With the government making sweeping cuts to frontline services there is a growing school of thought that it is the business community that needs to take the lead in helping fund charities and social enterprises that fight economic disadvantage.

A new type of funding has grown up in the charitable sector called Venture Philanthropy. It takes the principals and practices of Venture Capitalism and applies it to the charity sector, providing funding, management support and consultancy.

Impetus Trust are one such organisation. The charities they support have grown their average annual   income by 31% year on year, eight times the sector average. This has enabled them to expand the services they provide and so increase the number of people they help each year. Their portfolio of charities is now helping over 250,000 people a year.

To ensure these schemes succeed, Impetus Trust will on Monday urge the government to adopt the principals of the Obama administration’s Social Innovation Fund. This would see it channel money from its Big Society Bank through intermediaries, like Impetus Trust, who would match the money with private funding. It wants the government to select a range of intermediary organisations that can collectively offer a full range of funding, including grants, equity and quasi-equity, loans and bonds.

But does business have all the answers? And what can we in the UK learn from a similar scheme already in operation in the US?

Joining our presenter in the studio will be the Chief Executive of Impetus Trust Daniela Barone Soares, and two CEOs of charities that are in the Trust portfolio; Matt Stevenson Dodd of Street League and Rachel Carr from IntoUniversity.

So join our guests live online at www.studiotalk.tv on Monday November 29th at 15:00 GMT

For more information visit www.impetus.org.uk

H: Jayne Constantinis, host
A: Daniela Barone Soares, CEO, Impetus Trust
B: Matt Stevenson-Dodd, Street League
C: Rachel Carr – IntoUniversity
D: Paul Cartar

H: Today we’re talking about venture philanthropy. What’s that? Well, it’s a revolutionary charitable initiative that could form a bit part of David Cameron’s vision for a big society over the next few years

Titles

H: Hello and welcome to The Business Show. I’m Jayne Constantinis. The organisation that has pioneered venture philanthropy in the UK – Impetus Trust – has released its annual report today and it contains some staggering reports and recommendations for tackling economic disadvantage, head on. Well, joining me today are Daniela Barone Soares, who’s the Chief Executive of the Impetus Trust and 2 CEOs of charities that are in the trusts portfolio. Matt Stevenson-Dodd of Street League and Dr. Rachel Carr from IntoUniversity. Welcome to all of you, thank you for coming in. Coming up today, highlights from the report, making a difference in the UK today, and all your questions answered. Now, don’t forget that we are live today, so if you want to get your questions to our guests, then use the box on your screen, send us your name of course, and if you’re on Twitter, use the #studiotalk. So Daniela, let me begin if I may, by asking you to tell us about Impetus Trust, what it does and why you set it up

A: Well, Impetus aims to find and build the Googles of the charity sector. So we basically are an active form of…Impetus trust is a form of venture philanthropy, which in an active form of philanthropy that involves giving skills as well as money. So we apply the principles of venture capital into the social sector but for a social return, not a financial return. So we pioneered Impetus as a first venture philanthropy in the UK about 8 years ago and we’re having very good results in transforming the results of charities.

H: And where did you get the idea from?

A: Well, the idea largely came from in the US venture philanthropy was started in mid-90s and also from venture capital itself. That there are some frameworks and principles from business that can help the social sector to become effective and increase its impact.

H: And you release your results today. How are they? You’re smiling so I’m guessing it’s good!

A: Yes, I’m very proud actually, that in an environment like this one where a lot of charities in the past year have been satisfied with just barely keeping still, we are happy to announce that the organisations in our portfolio have grown over 40% in terms of the number of the people they are able to help, and this is reaching about ¼ million people in the UK, so really happy about that.

H: Now, Matt, Rachel, you are in the portfolio, so you are the beneficiaries of this system. Tell us what it’s like to work with them and how it’s different from other organisations

B: Sure. I think what’s most important is that Impetus really understand what Street League are trying to do. We’re trying to tackle disadvantage head on and what’s great is that Impetus really understand us. Street League could do more of that that we could actually grow and do more in more places. I think the classic part of the model is that it’s more than just funding. You know as we’ve just said, charities need funding to survive, but what Impetus provide is also a range of expertise and help and consultancy, things that you wouldn’t begin to be able to know or afford or to know where you could have access and it’s that that really helps you when you go forward.

