori). They are the initial board members
- there is another group of founders who can participare economically to the foundation and who can elect 1-3 members to the board
- there is final group of participants to the foundation , who can support in various ways, without any ingerence into governance. You can imagine to have also the local government as participant.
The foundation can own the 100% of a commercial company which should not distribute profit but which can manage and run commercial activities, with a better fiscal treatment. If you are interested to understand more which could be the similar organisational structure in the UK, I can check with our pro-bono legal firms.
David Rankin - Feb 16, 2005 12:35 pm (# Total: 60) The discussion looks great so far!
I am David Rankin, Vice President for Programs at the Great Lakes Protection Fund. My team provides financial support (debt, equity or outright grants) for projects to improve the health of the Great Lakes ecosystem. We are a private, not-for-profit corporation, but not a charity. I agree with Serena that governance design strongly depends on the form of the organization, which in turn depends on the legal/statutory environment where you choose to organize/incorporate.
My background includes experience leading initiatives in government and the not-for-profit sector. I have an undergraduate degree in environmental science, and an MBA (finance and strategy emphasis).
I am very intrigued with Bjorn's personal bias against funding capacity based on a written proposal. I strongly agree that proposals are "polite fictions." So this prompts two questions: Bjorn, do you have a template term sheet that you use to structure your support? If so, are you willing to share it? I, for one, would be very interested.
My offer is this- I am willing to review/comment/discuss concepts or draft documents related to the Oxford initiative (or any of the others already identified above), if the authors believe that I can add value.
I look forward to this session!
drankin@glpf.org www.glpf.org
schiles - Feb 16, 2005 1:36 pm (# Total: 60) NYU Stern School of Business
I want to try to provide some information from our experience to answer several of the questions that have come up.
But first I want to invite you all to our Conference of Social Entrepreneurs: Financing Start Up Social Ventures on Friday March 4th at the Stern School. I noticed some of you from Oxford will be here for the Harvard conference on the 5th and thought you might want to come here as well!
In reference to the board decision making process and reporting requirement questions:
We have put together evaluation guidelines that cover everything from the clarity and reasonableness of the organization's theory of change, venture model, marketability, management team, social impact assessment, financial plans, and overall feasibility of the plan. In the end, it comes down to a subjective decision by the Board after much discussion as to whether the venture can achieve significant social impact.
-Niche: Where is the best place to locate this fund within the Business School? Should it exist with a separate indentity? Or can it leverage from existing research centres that share a similar mandate? If so, what structure would it be needed in order to ensure delivery and effectiveness
Our fund is really focused on social entrepreneurship as opposed to venture philanthropy. In that way, we felt the Fund was best located in our entrepreneurship center where we could bring all the programs and resources of the faculty and staff to bear on the success of the ventures.
-Continuity: How can the VP structure maintain ownership from the students and alumni body given the high turnover of cohorts in a one-year MBA. Can any of the governance instances take care of this?
For us, we launched the Satter Fund as an entity administered by the School but supported by students through our Practicum course.
-Reality check: What mechanisms could be put in place in order to ensure a balance between academic interests and those of practioners as projects get funded? Shall we fund start-up projects only? Or can we also fund for expenses related to institutional and capacity building?
For Stern, we wanted to leverage the mission and resources of our entrepreneurship center so we focus our support on only start up projects. This is the target of our broader programs.
Look forward to continued discussion.....
Jeff.Mowatt - Feb 16, 2005 2:06 pm (# Total: 60) P-CED
I'm Jeff Mowatt, the sole sponsor of P-CED, incorporated in the UK as a guarantee company just under a year ago. We tried hard to find such a venture philanthropy at that time, proposing a business model competing in the UK for-profit world to deliver surplus revenue to moral collateral based microfinance, orphan aid and education projects in Eastern Europe.
We were obliged to exit the UK because such start-up funding didn't exist at the time, finding a three way division in this area of funding - Charity, bona-fide cooperative and venture capital. Our organisational model was incongruent with all of these, aiming to be a social enterprise in every aspect of this paradigm.
We're located in Eastern Europe now, largely because of this.
I'm very concerned about the way social enterprise is being promoted in the UK finding that government right to the top isn't responsive to what it's preaching. I may yet be proven wrong but having approached the APPG on Social Enterprise on this very subject as a final resort 2 weeks ago, I have to conclude that I'm not going to get an answer.
