Knowledge Centre Director European Venture Philanthropy Association (EVPA)
Tailored financing is one of the key practices of venture philanthropy which entails the use of a range of financing mechanisms according to the needs of the social purpose organizations. Nonetheless, some evidence points to the fact that not all social investors are aware of the possibility of combining different financing instruments and how to use them. Further, there might be still some confusion about what “hybrid finance” means – does it mean mixing different financing instruments or mixing public and private funds, and how is it different from hybrid instruments, hybrid capital and blended finance? This session will address the aforementioned questions through analyzing existing practices.
- Which are the characteristics of the social investor that have an impact on the financing instrument chosen (e.g. risk perspective, return expectations, time horizon, type of non-financial support provided, values, mission, strategy)?
- What are the investee characteristics (e.g. type, internal structure, stage of development, sector, support needed) to be considered when choosing the financing instrument to use? How do investees characteristics influence the decision to use an instrument or another? How the investor can assess the investee’s characteristics? What could happen if the investee’s assessment then turns out erroneous?
- Which are the main issues in the public/private collaboration? Which are the main results achieved? Are there areas where this mix is most suitable? Are there geographical considerations or limitations?
- For the purposes of this session, a “social investor” includes organisations involved in both grant-making and impact investing and an “investee” includes charities and social businesses.