While many venture capitalists have been struggling since the credit crunch, one charity that adopts a 'venture philanthropy' approach to its investment is reporting impressive results.
The Impetus Trust was founded in 2002, inspired by the emerging venture philanthropy movement in the US. Unlike traditional grant-making, which focuses on funding projects, venture philanthropy is about taking a holistic view of the charities or social enterprises being funded.
"Our investment is used in a strategic way to help organisations increase their capacity, improve senior management skills and maximise impact," says Daniela Barone Soares, chief executive of the Impetus Trust. She says the trust is driven by a desire to help charities achieve the best record they can on tackling poverty and inequality.
The trust, which raises money from individual donors as well as charitable foundations, has invested in 14 voluntary organisations to date and hopes to fund another five or six this year. "We're looking for ambitious charities and social enterprises that fight economic disadvantage and work in education, skills and employment," says Barone Soares, who was born in Brazil and worked in private equity and venture capital before joining the sector as head of institutional support at Save the Children UK in 2004.
Among the organisations the Impetus Trust has funded are disability charity Speaking Up and offender resettlement charity the St Giles Trust, which won the award for most innovative charity at Third Sector's Britain's Most Admired Charities awards last month. Its most recent investment was in the FRC Group, a social enterprise that provides training for people living in poverty and the long-term unemployed.
Barone Soares says the trust provides an intensive package of finance and support over a period of four to five years. "Members of our team spend several days each month working with each of our charities, supporting both strategy and day-to-day operations," she says. "We also put the charities in touch with other experts who can provide pro bono help, such as professional coaches, finance experts and so on."
As well as providing funding, the Impetus Trust also brings in other charitable trusts and foundations to support the charities it works with. Barone Soares calls this approach "co-investment".
The trust has been particularly active in measuring the impact of its work. Last November, it announced that its portfolio of charities and social enterprises had increased their average annual growth in income to 40 per cent, up from 29 per cent the previous year. The organisations also worked with an average of 56 per cent more people than the previous year.
The trust is also helping to find ways of standardising the measurement of social and environmental impact. It is one of the first grant-making organisations to pilot a new social return on investment methodology, supported by the Cabinet Office. The method is intended to give sector organisations a way of demonstrating the social and environmental value of their work.
"We're excited to be working at the cutting edge, as a member of the steering group, and piloting the methodology with some of our portfolio charities," says Barone Soares.