H: Is that what you’ve found as well Rachel? It’s helping you to run your organisation more efficiently?

C: Absolutely couldn’t agree with you more. When Impetus first got involved with us, 4 years ago, we were one education centre running services for disadvantaged young people. Today we’re running 6 centres. Back then we saw 800 students a year, last year we saw 5,000, that kind of expansion has come about because of Impetus’s funding, its expertise, its pro-bono support and I quite agree what you’re saying, it’s the combination of things that have made our expansion possible.

H: It’s quite interesting when you talk about applying the same business practices as venture capitalists. Are you quite tough on them?

A: I think we call ourselves a critical friend, so I think to some extent yes, but on the other hand, we are actually backing their plan, so these are already very ambitious chief executives that want their organisations to grow and they understand the impact their organisations can have on the social issues. So what we do is actually keep reminded them, that that’s the focus, that that’s what we have to do and in a sense, always as an external. We’re very involved, but we’re not in the day-to-day, so I think it always helps to keep a perspective and in that sense we challenge as well as we support.

H: And you have targets I believe.

C: We do have targets and we closely monitor those targets with Impetus, but I have to say I have found the relationship really healthy, because once Impetus have decided to invest in your charity, they fully support you, but they also fully trust you, that you do have a vision to expand your charity and that they’re there to help you grow and I think that’s really critical. It is a critical friend but it’s a critical friend who trusts you to do the best for your charity

B: I actually really like the approach they take and it’s like a venture capitalist, it’s as if they’re investing their own money. I think that’s right, I think you should be put on your toes, you should be saying what you are actually doing to achieve that. But you’re right, there is as you say the critical friend thing there. I really like that once a month you’ve got to get out your figures, you’ve got to talk about what you’ve been doing. It’s really important to be held to account for everything, but that actually keeps you on target for that growth you’re trying to achieve, which is what you want

C: It’s also, if you’re not achieving your targets, there’s help to get you there, it’s not kind of where’s your targets, where are you against your growth plan, it’s we’re in this together, a partnership. OK, what are the issues we’d like help with, what are the issues we’d like support with, and that’s a really helpful model, I think

H: It’s a kind of discipline that people in the charity sector, business discipline, that you don’t have. May have the good ideas and the heart in the right place. So what are your criteria for choosing a charity?

A: Well the focus that we have is to really tackle economic disadvantage. And so we’re looking for organisations that are intervening at critical points to really allow their beneficiaries to break out of that inter-generational cycle of economic disadvantage. So we’re looking for these kind of organisations, usually providing education, skills and jobs to move these people out of disadvantage. They have to be headquartered in the UK, they have size criteria of between £250,000 to £10m, roughly, that’s the sort of size that we’re looking for, and we need to feel that the Chief Executives are ambitious and backable and that they’re tacking the root causes of the social problems

H: And presumably here are 2 chief executives who are ambitious and backable

A: Absolutely!

H: It’s also interesting that you’ve chosen this particular sector. Why have you chosen focused in on this rather than some of the more traditional old people, children, animals…?

A: I think part of it was that we felt that this was a hard problem and we felt that this model of venture philanthropy has the potential to really tackle head on those very tough social problems and that was the reason why we personally all resonated with that in a sense of understanding poverty and trying to really make a dent in eliminating it, so I think that was part of it

H: And what about future plans, to expand or move into other sectors perhaps

A: I think we definitely want to expand, I think the model has proven that it can deliver a lot of results, that it can deliver transformation for charities and that sector, so yes, we do want to expand and it’s a matter of really finding the recourses to actually expand, because there is no limit to what this model can achieve to be honest and as because there is a multiplier effect in the way that we operate, every little bit that we do reverberates further into the sector. For each pound, for example, that we donate to a charity, we get an addition £4 in the value of matched funding, or the value of the volunteering pro bono skills that go into that charity, so it has a multiplier effect, so there is no limit really.

