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VENTURE PHILANTHROPY INVESTING FOR BETTER SOCIAL OUTCOMES
Warszawa, 9 April 2019
GLOBAL CHALLENGES
SOLUTIONS?
THE VENTURE PHILANTHROPY MODEL
Definition
VENTURE PHILANTHROPY
Venture Philanthropy (VP) Long-term and high-engagement approach to supporting social purpose organisations (SPOs) to maximise social impact.
Three core practices:
• Tailored Financing
• Non-financial support (capacity building)
• Impact Measurement and Management
Spectrum
THE IMPACT ECOSYSTEM
Philanthropic Capital
Society
Government
Philanthropic Capital
Society
Government
Market
Capital
instruments
INVESTING FOR IMPACT
• support innovative solutions to pressing social issues;
• take on risks that no other actor in the market can – or is willing to – take;
• provide in-depth non-financial support.
INVESTING WITH IMPACT
• need to guarantee a certain financial return alongside social impact;
• Invest in proven solutions and/or organisations with viable business models;
• have access to larger pools of resources.
COMPARISON
Role in the ecosystem: Role in the ecosystem:
Complementary approaches!
scaling proven business models, making sure
impact consideration is part of all investment
decisions.
• test (and bring to the market) new solutions to
social issues; and/or
• support SPOs that have no market outlet.
EVPA REPORT ON IMPACT STRATEGIES
https://evpa.eu.com/pages/evpa-impact-strategies-journey
INTRODUCTION TO EVPA / OUR MEMBERSHIP
Service
providers
Financial
institutions
Other
associations
Academic
institutions
Foundations
Impact
investing
finance first
Private
Equity firms
VP/SI
organisations
EVPA is a membership association made up of organisations interested in or practicing venture philanthropy and social investment
(VP/SI) across Europe. EVPA currently gathers over 270+ members from 37 countries.
EVPA - a pan-European association of
practitioners and other stakeholders
CONTEXT for EVPA work in CEE
CEE is a region still lacking the right level and type of financing
Philanthropic capital need as seed investment & long-term, patient capital from 50 - 150k
Lack of stable infrastructure for social organizations
Budgets of incubators and other social entrepreneur development organisations in CEE operate with
highly-restricted funding
Need for regional collaboration
To eduate and to create opportunities for learning, to exchange on the pipeline development and to
co-invest
Geographic focus of VPOs by € spend in 2015
VP TRENDS / COUNTRIES ATTRACTING MOST FUNDING
VP TRENDS / COUNTRIES ATTRACTING MOST FUNDING
Geographic focus of VPOs by € spend in 2017
CONTEXT for EVPA work in CEE
CEE is a region still lacking the right level and type of financing
Philanthropic capital need as seed investment & long-term, patient capital from 50 - 150k
Lack of stable infrastructure for social organizations
Budgets of incubators and other social entrepreneur development organisations in CEE operate with
highly-restricted funding
Need for regional collaboration
To eduate and to create opportunities for learning, to exchange on the pipeline development and to
co-invest
1st Polish
Venture Philanthropy Fund
www.valores.pl
In 2017, Valores exited its first 3 social organizations
150 000 EUR disbursed as grants in 2015 - 2017
a greater impact on their target social groups than three years ago:
2.4 million more disabled people have access to physical buildings and digital sites and 975K
are served by trained personnel (Integracja)
400 foster children are supported p.a. vs 230 three years ago (Robinsons)
1,800 children p.a. in after-school program vs. 750 three years ago (FSD)
All have scaled up their key programs and extended their reach geographically
All are managed more effectively, allowing for further scaling up going forward
All achieved greater financial independence and sustainability
Integracja’s “Expert Services” revenues increased by 140% vs 3 years ago and profits 3x
Robinons’ total annual revenues increased 85% vs 3 years ago, with 77% now provided by
non-public sources
FSD increased self-financed activities from 2% to 25%; new youth workshop revenue streams
creating useable profits
Valores Fund I: four years of social investment activity
1,440,000 PLN (350 K EUR)
committed to date in grants for 8
social organizations
Positive impact the lives of over
2,000,000 marginalized persons
in Poland
Financial support through targeted grants 1,150 hours of pro bono time from PE professionals to address
organizational & financial challenges
A key goal is “capacity building” for the organizations to grow and
sustainably impact more lives
Non-financial support for the portfolio
Access to networks
HR Management
Financial Planning
Sales Operational Support
CEO
Support
Impact Measurement
Strategic support
Financing
& revenue strategies
Technical
specialist
assistance
Portfolio summary 1: Integracja Financial & social return on investment
Integracja's goal is to increase social activity of people with various
disabilities by eliminating barriers which hamper their everyday life.
