How can venture philanthropy organisations, social investors and impact investors, improve the way they allocate resources to their investees?
To answer this question the EVPA Knowledge Centre embarked on a nine-month journey with a group of over 30 experts. The result is the new EVPA report “Financing for Social Impact – The Key Role of Tailored Financing and Hybrid Finance”, launched at the EVPA Annual Conference in Oslo on 9 November 2017. This new piece of research looks at how funding can be shaped in a way that meets the financial needs of the social purpose organisation (SPO) and at how different actors can collaborate in the VP/SI space to bring more resources to SPOs.
EVPA has developed a three-step process to help VP/SI organisations find the most suitable financial instrument to support a SPO. The process is known as ‘tailored financing’ and it is addressed in the first part of the report.
The report also focuses on ‘hybrid finance’, which is defined as the allocation of financial resources to impact-oriented investments, combining different types of financial instruments and different types of risk/return/impact profiles of capital providers.
One of the main conclusions of the report is that tailored financing and hybrid finance promote a more efficient and effective deployment of resources in the VP/SI space. They can represent a way to solve the existing funding gap that prevents SPOs from gaining access to the capital needed for achieving self-sustainability and for scaling.