H: Thank you for the moment. In the next part of the programme we’ll be discussing some of those future plans in greater detail, which include encouraging the government to embrace models such as President Obama’s social innovation fund in the US. Stay with us.

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H: So if you’ve just joined us, we are today talking about venture philanthropy and the work of the Impetus Trust. The charities that they support have grown their income 31% year on year which is 8 times the sector average. Now, Matt, Rachel, you are some of those charities, where you surprised by those figures? I think you said 40% didn’t you?

A: 30% and a number of people helped, but income 30%

H: Income, yes 31%. Are those figures a surprise to you?

C: I have to say they’re not really a surprise to me, only in that I know Impetus works. They invest time, they invest money and they invest people in the charities they work with and that combination has helped us as a charity IntoUniversity grow immensely in terms of the people we help and our finances and I’m sure it’s the same for you, so it is staggering, it’s a staggering result, but I’m not personally surprised by it

B: You can kind of understand why people might be surprised, given the climate at the moment, it’s very difficult for charities, but I think it is that extra investment. What I’ve been struck by is the similarities between charities and businesses sometimes, which you sometimes just don’t know are there. Some of the support that Impetus have provided has helped Street League look at things we do in different ways and it’s been really interesting to say, that’s how you do that in a bank, can we do that in the charity and I think it’s that kind of approach that’s really helped us as well

H: I don’t think you’ve actually explained what Street League does. Just give us 10 seconds on what you actually do

B: OK, so Street League changes lives before, and we worked with some of the most disadvantaged young people in the country. We helped them through structured football and education programmes, with a view to get them participating in work, education and training and it works. It’s really good. 75% of our participants go on to get a job or go into training or go back into education, and we’re working with some of the most disadvantaged young people in the country

H: Rachel, give us another concrete example. Matt’s mentioned applying business disciplines and business systems to the charity sector. Give us another very concrete example of what the Impetus Trust actually does once it’s involved in your organisation

C: Well every charity in the Impetus portfolio has an investment director attached to it, and the CEOs meet monthly with the investment director to get support and there’s a whole associate scheme, I don’t know if you’re going to be talking about that but Impetus has an extensive associate scheme where charities can call upon the expertise of really high calibre people from the business community, whether that be a lawyer, somebody from PR, somebody from media, really across the range of disciplines, so charities can go to Impetus and say I’d like some help with this issue and know that they’re going to get somebody really high calibre supporting them

H: The kind of people that you simply couldn’t afford to access otherwise

C: Exactly

H: Well of course this approach is actually nothing new. Let’s hear now from somebody that has experience with the US’s social innovation fund and how that works in practice. This is Paul Cartar

D: The social innovation fund actually represents in our view, a new way of doing business for the federal government of the United States and it has 2 major components. At its core is a grant programme that is intended to increase the flow of dollars to high-impact, non-profits that do work in low income communities and there are 4 features of this grant programme that we think are really distinctive, that make it a new way of doing business. The first is it’s focus on solutions that are actually developed within the community and not within the bureaucracy of the federal government. The second is that we work through intermediaries, to the actual grantees of the social innovation fund are not the actual service providing non-profits themselves, but rather our grant-making organisations, that have prior experience in identifying high-impact non-profits, executing grants and helping those non-profits grow to realise their full potential for social impact. The third is very strong match requirements and finally, a variety of other collaborative initiatives that we might support that are themselves intended to improve the impact of organisations throughout the non-profit sector in the United States, which could include things like advancing the standards of evidence, or building more robust grant making infrastructure

H: Interesting, because you said you took your model from the US. It seems to me he’s talking up a bottom up, rather than top down system there. Do you think it can work here?

