Invest in a good cause to receive greater returns
Former Baillie Gifford & Co partner Leslie Robb shares the rewards of venture philanthropy following his investment in Inspiring Scotland’s 14:19 Fund.
When an investor is running the rule over a potential deal, one question pops up again and again: what’s the return on my investment? Whether it is the dividend or the interest rate or the increase in the share price, investors want to know how much money they will make from a deal.
Yet, not all returns on investment can – or should – be measured in terms of money. As one of the investors in the 14:19 Fund run by non-profit organisation Inspiring Scotland, the return that I want to see is how many young people are being helped into education, employment and training by the charities supported by the fund.
Inspiring Scotland was launched in 2008 to help essential charities become exceptional ones. The organisation not only invests cash from its funds, but also uses what’s known as the “venture philanthropy” model.
This means that charitable organisations receive both funding and advice on how to manage their operations. This knowledge comes from performance advisors and professional volunteers, who help the third-sector organisations on a pro bono basis. The performance advisors work alongside members of staff to strengthen the day-to-day running of the charities. Whether it’s succession planning or risk management strategies, the advisors help the organisations to enhance the essential skills they need to ultimately help more young people.
One of the key factors is helping charities to improve their financial management, including the ability to carry out cost-benefit analysis. We’ve all heard horror stories about how some charities have frittered away their money on ineffective programmes or had it swallowed up in needless expenses – that’s why, as an investor, it’s so reassuring to see how Inspiring Scotland operates.
Another important consideration is how the not-for-profit organisation connects its charities with pro bono advisors. This network of more than 300 experts – from lawyers and accountants through to photographers and public relations advisors – have helped these organisations to tackle issues in their specialist fields.
This use of the venture philanthropy model was one of the attractions for me of investing in the 14:19 Fund. After retiring as a partner at fund manager Baillie Gifford & Co six years ago, I was looking for new interests when an ex-colleague mentioned Inspiring Scotland to me.
Two of its performance advisors had worked in the same industry as myself and so my interest was piqued. That gave me a kick-start to look more closely and the more I saw of what Inspiring Scotland was doing, the more I felt that it was the kind of organisation I would like to support.
I was attracted to the 14:19 Fund because it supports young people who are struggling due problems linked with their background or education. I didn’t come from a particularly well-off background and so I’m a big fan of people who strive to achieve success in whatever they do.
It’s important to try and develop young people’s skills – that’s not something the government or the education system can fully do. Many young people start their lives with serious disadvantages and it’s important to recognise that and try to find ways to deal with it.
One of the most rewarding parts of investing has come when I’ve visited the charities and met the young people who have been helped by the fund. It would be unfair to single out any one cause because they all do good work.
What links the charities is that they all provide activities that appeal to young people – whether it’s football with Street League, cycling with the Rural & Urban Training Scheme (Ruts) or cooking for the café or youth hostel run by the Callander Youth Project Trust. The charities use these activities, which young people don’t find threatening, to build their confidence, before helping them to develop other skills that will aid them in their search for education, employment or training.
The other factor that unites all the charities is how impressed I was with the members of staff who I met. The way they work with the young people is inspiring and it’s great to see how they have developed with ten years of support and investment.
As the 14:19 Fund comes to the end of its ten-year operation this month, I know that members of staff at Inspiring Scotland are busy putting the finishing touches to plans for its next thematic fund. I’m confident that any potential investors who take the time to meet with the team at Inspiring Scotland to learn about its venture philanthropy model will be impressed with the high-calibre of the organisation.
Meanwhile, the current fund is on course to hit its target of helping 35,000 young people over the past decade. That’s a healthy return on investment in my book.
This article was written by Leslie Robb and was initially published in The Scotsman on the 10th of December 2018
Venture that is reaping rewards for young people
WIND the clock back 10 years and Scotland was in the grip of the global banking crisis. Royal Bank of Scotland was bailed out, Halifax Bank of Scotland was forced into a shotgun marriage with Lloyds TSB and consumers stared into the precipice of a decade of ultra-low savings rates.
Yet, amongst the gloom of the looming recession, there were chinks of light. Without fanfare, but with plenty of gusto, Inspiring Scotland was launched to tackle some of the most deep-rooted social mobility problems in our nation.
Inspiring Scotland takes essential charities and helps them become exceptional ones using a “venture philanthropy” model. Just as venture capitalists provide funding to develop start-up companies, so venture philanthropists provide the cash to help charities scale up and sustain their activities.
Its flagship 14:19 Fund is about to celebrate a decade in operation and is on course to hit its ambitious target of helping 35,000 young Scots into employment, education and training. More than £50 million has been invested by the fund, seeded with finance from the Scottish Government, private trusts, foundations and philanthropists. It has attracted a further £75.6m of match funding.
Yet the money is only half of the picture. What sets the 14:19 Fund and the wider Inspiring Scotland model apart is how they provide the expertise and advice to help charities manage their cash and other aspects of their operations. Venture capitalists know when they need to jump in and help the companies in which they invest. Venture philanthropists are no different.
Venture philanthropy is a highly-engaged form of funding and our performance advisors, often from senior financial and professional services positions, work with staff at our charities to strengthen their day-to-day management. This comprises implementing strategic business plans, developing risk management strategies and strengthening financial management, including through cost-benefit analyses. We also have a network of more than 300 professional volunteers, ranging from lawyers and accountants to photographers and marketing specialists, who provide expert advice to our charities on a pro-bono basis.
Many go on to join the boards of the charities, strengthening their commitment to tackling poverty and improving life chances in Scotland.
One of the most inspiring examples of our pro-bono success is the Callander Youth Project Trust (CYPT), a charity that helps young people into work and education. When CYPT managing director Chris Martin told his board that he wanted to develop a building in the town to launch a pair of social enterprises – the Bridgend cafe and the Callander Youth Hostel – they thought he was mad. With advice from Inspiring Scotland’s volunteers, CYPT has breathed new life into the local area, with the youth hostel picking up a five-star rating from VisitScotland and the cafe thriving.
As the 14:19 Fund concludes 10 years of success, our attention turns to Inspiring Scotland’s next venture. Helping 35,000 young people into education, employment and training is a massive achievement but youth unemployment is still a spectre that holds back many communities from realising their full potential.
It’s not enough for us to put our hands in our pockets to support charities and then walk away. We need to roll up our sleeves and help them better manage their finances and operations so that they can better sustain support for more young people across our most disadvantaged communities.