Robert Armour spoke to Celia Tennant about how Europe’s first venture philanthropy funder is helping Scottish charities learn to meet the needs of private investors
Celia Tennant is no stranger to challenges. The Larkhall local has spent much of her adult life pushing her body to the limit via triathlons and endurance events, cycling, swimming, running and, in her youth, even horse riding, so much so her hip now awaits surgery after years of high-impact activity.
While this “hugely frustrating” development may have slowed down her physical exertions, it hasn’t stymied her professional ambitions, not least of which involves a 10 year plan to distribute £100 million-worth of cash via an approach that not many people have heard about let alone understand.
To explain: Tennant heads up Inspiring Scotland, currently Europe’s only venture philanthropy funder – an approach similar to venture capitalism but one that is ethically motivated.
It runs three funds: 14:19 helps young people make the transition from school into education, training and employment; Go2Play invests in a small portfolio of play ventures; and LinkUp encourages residents to come together, build new relationships and start to address the challenges they face in areas of deprivation.
To finance these funds, the organisation attracts investment from the Scottish Government, trust funds and high net worth individuals, redistributing the cash to charities working towards these social goals.
When charities tell us how difficult it is to raise cash we say we know – because it’s equally hard for us to source funds
That might sound simple but there’s a caveat: it works with charities closer than any other funder, providing ongoing expert advice and support, often for several years, to make sure they are able to deliver the remits they set out to achieve.
Funded charities also have a responsibility beyond simple reporting – they must also work towards a “leverage model”, proactively sourcing other revenue streams and making cash generation a priority.
The idea is that in the long run the organisation is more sustainable, more accountable and, eventually, better at what it does.
It’s a robust approach says Tennant, who says rigorous performance monitoring ensures the maximum return for investors, just like a commercial investment fund.
Funded charities therefore have to get used to constantly auditing their own performance. But while some might argue this creates more red tape for small charities already creaking under the weight of regulation, it’s an approach Tennant makes few apologies for.
She explains: “We are stewards of other people’s money – and, as a charity, our ultimate performance focus is about changing people’s lives,” she says.
An independent evaluation of Inspiring Scotland found
91% of ventures funded reported a clearer focus on impact
84% now measured their impact more effectively
81% supplied better service delivery
69% created better management
96% networked better
68% became more sustainable
“Therefore we don’t really make too many excuses for putting our investees through a robust process that enables them to tell what impact they are making on society.
“It’s very much like the private sector and we can then go back to our investors and show them how their investment is working.”
And it does seem to be working. Since 2008 Inspiring Scotland has managed to secure ongoing investment from a procession of notable backers including the Souter Charitable Trust, the Wood Family Trust and the Esmee Fairbairn Foundation to name just a few. They are, according to Tennant, growing in confidence that the venture philanthropy model is the new way forward in funding.
“When we started out we wanted a funding model that would provide a shot-in-the-arm to the third sector,” says Tennant. “Attracting investors was, of course, key. Despite venture philanthropy being pretty much unique, we captured big investors’ confidence.
“The key aspect was having very clear cut social issues people could understand. Like any investors, they want to be assured their money is being used to the greatest good and is providing a return, and we’re achieving that.
“We need to keep their money flowing.”
As a strategic funder that’s a daunting challenge. For example, in terms of its 14:19 Fund, Inspiring Scotland may continue to support an organisation for an entire 10 year duration.
“We’ve been very successful in retaining existing investors,” says Tennant, “but fundraising is very challenging. When charities tell us how difficult it is to raise cash we say we know – because it’s equally hard for us to source funds.”
Venture philanthropy many not suit every organisation, especially those providing public services such as care organisations.
But with public sector money disappearing, even these charities will be forced to become more organised and more innovative with the way they source funds.
“There are social issues that don’t lend themselves to the social enterprise model,” says Tennant. “Realistically we’ll always be living in a grant-funded environment and that’s fine where that money is used sensibly.
“But if we are able to maximise the potential of those organisations which are able to make the transition, and encourage them into making that move then the third sector will be far more able to respond to the need placed on it.”