A: Yes, definitely. The system there is a mixture actually, interestingly. It’s about the government – the Obama administration earmarking funds to go into intermediaries, or organisations like Impetus, that are used to finding, selecting and supporting charities and social enterprises that are high-impact and innovative to bring the social solutions to bear, so basically then these organisations, not only the intermediaries but the recipients, they both have to match the funding received from the government, so it becomes a very much of a private/public/volunteer/sector partnership that actually yields a much better result, because as Paul Cartar was saying in his talk the bureaucracy of the federal government is not able to identify, is not on the ground to see which organisations are those high-impact, social innovator and therefore organisations who have been doing that, have the ability. I think it’s very much the same here. Obviously there are some adaptations to be done within the UK context but I think very much so

H: Dare I use the phrase “Big Society”? It’s starting to feel a bit like that. What do you think?

B: I think “Big Society” is a great idea but how do you get the money to the right people on the ground and I think what was just said there was about investing in organisations who understand that. What Street League had to go through to get the Impetus investment was really quite difficult and the due diligence and looking at what Street League does and looking at whether it was as you say an innovative charity that’s going to go places. That should be done by intermediaries like Impetus, it shouldn’t be centrally done by the government, so that donation of money to intermediary services who can then hand it to where it’s best needed is very good

H: Excellent. So, can it work over here? In the final part of the show we’re going to be taking all of your questions. Stay with us

Break

H: Well if you’ve just joined us, thank you for joining us to talk about this very interesting innovative trust and we’re going to take some of your questions now that have been coming in in the last few minutes. One here from Sarah, who says, “With CSR budgets likely to remain squeezed” – of course we’ve got right down to the money issues! – “how can an organisation such as Impetus help charities looking to increase their revenues? There’s just less money around”

A: It is interesting. Less to some extent, no to another extent actually. There is still money around and the fact that we’re able to multiply this money in terms of getting some other sorts of resources, from businesses, foundations, grant-makers actually makes that money go further so in a sense, yes it might be a challenge, but actually I don’t think it’s going to be that bad

H: And is it that the organisations trust you because of your background and because you are rigorous in your charities and who you’re going to work with that they know the money’s going to be well spent? Is that at the heart of it?

A: To be honest, I think you’re right. I think there’s a sort of risk insurance here with Impetus. When things were very good, I think that also CSR budgets were being splashed around with less criteria. What we see now is not that there are less budgets, but the rigour of selection is much greater, and the fact that not only we’re selecting the charities, that’s one part of it, the other part of it is that we’re actually giving the support to the charities that is beyond just the funding, and that serves as a risk mitigation for organisations

H: So does it mean that in practice, you the charities are spending less time going out there trying to get funds and more time running the charity? No, in a word!

B: I would say that what Impetus have done for Street League is really help us focus on what we’re very good at, and in doing that have saved us more money. So we’re still out there fighting every day for the money to get in to do our good work, but actually it’s a lot more focused and the connections are there

C: And also in my experience, Impetus have helped us lever in money from other sources because we’ve been branded as a charity that Impetus supports, other grant-making bodies respect that and that’s been really helpful for us

H: It’s becoming a sort of seal of approval if you like

C: Yes.

H: That must be very helpful. Let’s just take Beth’s question while we’ve got time. A question for you again, Daniela, “What’s been the biggest stand-out achievement to date of your work?” Obviously present company excluded!

A: Luckily, I can say that there have been many very good achievements. I think one that I can mention because it’s been on the news so much is St. Giles Trust for example, which is an organisation that has…we started working with them, we’ve already worked with them for 5 years. They were a homelessness day-care centre that were quite indistinguishable to be honest and then they transformed themselves into a service to rehabilitate ex-offenders to that they don’t re-offend and re-offending is a huge problem to society, it costs £11bn a year, and so as a result of that partnership, they basically are now the leading resettlement organisation in London and the South East. They have been chosen by the Ministry of Justice and Social Finance to pioneer the social impact bond, which is an outcomes bonus programme so they’re really targeting reducing re-offending and their re-offending rates from their group have gone from the average 60% to less than 20% and as well as they have grown 15 times the number of people they help in the years that we have been working with them, so that’s one, but we have several and these are two in the making!

H: Well obviously and those statistics certainly speak for themselves don’t they? We could go on and I’m sorry that we have to end. Thank you very much for coming in and talking to us and if you’d like more information then go to the website, which is www.impetus.org.uk. Thank you for joining us. Goodbye.