Accessibility Audits* Trained employees
x5 the number of annual accessibility audits made p.a. (Expert Services)
700 buildings and websites audited in 2014-2017
70 “Bez Barier” accessibility certificates granted 2014-2017
Blue chip clients incl. Warsaw metro, Chopin airport, Skanska,
many others
x12 the number of employees trained annually to work with disabled people
(Expert Services)
212 in 2014 2,625 in 2017
Financial Performance* Social beneficiaries*
+140% incr. in annual rev. of Expert Services, to PLN 1,7m in 2017 2.4 mln disabled with access to buildings and websites
x3 annual profit from Expert Services, to PLN 360K in 2017 300
975K
jobs found by disabled persons
disabled persons are now served by trained corporate employees
Valores value added - non-financial support: 350 hours of PE professionals’ and business entrepreneurs’ pro bono time
Scale up of the “Expert Services” (fee-generating architectural & online audits and employee training), with introduction of selling competences and processes, which led to numerous
strategic corporate partnerships, plus the best known accessibility certification on the market (“Bez Barrier”), and the generation of material profits to be used in other Integracja non-profit
activities;
The employee training service was re-organized and a new product offer was developed, resulting in 80 companies and 4,725 employees trained over three years in customer service of
persons with disabilities (e.g. Warsaw subway, PKP trains, LOT stewards, airports, banks, telecoms);
Integracja expanded its program dedicated to employment of disabled persons by increasing the portfolio to 900 employers interested in hiring people with disabilities resulting in 300
people hired;
Valores organized a pro-bono Supervisory Board to support Integracja’s progress and provide strategic insights across multiple organizational functions; it has led to a more effectively
managed organization with recruitment of additional management resources. *Since Valores investment
19
Social Business Accelerator Mentor
Khai Tan, Bridgepoint
Portfolio summary 2: Robinson Crusoe Foundation Financial & social return on investment
Robinson Crusoe Foundation empowers and equips youth nearing
the end of foster care with skills and experience to become self-reliant
*Since Valores investment
20
Social Business Accelerator Mentor
Zbigniew Łapiński, 3TS Capital Partners
Core Programs: Bezpieczny Staż* New program*
+75% increase in the number of annual corporate internships for youths (from 51 to 89
per year in “Bezpieczny Staż”);
cumulative 218 internships completed 2015-2017;
attracted major new corporate partners with long-term perspective (FM
Logistics, Żabka, Credit Suisse, others)
Ginger bread production (“Food4Good”) offers work experience and project management skills in a
workshop setting, as a tool for engaging corporate employees and foster youths (supported mostly
by Credit Suisse)
Financial Performance* Social beneficiaries*
+85% increase in annual revenues in 2017 vs 2014:
71% of increase was funded by non-public sources
overall 77% of total funding is now from non-public sources
+75% increase in the number of foster youths supported across all core programs, to
400 from 230 youths annually;
over 900 individuals supported over 2015-2017
+15% New Social Impact Tool introduced shows up to 15% higher self-reliance and
self-confidence in youths who completed the program
Valores value added - non-financial support: 260 hours of PE professionals’ and business entrepreneurs’ pro bono time
Development and implementation of a valid impact measurement tool identified by Valores, which showed that on average, Robinson youths increased their self-confidence, self-reliance and readiness for
independent living by up to 15% compared to peers not enrolled in the activities of the Foundation;
The portfolio of Robinson's activities was revised after introducing project management, marketing and proper cost allocation improvements, which led to new pricing strategies and the engagement of new
long-term business partners (e.g. Bepieczny Staż) as well as restructuring the market approach (e.g. Food4Good);
Valores and its donors opened their corporate access networks that helped engage new internship partners;
Through Valores and SBA mentoring, the Robinson's team understood and implemented strategic planning, financial management and improved resource allocation, leading to more focus on core programs,
sustainable development and financial sustainability with diversified non-public sources of funding;
The management team gained confidence into its abilities to grow and competences to increase its scale and social impact going forward, with ambitious plans for the future.
