Philanthropy finds a new role to play

Charities are more in charge of their own destiny these days. Picture: TSPL

The lines between investing for profit and investing in a social business or charity for a social return are blurring – with similar approaches being applied to both. New social investment initiatives and vehicles will hopefully bring new funding and opportunities for the third sector, and this has the potential to be really exciting. Charities more in charge of their own destiny, less reliant on external factors and funding and delivering more social impact.

Of course, social investment won’t be right for all charities and not all charities should be forced to divert their time to consider this. For many of the 23,000 Scottish registered charities, grant funding and donations will remain their lifeline. However, for others with potential, support should be given to help explore ways of diversifying income, becoming more business-like, both in mind and behaviour. By doing this, we will create a strong pipeline of investment-ready charities.

In Scotland, I am pleased that venture philanthropy has a role in doing just this. To explain its origins, venture philanthropy began in the United States in the 1990s before moving into Europe. It initially established itself in the financial sector, born from the venture capital world. As well as introducing venture capital principles, it also brought a new type of donor, and with it, new money to do good. Since then, it’s evolved and grown from the purest of models. However, the principles of using financial and non-financial support to build stronger social organisations, in order to increase their societal impact, remain at the core at all times.

Inspiring Scotland, a Scottish model of venture philanthropy, was launched seven years ago in response to the needs of the Scottish sector.

We provide the sector with longer-term investment and intensive bespoke development support to help organisations become more sustainable, more accountable and, eventually, better at what it does, delivering even greater social impact.

One organisation which has lived the venture philanthropy experience and undergone significant transformation is Callander Youth Project Trust (CYPT).

Prior to Inspiring Scotland investment, seven years ago, it was operating out of a room in the local high school. In 2012 the trust took a big step and secured the Bridgend House Hotel in order to establish a rural training hub for young people.

The development was not just a nice thing to do. It was vital in the long term vision for the trust and one of the key milestones in its journey towards longer-term sustainability. It was a venture which needed to make a profit, while at the same time fulfil its social aims.

The town of Callander is well known for its hospitality and tourism. However, many young people, especially those who are furthest removed from the labour market, were not securing employment.

CYPT engaged with employers to develop a strategy to up-skill local young people and re-balance the skills deficit in the local area. Three years on, and the trust has developed an entrepreneurial and business attitude enabling it to launch a number of innovative social enterprises that train young people and raise an income to support the organisation.

The Bridgend Café was launched in 2013 offering locally sourced and often home-grown produce in the community café. The trust matured to be able to use other social investment funding, such as Triodos Bank and Social Investment Scotland and as a result CYPT opened the five-star Callander Hostel as its flagship social enterprise in 2014.

CYPT has taken an entrepreneurial and innovative approach in raising money to become self-financing. All of this effort is to create opportunities for young people. Venture philanthropy has been alongside Callander Youth Project throughout this journey, both challenging, enabling and supporting.

Venture philanthropy may not suit every organisation, but it is one tool in the tool box in Scotland. I am encouraged by the new initiatives coming in to the sector, such as social investment tax relief (SITR), bringing new investment and helping to create a healthy funding ecosystem. However, what we need to keep at the forefront of our minds, is we are in the business of making a difference to people’s lives, and the social impact needs to remain the most important factor.

• Celia Tennant is chief executive of Inspiring Scotland www.inspiringscotland.org.uk