What is it that makes this area so inaccessible I wonder? I'm pretty sure I understand the words that are being said but there's this feeling of being locked out, perhaps for lack of academic credentials, maybe being seen to be stepping into someone else's domain. I can understand that, I'm British after all.
Venture philanthropy start up assistance will be a welcome change nevertheless.
Regards,
Jeff Mowatt
audrey_zhou - Feb 16, 2005 5:18 pm (# Total: 60) Oxford Business School
It's great to see the discussion is going well so far. Thanks a lot for everyone's sharing.
I am one of the five MBA students working on this business plan, particularly in the field of designing a business model for Oxford VP Fund. This is a critical component.
Would anyone kindly shed light on this topic? i.e., what selection criteria is used to assess an application? How to become a partner of Fund? How to run the grant committee?
Thanks again!
kiranmenon - Feb 16, 2005 10:09 pm (# Total: 60) The Footprint
Hi everyone,
I am a Social Entrepreneur from India who runs 'The Footprint'. We are in the field of Corporate Social Responsibility and integration of Sustainability in corporate processes and technologies.
At present I am also mulling the launch of a Social Venture Fund for the region. The Venture Fund would be one of the only such ventures in this part of the world. I have been in touch with some of the 'big' players in the sector across the globe.
One of the biggest issues that philanthropic funding has seen - at least in this part of the world - is the disconnect between the funders and the social change that takes place on the ground. large philanthropic funding comes from international funding organizations or philanthropists and this poses a great challenge - The funders NEVER get to see how and where change is being created by using their funding!
To tackle this problem one of the solutions we are working on - with the Venture Fund I am looking at launching - is to tap the social responsibility and philanthropic budgets of companies in the country. This ensures the proximity of the funders and the organizations.
Also, one of the critical issues that we have identified is the lack of Strategic and Operational Management skills amongst the not-for-profit community members. Therefore the Venture Philanthropy model was the best solution that has come up in the recent past. Through the VP route, stress should be laid more on capacity building and strategic management rather than on the funding opportunity that exists!
I would also like to throw out a 'heads up' as far as the management team of the fund is concerned. It is imperative that the team is diverse in its skill sets and includes those that have experience in venture capital management and capacity building efforts in organizations. The critical factor is to draw the balance between operational management, funding and portfolio management for the Venture Fund.
These are some of the issues that has been identified and some of my views that I have written about... Wanted to end this message by commending those that have initiated this dialogue.
Kiran Menon www.thefootprintonline.com
Rachel Elliott - Feb 17, 2005 2:44 am (# Total: 60) Ibstock Community Enterprises Ltd
Hi - its all good stuff but are we talking the same language?
What do you mean by 'social enterprise' - flawed as it is, I would want to stick to the DTI's definition. This excludes corporate social responsibility and voluntary sector becoming more enterprising in its approach. However, I would want to strengthen the definition by looking at issues of ownership and governance.
I think we have a lot to learn from our forebears in the co-operative and mutual sectors. However, many within the sector in the UK would argue that these are now on the fringes of our world.
My next problem is the way in which the UK uses the term 'venture capital'. This implies a significant financial return for investors. Almost without exception, the legal forms that UK social enterprises use mean that they cannot make this type of return to investors.
I would always want to argue for the equal validity of social or environmental returns on investment but unless we develop suitable metrics for measuring these we will always struggle to make these as valid as financial return.
If the proposed fund needs to be self-sustaining, and generate sufficient surplus to cover its own admin costs, then it must make some financial return. Usually, for UK Social Enterprises this will mean loan finance rather than equity shares. As yet, most of us struggle to generate sufficient income to make repayments at commercial levels.
So these are the challenges as I see them. Sorry to be such an anorak but I think if this is to work we need to be very clear what we all mean. Only then can we move forward.
You might want to check out the evaluation work that Stephen Thake has been doing on the Adventure Capital Fund. This is available on the new economis foundation website www.neweconomics.org, along with lots of other interesting stuff.
Toby Beresford - Feb 17, 2005 2:58 am (# Total: 60) MicroAid
Hi all, Good conversation and good project.
Brief intro: I run MicroAid using the internet to transfer technology and knowledge to community groups worldwide. See attached summary file for more about our Community Group Online Centre subscription service.
