Graduating with honours

Where private equity firms have exits, venture philanthropy funds have ‘graduations’. Impetus Trust recently had its first

The Impetus Trust, a UK venture philanthropy fund, has seen its first charity graduate from its portfolio. Speaking Up – a Cambridge, UK-based organisation that encourages people with learning difficulties, disabilities and mental health problems to speak up for themselves – left Impetus's portfolio in November after four years.

During the course of the investment, Impetus committed £400,000 (€478,000; $597,000) cash to the charity and £216,000 worth of mentoring expertise. The commitment has helped transform a small, mostly grant-funded, low-profile organisation to a national voice on disability and a sustainable organisation able to help over 3,000 people last year – six times as many people as four years ago.

Speaking Up founder and chief executive Craig Dearden-Phillips described working with Impetus as “like putting a turbo-charger on your organisation”.

The organisation's graduation represents the first exit by Impetus from a portfolio charity.

“We have a clear and ambitious plan when we engage. It has a beginning and an end,” says Impetus chief executive Daniela Barone Soares, adding: “The charity will graduate from the portfolio when it can continue by itself, when more funders are lined up and the business plan has been revised for the next stage of growth.”

A venture philanthropy exit is not exactly like its venture capital equivalent. Whereas a venture capitalist waves goodbye and concentrates on its next project, a venture philanthropist will continue to monitor its graduated charities for up to two years after exit to ensure the organisation stays on track.

Earlier this year Impetus announced ambitious plans to more than double its investment portfolio from 11 charities to 35 by 2012. This will require raising around £30 million: about £20 million in cash and £10 million worth of pro bono man hours.

Far from being daunted by the financial crisis and recession, Daniela Barone Soares sees possible opportunities in the market slowdown. One upside would be a “flight to quality” in which givers seeking to maximise the power of their donations will concentrate on measurable venture philanthropy-style organisations.

Another possible development might be the increased availability of talented professionals. With a lot of dealmakers on standby until credit becomes more readily available and a lot of bankers in the job market, there should be no lack of manpower ready and willing to help.