‘Venture Philanthropy is concerned with the disciplined deployment of capital to achieve social impact’

Venture philanthropy is a model that applies business principles to the social sector to obtain stable funding, build capacity and partnerships in social enterprises and other social purpose (philanthropic) organisations, with the objective to help these organisations to tackle social issues more effectively. Paul L. Carttar, founding director of the US social innovation fund (US SIF) and a frontline advocate of venture philanthropy for Nigeria and Africa, spoke to BusinessDay’s Innocent Unah about the model, the level of reception it has received in Nigeria, and other relevant issues.

The last time you came to ‘preach’ venture philanthropy to Nigerians, how successful was it?

It was very successful. What’s critical at this point is to make sure that as many people as possible get a good understanding of what the idea is, how the idea can add value to them and then give us feedback. That’s by far the most important.

What has the feedback been from the view point of the thought leaders and industry leaders you met the last time?

The reception has been very positive because the number one value in general that people have seen is in terms of getting a lot of critical parties together to problem-solve, because there is a feeling that the ‘silos’ do not communicate well among themselves. And when we talk about the ‘silos’ we mean the different categories or groups of people.

So you’ve got a strong private equity community; you’ve got a strong professional services community; you’ve got a strong foundation community; you’ve got a strong start-up community.   And within the ‘silos’ there tend to be good networks and good communication, but poor collaboration between them. But that’s not peculiar to Nigeria- it’s a very common problem everywhere. We’ve seen it in Europe; we’ve seen it in Asia.

That’s the number one value that people are seeing – that is we are creating a way for different parties to communicate and work together.

Based on your experience and the responses you’ve seen so far, when do you think that the venture philanthropy initiative is going to kick-off fully in Nigeria?

We’re hoping it will kick-off in the first half of 2018. But rather than dwell on the timing for take-off, what is more important for us is that when we launch, we will know that everything is in place for success; it is not so important that it happens on a certain date. So our focus is really on putting the right things in place.

When you talk about the right things being in place, what are those things you would like to see before you can say that you are ready to launch?

There are several aspects to it. Number one is to sort out formal, legal corporate issues. There is building an organisation, then there is fund raising. But among these things the most important is leadership. So we are also working on robust membership. We are working on all of those things and we will launch when everything is ready. We cannot launch just because our schedule or calendar says we will launch on a particular date as the whole emphasis is to create a platform that will be successful in generating value for Nigeria and Africa.

So what is the role of ACA in all of these?     

ACA has been a good supporter of the cause. ACA has helped give us access to a lot of people and that is probably the number one value they have created, that is helping introduce us to a lot of key parties in Lagos, business, and across Africa. And the cocktail (which held in February) will be the best single example. But key people in ACA are incredible, they have helped in providing good advice to us.

To what extent would you say that you leveraged the event of yesterday (i.e. Ford Foundation/ACA convening on impact investing) to advance the cause of venture philanthropy?

Well yesterday’s event is important in raising the awareness in general in the Lagos community for impact investing as a means of creating social impact. And there are a lot of parties that are interested in making the increased awareness possible. The PE/VC community is one critical constituency. ACA was a major organiser (of the even) but really represents the interest held by a lot of investors. 

The other party of course was the Ford Foundation that has critical interest in advancing social impact in Nigeria and elsewhere and they also represent a critical set of interest relating to impact investing because in the end the whole value proposition around impact investing is the ability to deliver on both the financial dimension and social dimension.  If one of those is away then you don’t have anything you are targeting. Because if it is only social, then you have primarily philanthropy and if you remove the social, then you have primarily a profit venture or business.

From our standpoint both of those constituencies are important because we view our contribution as creating a community that involves both social and the financial goal aimed at accomplishing social impact.

So what you are saying is that there is a nexus between what Ford Foundation and ACA stand for and what you stand for  . . .

Exactly! And what we are about is disciplined deployment of capital to achieve social impact. Capital means not only financial capital, but also includes human and intellectual resources. So that really is the key service for us. So it is within that context that encompasses grant making where that grant making has a disciplined investment mentality to undertake any venture with clear goals, transparency, and accountability.

It also encompasses investment for financial returns so long as that investment is intended to create social impact. So, both of those fall under the concept of disciplined deployment of capital. So if it is not disciplined you are just giving money away; then that’s not of interest to us. And if an investment does not have the explicit objective of to achieve social impact then that investment is not of interest to us either.  And that’s okay because they’ve got their own networks that talk to them – they don’t need us.

For the Nigerian PE/VC and Philanthropy communities, what would be your overriding message for them?

The message will be that whether as a firm or as an individual in the firm they should have a strong interest in deploying their resources to make social impact. Whenever that is the case we will then believe that the community that we are creating could be beneficial to them.