I have a couple of 'imagined' questions intended to stimulate discussion on the project:
The Sierra Leone Question I am in Aberdeen Road, Western Area, Freetown, Sierra Leone. I want to help local people become economically empowered and relieve poverty in my local area. How will your VP fund affect me? How will I access it?
The Tonbrige Wells Question As a philanthropic investor I might be prepared to purchase £100 worth of units in your VP fund and keep them for three years, after which point I'd like to sell them and get some or all of my original stake back. I don't expect any financial increases in my investment however.
Can you offer a social return on that money each year? As an investor I would want to see that social return in tangible, measurable terms. This would allow me to compare funds to identify where my social money is best invested. My preferred measurement would be related to number of economically empowered poor rural women in sub saharan africa but I'd be prepared to settle for what you can measure.
Good luck with the project. Looking forward to seeing you all at the Skoll Forum.
Kind Regards Toby
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Pamela McLean - Feb 17, 2005 7:20 am (# Total: 60) Kiran Menon writes “Also, one of the critical issues that we have identified is the lack of Strategic and Operational Management skills amongst the not-for-profit community members. Therefore the Venture Philanthropy model was the best solution that has come up in the recent past. Through the VP route, stress should be laid more on capacity building and strategic management rather than on the funding opportunity that exists!”
That is certainly true for CawdNet. We do need money – of course we do – but pitifully small amounts by the standards of business. What we need enormously is to get some kind of business head on our shoulders.
We are good at understanding problems, recognising potential solutions, mobilising people to help, and getting things done in ways that work locally. When it comes to money matters and business we are pathetic. We recognise this. We are ignorant to a level any business- person would find hard to imagine.
Pamela McLean - Feb 17, 2005 7:45 am (# Total: 60) In a previous email I commented on CawdNet‘s lack of business acumen. I need to clarify that. CawdNet is a network linking various individuals from a number of different organisations. Those organisations include projects which are run in extremely efficient and business like ways. I think particularly of the micro-finance bank run by Fantsuam Foundation. I think also of Muji Lawal at the Ago-Are InfoCentre and her meticulous records and accounts.
The “pathetic” approach to business which I referred to lies more at the very core of the CawdNet associates – especially with me and one of my close colleagues. We are the two people most likely to come up with ideas for what we should be doing – but lack the business background to help us with costings, negotiating and generally putting ideas onto a firm business footing. From a business point of view we are probably our own worst enemies.
I hope this puts the record straight, and ensures recognition of the business professionalism of other people, in established projects, related to “the CawdNet family”.
robjohn - Feb 18, 2005 9:04 am (# Total: 60) Rob John, Skoll Centre, Said Business School, Oxford
So many thought provoking posts the last few days.
Serena: glad to hear what's happening in Italy with Dynamo. You say Bain helped in the early business planning. Is the firm still involved with ongoing strategy consulting? Do you have tips on how a VP fund partners with a firm of consultants? What are the oppprtunities and limits of such a partnership?
Toby: Good to know that MicroAid is still thriving. You mention being able to demonstrate that someone who puts money into the fund can see a social return, even on an annual basis. If wonder if that is harder to capture for us. We probably will want to invest our cash and skills building some aspect of the organisational capacity of a nonprofit - if the inputs are successful, it leads to improved mission, which in time is measurable (with the caveat of correctly attributing our inputs to improved mission). This would be harder to measure and report than, say funding the organisation's project work. How can we do that?
Rachel: On the fund being self sustaining. Well that's a moot point. Does it have to be? We could aim for the fund to use a mix of grant and loan, with probably a small proportion of the total spend recycling a few times. This way the fund would run down over time unless topped up. We're only using the term venture capital to describe a form of financing where the investor is engaged with and adding value to the organisation being invested in. For us, this hands on approach is about bringing in skills and advice not receiving a financial return. If the fund demonstrates it can add value beyond the cash value of its grants, I hope that will attract others to invest in the fund and keep it rolling.
Kiran: great to get a contribution from India, a country that must have the biggest community of social entrepreneurs. A few years back I came across Impact Partners, a VP fund working out of Mumbai, which funded the start up of Magicbus India, an amazing outfit working with street children. Impact raised its capital through the NRI community in New York's financial services industry. I don't know if Impact is still active, but Magicbus is thriving. It always struck me that India had so many of the right ingredients to make VP effective, and indeed didn't really need cash from Indians abroad. Is there a business school in India we could link up with who might want to explore a the VP approach with us?
