New venture philanthropy fund for Scotland

As venture philanthropy continues to gain traction across Europe, a new initiative in Scotland is arguably the biggest and boldest yet.  With an ambition to effect “landscape change”, the scheme, aptly named Inspiring Scotland, will distribute between £70m and £100m over the next decade to Scottish charities.

“Our aim is to marry ‘traditional’ philanthropy with venture philanthropy to more effectively tackle the serious issues facing Scotland,” said Andrew Muirhead, chief executive of Lloyds TSB Foundation for Scotland.
 
Launched in January by Lloyds TSB Foundation for Scotland, Inspiring Scotland’s first fund will target 14-19 year olds who are struggling to make the transition from school to the next stage of their lives. There are approximately 32,000 young people in Scotland who are not in education, employment or training (NEET), and they “represent a huge loss of potential for the country and their local communities”, according to the fund. Inspiring Scotland plans to start subsequent funds to target other areas of need. 

Inspiring Scotland will bring together money invested by philanthropists, grant-making trusts and foundations, business investors and government funds.  The Scottish Government is investing more than £9m over the next three years, while local government is also actively supporting the initiative.  “We have a rounded relationship with all our funders”, commented Muirhead. “They are involved at every stage of the model, whether it is governance of Inspiring Scotland or of individual charities we support.”   Inspiring Scotland will be managed by the Lloyds TSB Foundation for Scotland but plans to become a separate legal entity with a governance structure representing all the investor groups.

The scheme will offer long-term funding as well as capacity building support.  A long-term challenge requires a long-term investment, Muirhead explained: “Charities need time to prove themselves and to flourish. A venture philanthropy approach will give new ideas space to breathe, and allow existing models room to grow.  There needs to be longevity for significant impact.”  The fund will also help charities become “investment ready”, through a separate stage in the proposal process.

An important element of the model is its exit strategy.  Planning for exit begins during the proposal development stage, and a condition of the partnership is for charities to partly match Inspiring Scotland’s support with other funding.  The aim is to improve the charity’s sustainability, by strengthening the fundraising proposition, building new income streams or, where appropriate, helping to make the model applicable for government. 

To ensure sustainability and a successful exit, Inspiring Scotland also offers capacity building support, and will facilitate cross-sector collaboration, from back-office to front-end delivery.  It also has a network of management consultants who can provide ad hoc strategic support, as well as a dedicated team of performance advisors.  Muirhead remarked, “There is an incredible bureaucracy of evaluation, and we hope to create some space for more standardised performance measurement.”  He continued, “Our style is open learning – we want to know what’s working and what’s not working – and we actively seek ways to do things smarter.  There is no point in doing this unless we are really adding value.”  Importantly, the cost of evaluation is built into each investment. 

A second but equally important objective of Inspiring Scotland is to help promote philanthropy in Scotland.  Muirhead said he hopes the initiative will inspire more individual giving, and that the fund can provide a model for best practice. 

Muirhead spent a six-month sabbatical visiting venture philanthropy organisations across Europe, the US and Australia, to learn and adapt the most successful elements to create a unique approach for Inspiring Scotland.  One key lesson is the importance of openness and transparency.  He explained, “Sometimes venture philanthropy can become too ‘clubby’. Open access is important for success.”  The quality of the product is also critical, he said.  It requires the best people as well as appropriateness and professionalism of reporting.
   
“The best venture philanthropy is ambitious, pushes boundaries, and takes risks”, Muirhead summarised. “Inspiring Scotland is a learning organisation – we have a great product, but, like the charities we support, we are still evolving.”

• www.inspiringscotland.org.uk