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2. Reflections. Venturesome's approach What have we learned in the UKWhat this might mean for South Africa. 3. Venturesome: filling an investment gap started 2002. High risk fund, responding to finance needs of small/medium UK civil society organisations
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1. Financing Civil Societyreflections from Venturesome Bea Devlin
Head of International Development
CAF
September 2008
2. 2 Reflections Venturesomes approach
What have we learned in the UK
What this might mean for South Africa
3. 3 Venturesome: filling an investment gapstarted 2002 High risk fund, responding to finance needs of small/medium UK civil society organisations & social enterprises, in space between grants and commercial loans
Adapt commercial instruments: private equity/venture capital models; recycle funds; portfolio approach
Stimulate the market
John Kingston 15 yrs with 3i Europes largest Venture Capital organisation and then Director Save the Children, exploring financial mechanisms relevant/helpful to charities
Eg Church redevelopment plans used unsecured debt and underwriting
Small/medium orgs have little surplus, unable to manage cash flow, invest in innovation/development; banks wary
Test ideas: Risk much lower than perceived, risk wouldnt be any more than providing a grant which CAF already doing
John Kingston 15 yrs with 3i Europes largest Venture Capital organisation and then Director Save the Children, exploring financial mechanisms relevant/helpful to charities
Eg Church redevelopment plans used unsecured debt and underwriting
Small/medium orgs have little surplus, unable to manage cash flow, invest in innovation/development; banks wary
Test ideas: Risk much lower than perceived, risk wouldnt be any more than providing a grant which CAF already doing
4. 4 Social investment: a vision Civil society organisations have access to the appropriate expertise and capital that enables them
to increase social impact and to
build their financial resilience
5. 5 UK context: funding civil society organisations To mid 1990s: Donations and grants given for recurrent expenditure (eg staff, programme delivery) and capital spend (eg property purchase)
1995 CAF launched a lender (Investors in Society became Charity Bank); bank loans model, minimal losses
2002 Venturesome launched higher risk approach in space between grants and bank loans
Civil society organisations = working to achieve positive social change, social impact is core to mission
Capital/loans are not a substitute for income
CAF was and is grant maker, Investors in Society become Charity Bank started by making loans to charities for buildings
1996 CAF established Investors in Society to make loans to charities, loans rare, at that time banks & charities unwilling to enter loan space saw as high risk.
Investors in Society positive, CAF considered higher risk fund
Civil society organisations = working to achieve positive social change, social impact is core to mission
Capital/loans are not a substitute for income
CAF was and is grant maker, Investors in Society become Charity Bank started by making loans to charities for buildings
1996 CAF established Investors in Society to make loans to charities, loans rare, at that time banks & charities unwilling to enter loan space saw as high risk.
Investors in Society positive, CAF considered higher risk fund
6. 6 Venturesomes approach Venturesome was set up as a high risk fund to:
Provide finance in the space between a grant and a loan
Lend or invest in organisations achieving social impact
Take higher levels of financial risk than a bank, in exchange for helping achieve social impact
Treat organisations as customers/partners not applicants
Help clarify organisations objectives and raise appropriate funds
Increase range of finance options used by civil society
Stimulate/build a social investment market Portfolio 25% pre funding; 20 wking capital, 55% development
Risk up to 50% of some investments might not be returned, target recycling rate 75-80%
Portfolio 25% pre funding; 20 wking capital, 55% development
Risk up to 50% of some investments might not be returned, target recycling rate 75-80%
7. 7 Funding for Venturesome Funding for Venturesome has been philanthropic
CAF
Corporates: financial institutions
Individuals: finance/business people
Grantmaking Foundations
Funders support because:
attracted to model: recycling / leverage of funds
want to be part of creating a social investment market
inspired by the organisations supported
Individuals making gifts 50k to 1.5m over time
Pilot phase: CAF, 2 corporates, 1 individual
Development phase easier to attract investment grant making trusts; social investment market growing
Our investors are `donors 12 investors plus CAF
2008 8m approx 1/3 CAF/Barclays; 1/3 private philanthropists; 1/3 grantmaking foundations
CAF interested funders in model through conversations, meetings, as fund developed website became more important to disseminate information, build brand
Report to funders every 6 monthsIndividuals making gifts 50k to 1.5m over time
Pilot phase: CAF, 2 corporates, 1 individual
Development phase easier to attract investment grant making trusts; social investment market growing
Our investors are `donors 12 investors plus CAF
2008 8m approx 1/3 CAF/Barclays; 1/3 private philanthropists; 1/3 grantmaking foundations
CAF interested funders in model through conversations, meetings, as fund developed website became more important to disseminate information, build brand
Report to funders every 6 months
8. 8 Venturesome model