Sarah: Thanks for the input and offer for some of the team to visit what you're doing at Stern, that would be very instructive, if we can make it work out. The Satter fund was our initial inspiration - thanks!
Rob
Toby Beresford - Feb 18, 2005 9:49 am (# Total: 60) MicroAid
Hi Rob
Thanks for the reply and kind words about MicroAid.
On measuring capcity improvements, I agree with you and think it is fine as long as the indicators reported back to the investor are linked to the results of the capacity improvements and not to the improved mission. This will allow the investor to make direct comparisons as to effective use of funds which I think is crucial to the success of a Venture Philanthropy fund.
i.e. if we're a healthcare provider (say a diabetes disease management unit) and the new funds allow us to hire a salesperson selling additional preventative healthcare tools to our patients (an easy to use glycometer for example), we would expect to see results measured in the form of increased glycometer sales and income.
There is then an implicit link to mission improvements in this - that more patients self-regulating using glcometers means less diabetes complications.
As an investor I would be happy with this, as long as it was left implicit. If it was made explicit then you're quite right I would be project funding rather than capacity funding and might argue that my funds would be better spent simply buying the glycometers for the patients myself!
Toby
Serena_Porcari - Feb 18, 2005 10:28 am (# Total: 60) CEO Fondazione Dynamo
Rob,
Yes, Bain & Co'S Milan Office is still consulting the project. Once Dynamo started we signed with them a contract for three years and we agreed on a number of man days per year which Bain donates to Dynamo and its project. We are their single pro-bono activity in Italy and the partnership is very successful. Dynamo is staffed as a normal project and people are selected on a volunteer basis.
In my opinion the relationship is very positive if:
- the project selected are ambitious, complex and relatively long (more than 3 months) to leverega competencies and scale of the consulting firm
- The projects selected are innovative an potentially visible
- There is a good people relationship between the management of the VP fund and the consulting firm's partners
Some drawbacks could be:
- I think it would be difficult to manage specific pro-bono partnership with more than one consulting boutique;
- It is complex to manage correctely pro-bonos versus a market with consulting fees, which is becoming very active and competitive also for non profit...
Pamela McLean - Feb 18, 2005 3:39 pm (# Total: 60) Returning to what Kiran Menon wrote “The funders NEVER get to see how and where change is being created by using their funding!”
Interesting point – and a very encouraging one for us at CawdNet, as we try to discover how to engage with the social entrepreneurship community and to find possible partners and friends. Often when I read what funders want it is depressing – somehow it doesn’t seem to relate to us. But what Kiran says – people wanting to know how and where change could be created - now that is something we can respond to. We can provide information in plenty.
Our whole purpose is to enable information to flow. CawdNet is an information hub, reaching out equally to the connected communities on the Internet, and the rural communities that we serve in Nigeria, who are beyond the limits of the normal telecoms infrastructure. We are longing to find people who would like to see what we are hoping to do (and already doing) who would like to see changes created by their funding. We struggle to fill in the kind of forms that funders require - with measurable objective that don’t seem to capture what we are really trying to do. The attachment gives you a flavour of “our kind” of information. There is an explanation, a link to a short video clip (of local people giving feedback) and a couple of photos.
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Pamela McLean - Feb 18, 2005 6:37 pm (# Total: 60) Thanks to SocialEdge and the MBA students for arranging this discussion. I have the impression it was just for a week, so if that is correct it will soon be drawing to a close. I have appreciated mixing with people who have such varied areas of expertise.
Looking back it has been a rich learning experience – I have been thinking what I learnt and the influence of the week – written in the attachment.
Many thanks to all contributors for what I have learnt (and what my CawdNet associates will learn) as a result of this discussion – and thanks in anticipation to the organisers of the forthcoming Skoll World Forum … Roll on March 30th.
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Keely Stevenson - Feb 19, 2005 2:49 am (# Total: 60) Royal Bafokeng Economic Board
Wow! I must say that I am thoroughly enjoying this dialogue and deeply appreciative of the thought and time that each of you are contributing. Pamela, your document was wonderful! We will actually run this through to Tuesday, so we have 4 more days. Here’s a few things I’ve heard from the community the past few days:
>> A VP Fund’s promise of quality ‘managerial support’ to complement financial support for social ventures must be authentic and upheld appropriately. Value of Leverage: a little bit of good unleashes a lot of good if in the hands of the right social entrepreneurs at the right time—wasting their time with unnecessary process or irrelevant metric/measurement expectations would put the Fund’s mission in deficit. Being cognizant of the cultural differences and values of NGOs/social ventures and private business/venture capital is vital for designing goals, processes and procedures.
