From traditional philanthropy to venture philanthropy

Venture philanthropy (VP) has emerged in Europe during the past decade as a high-engagement approach to social impact investment and grant making across a range of organizations with a societal purpose (SPOs), from charities and nonprofit organizations through to socially driven businesses, focused on delivering long-term and sustainable societal impact. The investment process is defined by the investment strategy and structured in five steps: deal screening, due diligence, deal structuring, investment management and exit. A principal difference between the two models was that VP prescribed “investments” and hands-on involvement in the management of organizations carrying out social projects, whereas traditional philanthropy prescribed hands-off support of projects in the form of grant making. With more than €5 billion invested since the inception of the movement and with the average financial support per venture philanthropy organizations growing year on year, VP is today considered an appropriate and legitimate model of organizational philanthropy in Europe.