Portfolio summary 3: Happy Childhood Foundation Financial & social return on investment
Happy Childhood instills core values of entrepreneurship and social engagement
among students through long-term extra-curricular school programs
Crown of Polish Education (2-year flagship program)* Youth Academy workshops*
+120% increase in # of schools (from 6 to 13) engaged in the flagship CPE
geographic reach increased from 1 to 6 cities
x18 # of children participating increased from 220 to 4,000 per annum
program grew from 9 to 325 workshops annually
x2.4 increase in # of pupils participating in the CPE program: from 750 to 1,800 per
annum
Financial Performance* Social beneficiaries*
25% the percent of the foundation’s self-financed activities increased from 2% to 25% +13% social impact measurement results show that CPE graduates are on average
(versus typical non participant) up to 13% more engaged in social activities,
more creative, have greater trust in people and have a greater sense of self-
effectiveness and self-confidence
profitable New revenue streams created to cover costs of CPE/workshops led to profit
generation that now supports non-profit activities
Valores value added - non-financial support: 160 hours of PE professionals’ and business entrepreneurs’ pro bono time
Through impact measurement tools supported by Valores, it was proven that FSD’s programs lead to participants’ increased confidence and participation in extra curricular activities (i.e. volunteering,
entrepreneurial activities) leading to a greater level of engagement and development of their personal interests;
The number of children engaged in FSD’s comprehensive flagship CPE program and youth workshops grew exponentially with Valores’ support;
A nation-wide version of the 2-year core CPE educational program was developed and introduced beyond Lublin to 5 additional cities;
Its fee-generating offer of educational workshops was revised – a true cost analysis, development of promotional materials plus a new sales approach led to increased sales and turned losses into profits to
enable FSD to deliver free-of-charge services to those that cannot afford it;
Challenged by Valores to think about further expansion, FSD’s leaders introduced educational courses for teachers - to use them as agents of change and implementors of FSD’s activities in new schools
and cities;
FSD transitioned from a grant and project-based organization to a more entrepreneurial team, able to increase significantly its own financing.
*Since Valores investment
21
Social Business Accelerator Mentor
Małgorzata Bobrowska-Jarząbek,
Resource Partners
Valores I current portfolio (1/2) As of January 2019
2016
POMOST: decreasing the re-offence rate of ex-convicts through their social integration
The Zabrze halfway house for ex-convicts was successfully expanded to 25 places from 12 in 2015
Counselling programs in 4 prisons have expanded to include nearly 380 participants vs. 200 in 2015
A new program was started with supervised flats for further societal integration, currently housing 12 ex-convicts
Initial cash flow difficulties were stabilized, with fundraising prospects good for 2018
Pomost addresses the market of 88,000 convicts released each year from Polish prisons
2017
BORIS: “Safe Future” program enabling social and financial security of adults with intellectual disabilities
The “Circles of Support” model of the Safe Future program was fully developed; 10 families in the pilot project
A coalition of eight regional partners was lined up and have committed to roll-out the program to 80 more families in the next stage
for wider proof of concept
A complex application for an EU grant was submitted and accepted, opening up PLN 4 mln in H2 2018 to commence the nation-wide
expansion that can lead to long-term scaling
The project aims to address persons with intellectual disabilities, which number approx. 350,000 in Poland
2017
TNM: supporting disabled students to enable their education from high school through university
The first year of cooperation saw strong developments; TNM grew very rapidly, from 12 to 86 employees
The number of students supported nearly doubled to 430
The teacher and assistant training programs have taken off rapidly, with nearly 200 participants
TNM focuses on the market of nearly 30,000 students with disabilities nation-wide in Poland
22
Start date with
Valores
Valores I current portfolio (2/2) As of January 2019
2018
OCALENIE: supporting 3,000 refugees and migrants annually
The Foundation lost some key funding and with Valores support has worked to plug its budget holes during the first months of
cooperation
Ocalenie acquired four new flats for its innovative and new Welcome Home Program, bringing the total to 6
The number of persons living in flats under the Welcome Home Program was increased to 22
Ocalenie focuses on the market of an estimated 12,000 persons seeking asylum in Poland each year
2018
KAMILIAŃSKA FOUNDATION: supporting 400 homeless persons annually to re-establish their lives
The Foundation is actively acquiring new training apartments and preparing them for settlement by homeless persons, increasing
the capacity of the program already in the first months of cooperation with Valores
Communications activities focused on encouraging the local authorities of communities situated near Warsaw to participate in the
training apartment program
The St. Lazarus Boarding House continued its activities as do other core programs: Street-working (seeks out and aids homeless
persons found on the streets) and the “Piękne Miesce” social cooperative which helps homeless persons return to the job market
Kamiliańska addresses the market of approximately 2,700 homeless in Warsaw and 33,000 nation-wide in Poland
23
Start date with
Valores
The Valores Team
Executive Team:
Agnieszka Borek Executive Director, with Valores since Dec. 2016;
- Previously the Jagiellonian University’s expert on educational standards in Poland, with
significant experience in supporting NGOs.