>>Are we speaking the same language? The discussion has been useful in exploring the range of possible Fund activities and the values driving those activities. We are getting some clarity to determine the Fund’s coordinates on the axis of funder engagement (high to low) vs. financing type (philanthropic to commercial…associating return expectations on grants, loans, equity appropriately). I agree w/ Rob, and I imagine us to be on that NW corner of the axis where we focus on (respectful) high engagement grant partnerships, perhaps evolving a small component of the Fund into loan offerings. We might also be able to partner with the b-school’s new Venture Capital Fund in terms of issues related to equity in social enterprises, but this would not be our primary focus.
>>Evident through sarah's stroy at NYU, the affiliation with a University provides a unique network of resources which can be coordinated and focused on the social ventures. The question of by Yandong of where to legally structure this (within SBS, a community foundation, as an independent charity) all seem to point to being a fund within the school. How we can synergize the faculty consultation/research capacity, alumni consultancy/donations, MBA class time/talent will be key to success in effective budgeting for quality services, and more importantly community building. How we tap and manage probono external resources through partnerships such as the one Serena describes with Bain & Co or with knowledge sharing among other b-school and VP Funds as mentioned by Kiran will be equally important.
So, drilling down a bit to more detail, what would it take to operationalize this? As I mentioned, my component of the business plan focuses on the financing (strategies for raising capital and instruments for investing it).
On Practical Aspects of Fundraising:
So far, offline advice says that we should look to high net worth alumni or corporate donors to capitalize the VP Fund and then look for finding on an ongoing basis. However, Oxford’s business school is relatively new which means we have a smaller pool than most, and most students come from countries that do not have core cultures of philanthropic giving supported by tax benefits. It is my understanding that here in the UK, it is not common practice to ‘give back’ to your university. What should the source of funding look like? Bundling donations of many individuals, one major donor, corporations, foundations, all of the above? What’s a comfortable amount to launch the fund…how shall we set our targets?
Should we plan phases and eventually spend the fund completely down over 5-7 years?
For example, we could raise 1 Million to launch it as has been suggested to us in an offline interview, and then invest/grant 200,000 annually over five years (25-50K per social venture, most being renewed for 2-3 years). We could continue to provide capacity support a few years following the last grant and then spend a year analyzing the impact of the Fund overall (perhaps a doctoral student @ Oxford could lead this). At that point determine whether the Fund’s success deems another more sustainable grant or whether it could be considered an experiment whose lessons learned contributed to the field as a whole. I guess that leads to another question: What does success look like specifically for the VP Fund? If transparency and accountability are important to us, then we must think clearly about meaningful and rigorous measurement of our own success from outputs, outcomes and impacts which balance our goals of strengthening our social venture partners as well as teaching and learning about VP in the UK.
OK—lots of great ideas you have shared… keep them coming and thanks again!
tutormentor - Feb 20, 2005 9:36 am (# Total: 60) Cabrini Connections Tutor/Mentor Connection
I've been in a lot of generic forums where concepts of investment or uses of technology are discussed, but few where they are part of a knowledge base or a focus on a specific problem. For instance, my organization focuses on connecting business volunteers with innercity youth in long-term strategies that result in these youth entering jobs and careers by age 25. We use maps of Chicago to illustrate that the city has almost 200,000 kids who need such help and that there are many neighborhoods and many different programs where a volunteer, business or investor could begin a long-term commitment.
However, there are few knowledge libraries that these volunteers, investos, etc. can go to where they can learn from what others are already doing, collaborate with peers on learning, capacity building or quality improvment, or innovate new ways to lower costs or improve results in all programs, not just one or two.
I've approached business schools at Northwestern and other places suggesting that a way to demonstrate how good the school is would be to set up a live business, managed by grad students and faculty, that focuses on collecting information about what business do to mentor kids to career, and marketing that information each year to increase the percent of alumni who use this information in their own business and community to mentor kids toward the university and a career. So far I only get nods of "good idea" and "but" which is accompanied by many reasons why the people I'm talking to cannot get involved.
However, by posting this idea and similar ideas in a knowledge library and by collecting and hosting ideas of others, we pilot the idea so that it begins to be a resource