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Capitalist principles and charity are combining to help the vulnerable, hears Rebecca McQuillan
Toni Keays from Glasgow, who’s currently in supported accommodation, is likely to hear any day that a tenancy has become available for her. “I could look in the door and think ‘ohmigod’,” she says. She’s no idea what the place will be like and has never faced such responsibility before.
Toni knows that she won’t be on her own walking through that door. Staff from Fab Pad, a project run by the charity Impact Arts, will be by her side. Fab Pad helps young people moving into their first tenancy to “make a house a home” by giving them help and ideas on interior design, and supporting them in making steps towards training, education and employment.
“You’ve hardly any money and you’re panicking,” says Toni. “At Fab Pad, you can make canvases for the walls, cushions and throws.” Meeting other people in the same boat and getting prepared for the move also helps allay the anxiety.
Impact Arts meets a pressing need by supporting vulnerable young people at various stages in their lives. In the current economic climate, it is not easy for any charity to build capacity, but Impact Arts has been able to do so in the last three years thanks to the support of a new type of funding body, Inspiring Scotland, which promotes venture philanthropy, applying the principles of venture capitalism to the not-for-profit sector.
Investors pay money into one of three funds and expect to see returns on those funds just like a venture capitalist would – only the return is social, not financial.
Susan Aktemel, director of Impact Arts, sees major benefits in being funded partly by Inspiring Scotland instead of exclusively by traditional grant-making bodies. “The key difference is the level of engagement and understanding they have,” she says.
“You can share the things that haven’t gone well and celebrate the things that have. You wouldn’t do that with an ordinary funder because their active engagement isn’t very much. Inspiring Scotland work with us to change plans, where other funders or partners might not be able to be so flexible.”
She adds: “One of the brilliant things about Inspiring Scotland is they did a lot of due diligence before investing, so now they are hands-off. With other government funders they ask for lots of information. Inspiring Scotland trust our financial information and our management systems. They did all the hard work at the beginning and now let us get on with things.”
When they put in their proposal, Impact Arts stressed that they wanted to build capacity; now, three years down the line, they are “much bigger”, says Aktemel. Inspiring Scotland has helped fund new staff posts and helped the charity buy premises.
Innovative ways of levering private finance into the voluntary sector are receiving more attention as public sector streams dry up.
Inspiring Scotland’s chief executive Andrew Muirhead launched the organisation in January 2008 after visiting venture philanthropy schemes in the USA and Australia. Muirhead, a former banker who used to manage the Lloyds TSB Foundation for Scotland, was concerned the funding many Scottish charities relied on was short-term or project focused, making it hard for them to grow. He says he found it a “huge frustration” that “entrepreneurial, driven, capable people who have the ability to change lives” were having their efforts curtailed by spending so much time form-filling. “The aim with this is to do less but do it deeper.”
Inspiring Scotland aims to help charities work towards financial self-sufficiency.
Its distinguishing features are long-term sustained support; a high level of engagement with the organisation whether times are good or bad; a willingness to fund some core costs as well as delivering specific projects; and helping charities to build capacity. Like other grant-making bodies, it also employs rigorous evaluation and holds organisations to account for results.
Investors include the Scottish Government, trusts and foundations and also individuals. Titans of Scottish business like Sir Tom Farmer and Donald Macdonald of Macdonald Hotels, are supporters, but anyone can invest, both financially and by offering their skills and expertise.
Of the three funds run by Inspiring Scotland, the most well-established is 14:19, set up to help young people aged 14 to 19 make a successful transition between school and further education, training or work. Investments are made over a seven to 10 year period. There are 22 charities (ventures) in the 14:19 Fund, working in 18 local authority areas, though it is not currently accepting new proposals.
The Go Play Fund aims to provide children aged five to 13 with more play opportunities. And on Monday, a new fund opened – the Early Years Action Fund, to improve outcomes for vulnerable young children – which will be accepting new applications until July 15.
In 2010, 4577 people had engaged with services supported by the 14:19 Fund. A total of £6.9 million was invested, augmented by £5.1m matching funding brought in from other sources by the charities.
The ventures get to define how long they need support for, instead of the timescale being set by the donor.
Muirhead is at pains to stress not every charity needs venture philanthropy. “It’s a hugely diverse voluntary sector so we’ve got to have the range of funding instruments as well,” he says.
Besides, there are not that many venture philanthropists around, he reflects. Funding of £6.9m is small in the context of the third sector.
However, Inspiring Scotland is growing. Aggreggate funding (the 14:19 investments plus matching funding) was up 20% in 2010 compared to 2009, and Muirhead says Inspiring Scotland has a good track record of retaining investors.
The 14:19 Fund aims to help ensure young people move along a “continuum of support” so they don’t drop off the radar. Yet Muirhead fears that funding for exactly this sort of work – what he calls “preventative money” – will come under most pressure.
To shore up such work, the former Labour government launched Social Impact Bonds, which are now being championed by the Westminster Coalition. These seek to get private investors to fund preventative public sector interventions on the principle such efforts will save the government money down the line. If the reoffending rate falls, the investors receive a return.
Muirhead hopes more ways will be found of bringing private, public and voluntary sectors together.
For a charity like Impact Arts, the support of venture philanthropists means more young people like Toni are benefiting. “Without Fab Pad, I’d be really terrified. I think I’d have a breakdown,” she says, laughing. “They’re definitely a comfort.”
www.inspiringscotland.org.uk
