Brussels, 28 February 2013 The European Venture Philanthropy (VP) and Social Investment (SI) sector continues to evolve rapidly and becomes more sophisticated in the use of instruments to generate greater societal impact. In 2011 the average annual financial spend per VP/SI organisation was €5.2m, which represented a 27% increase on 2010 (€4.1m). These results have been revealed by a survey conducted by the European Venture Philanthropy Association (EVPA), which will be presented in a report published on 1 March 2013.
This is the 2nd edition of the most comprehensive survey of the dynamic Venture Philanthropy and Social Investment organisations (VPOs) based in Europe. The objective of the survey is to provide independent data and to raise awareness about the impact of Venture Philanthropy and Social Investing in Europe.
The 2012 survey also indicates that the sector has continued to develop in terms of the type of instruments used to support Social Purpose Organisations (SPOs). The following key results demonstrate this:
- A striking evolution is the shifting balance in return objectives; while societal returns remain the primary focus more VPOs are now looking for a financial return (48% in 2011, compared to 38% in 2010) or are putting societal and financial return on an equal footing (25% in 2011, compared to 10% in 2010)
- VP/SI organisations have become more sophisticated in their use of the entire range of ‘tools’ to generate greater societal impact, including a focus on impact measurement, due diligence, coinvestment, capacity building, effective non-financial assistance and exits, and further use of tailored financing. The use of tailored financing is evidenced by the significant increase in the use of equity and debt instruments, and in the variety of financing instruments used by the VPO respondents, from 2010 to 2011. Debt and equity emerge as the most commonly used financing instruments, closely followed by grants.
- European VPOs are increasingly focusing on social enterprise as a target investee and are continuing to invest in small organisations with limited track records. This indicates that they are taking their role as ‘risk-takers’ very seriously.
A further development that became apparent from the survey is an increase in funding towards the economic and social development sectors, with an increased focus on unemployed people. Other important sectors that VPOs are targeting include education (15%) and health (12 %). Overall, children and youth remain the most important beneficiaries of VP/SI investments. Finally, the survey showed that European VPOs tend to invest either domestically or in developing countries with the bulk of funding going to Western Europe and Africa.
Dr. Lisa Hehenberger, Research Director of EVPA and in charge of the study, commented: “The 2012 EVPA survey shows that the VP sector in Europe 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 as a sign of tailored financing
becoming a reality. “
Kurt Peleman, EVPA CEO added: “As EVPA we are obviously happy with this increased sophistication. We are convinced that VP and SI are very valuable instruments for tackling some of the challenges linked with the current pressure on the European welfare model – and as EVPA we remain committed to taking a leading role in building the sector further”.
Despite the increase in resources that EVPA has seen devoted to venture philanthropy, more funding and resources are needed to help VPOs in their important work to build stronger social purpose organisations. Most European VPOs have budgets of less than €2.5m per annum. Furthermore, while the UK, France and Germany are well developed in this area and have a large number of VPO headquarters, there is limited evelopment across other parts of Europe so far.
Serge Raicher, EVPA Chairman oncluded: “The EVPA survey is a key tool in building a deep understanding of European Venture Philanthropy and Social Investment. EVPA is committed to continue the research and promotion of best practice in the key components of the VP/SI model and reiterates the importance of a collaborative approach to developing the sector."
Published byMr. Jan Bleus
in categoryFunding News & Updates
on05 Mar : 12:24
,updated on05 Mar : 12:34