- Promoted to Executive Director in Valores in July 2017.
Valores Board:
Ewa Konczal
Executive Chair of the Board since June 2017 (previously Executive Director);
CEE Manager at European Venture Philanthropy Association (EVPA)
Iain Haggis CFO & CRO, Central Europe Industry Partners
Erik Hallgren Managing Partner, Equitin
Stanisław Knaflewski Managing Partner, Altamira
Krzysztof Krawczyk Head of Poland, CVC Capital Partners
Robert Manz Managing Partner, Enterprise Investors; Head of PSIK Philanthropy Committee
Barbara Nowakowska Managing Director, PSIK (Polish Private Equity Association)
The Board meets every month and also acts as the Valores’ Investment Committee.
.
24
Tailored financial support Non-financial support Impact measurement
Valores funding for “non-restricted”
needs
Typically to support employment of key
persons or pay for activities that cannot
be funded from other (restricted)
sources of funding
Valores I - average funding per
organization was PLN 180 000
disbursed over 3 years
Executive Director - direct engagement in
each portfolio organization
Individual Valores Board Members’ oversight
of the portfolio:
Board support – regular monthly meetings,
discussions and work with portfolio
organizations – over 500 hours in Valores I
, Board Member - financial management of
Valores and portfolio monitoring
PSIK SBA mentors continued engagement
with Valores portfolio > 450 hours in Valores I
Valores donors’ individual contributions - over
200 hours in Valores I
impact measurement as regular practice
is one of the key objectives for Valores
During the pre-investment due diligence
process, organizations' current Impact,
its measurement approach assessed
Valores Executive Director leads ind.
efforts with each portfolio organization to
develop applicable measurement tools
Together with the organization, Valores
develops quarterly KPI reports to
monitor progress and intervene with
relevant non-financial support.
Valores also measures its impact at the
portfolio level to be able to assess the
social leverage of its activities and make
improvements for maximum impact
Valores’ venture philanthropy approach
+
+
25
PSIK’s SBA program is a pipeline for Valores
Social Business Accelerator (SBA)
Program
Non-financial support: up to 2 yrs
Financial + non-financial support 3 years
Combined support and pipeline development
Participation in SBA
¬ min. 6–10 months
¬ 10–15 organizations
per year
Nomination to SBA and
verification
of the organization
Financial and non-
financial support over 3
years
Analysis of potential for
financial support for most
promising organizations
Non-financial support: 2-5 years
Financial support: 3 years 12
The VI th Edition of the SBA Program with 16 social organizations and mentors was completed in June 2018 and SBA VII started in September 2018 with 15 social organizations and mentors
Deloitte Social Investment Leveraging
Index
28
Deloitte Social Investment Leveraging Index - DSILI
• A tool to show the potential and opportunities of social investment and
venture philanthropy in CEE, across four sub-regions
• Providing arguments why to invest – and what to invest in
• Present concrete ways to engage - CALL TO ACTION
29
30
Deloitte Social Investment Leveraging Index - DSILI
• A tool to show the potential and opportunities for social investment in
CEE, across four sub-regions
• Providing arguments why it to invest
• Present concrete ways to engage - CALL TO ACTION
31
Conclusions from the DSILI Index
1. Across the 4 sub-regions there is a high leverage in investing for impact -
overall scores position them from medium to high social investment leverage.
There are unaddresed social issues and developing social investment
ecosystems.
2. High investor prospect scores for most of the sub-regions - lowest for South
East Europe.
3. Partners, networks and entrepreneurial spirit to rely on - despite of
developing ecosystem infrastructure.
32
Invest for Impact in CEE - Call to Action
1. Became an investor in existing or new social
investment funds.
2. Invest directly in social organizations and
enterprises.
3. Build your understanding of the region - join
CEE events.
4. Invest in infrastructure organizations -
incubators & capacity builders.
5. Expand your value chain through new reliable
suppliers - social enterprises.
6. Advocate for systemic changes to develop
favorable conditions for social investors.
7. As governement or public inwestor open
public procurement to social actors.
Invest for impact in Central and Eastern Europe to further integrate with Western Europe through
sustainable, inclusive growth. Here is how you can do it:
Q & A
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B-1000 BRUSSELS
T +32 2 513 21 31
EVPA.EU.COM
european-venture-philanthropy-association
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