Connecting to the social sector: Is social investment dead without venture philanthropy?

The pipeline for social investment will never materialise if small charities and social enterprises do not have the confidence and skills to look at the options it might offer them. In this ‘Conversation for Change’, delegates explored if venture philanthropy could be the answer. 

Venture philanthropy, which combines flexible funding with skills support, is ideally placed to get grassroots organisations to the next stage, ready for social investment. But it currently makes up less than 10% of grant funding.

On Monday evening at The Gathering, one small room was packed full of people exploring the question: ‘Is social investment dead without venture philanthropy?’ 

Mary Rose Gunn, chief executive of The Fore, which supports dynamic early-stage organisations, set out the problem. She said: “We believe there is a certain amount of stagnation in the charity sector. Big organisations are getting bigger and small organisations are really struggling to survive. This has led to a lack of innovation, and innovation is important to solve the problems in our society.”

She added that small organisations didn’t have the skills and confidence they needed to access social investment. Venture philanthropy, she said, could provide them with money, alongside the skills they needed to make the first step.

Participants agreed that, in some cases, traditional grants could hinder the growth of small organisations. Chris West, partner at philanthropic advisory firm Sumerian Partners, pointed out that organisations could get trapped in the “hamster wheel of finding the next grant”. Others pointed out that grants were sometimes not proportionate to the needs of the organisation. 

On the other hand, one participant highlighted that grant-giving foundations were often short-staffed without the resources to offer anything more than solely grant funding. There was also a mindset shift needed among trustees and staff to consider different types of finance.

One participant shared their experience of introducing ‘repayable grants’ to charities. A huge stumbling block, she explained, was the way it was described. “The words ‘grant’ and ‘repayable’ don’t go together,” she said. “They come to us at the end of the year and say, we don’t need to pay this back because it’s a grant. We need to term it differently and tell them why it’s a good thing.”

Summing up, Gunn said that the conversation had emphasised the massive need for skills support alongside funding. She urged participants to continue to collaborate to take this work forward.