Private Equity firms become involved in venture philanthropy to encourage staff motivation and development, for altruistic reasons and to create a good image amongst the public and potential investors, according to a new guide to venture philanthropy from the European Venture Philanthropy Association.
Venture philanthropy, as described by EVPA, is a methodology that works to build stronger social purpose organisations by providing them with both financial and non-financial support in order to increase their societal impact. It includes grants, trading and social investment, where a financial, as well as a social return is expected.
EVPA’s new guide, which has been released this week, provides models for individuals and firms in the private equity industry who want to get involved in venture philanthropy
It also explores the motivations for private equity companies to become involved in venture philanthropy.
Speaking at the launch of the guide, Serge Raicher, EVPA chairman, said the venture philanthropy movement in the private equity world was growing:
“We’ve gone from five guys doing something to actually a true representative movement backed by the private equity industry.”
The number of grant-making bodies run by the largest private equity firms in Europe has more than doubled in the past five years (EVPA).
Mark Florman, chief executive of the British Private Equity and Venture Capital Association, who was also present at the at launch said it was early days for the venture philanthropy sector, but there were a growing number of philanthropists coming out of the private equity world who used their business skills acumen to help the charity sector:
“There are only a few thousand of us in the private equity market. But we can reach out and help the charity sector develop business skills. If charities are treated more like businesses they can do well.
“For example, I am involved in a charity called Build Africa, which is based on business principles. We sack staff, reward staff and give bonuses to staff on money raised.
“We are reaching out to our members to become more involved and take their skills into the social sector.”
To see the full guide click here.
