Venture philanthropy organisations (VPOs) are increasingly using debt and equity instruments and more are now looking for a financial as well as a social return, according to the European Venture Philanthropy Association’s second survey of the sector.

Grants represent the main financing instrument from VPOs, accounting for 65 per cent of the funding to investees, but this is down from the 72 per cent in 2010.

Meanwhile debt instruments including loans have doubled as the proportion of total funding from VPOs since 2010, accounting for 18 per cent total funding in 2011. Equity and quasi-equity instruments also increased their share from 11 per cent in 2010 to 15 per cent in 2011.

Almost half of respondents (48 per cent) said that they were looking for a financial return from investees, which is an increase of 10 per cent on the 2010 survey. One quarter of organisations now place social and financial return on an equal footing, up from 10 per cent in 2010.

In 2010 50 per cent of respondents said that no financial return from investees was possible, in 2011 this had fallen to 26 per cent.

EVPA concluded that venture philanthropy and social investment organisations have become “more sophisticated”. Dr Lisa Hehenberger, research director said: “The venture philanthropy sector continues to evolve rapidly. The most striking evolution is the shifting balance in return objectives. Although societal impact remains the primary focus, the relevance of some financial payback (either in capital or as an actual surplus on the investment) has become significantly more important. We see this a sign of tailored financing becoming a reality.”

Its research revealed that most (62 per cent) venture philanthropy and social investment organisations still had budgets of less than €2.5m. The average amount allocated was €7.4m and the median was €1.3m.

The membership organisation carried out the research in 2012 based on financial data for the year end December 2011. The survey was sent to 102 (74 members) venture philanthropy and social investment organisations with 61 responding. The 2010 survey was sent to 65 organisations and 50 responded. The full report was published in March 2013 and is available to download on the EVPA’s website.

 

Want access to all civilsociety.co.uk content? Subscribers gain access to all expert advice, analysis, surveys, special reports and the full archive of content from as little as £43.20 per year. Find out more...