Four years have now passed since an article on venture philanthropy and social venture capital by Prof. Dr. Dr. Achleitner appeared in the same place. At that time, the scene in Germany was still at the beginning of its development. A lot has happened since then. It is time to take stock. This paper will provide a brief introduction to venture philanthropy and the work of financial intermediaries in the social sector, along with lessons learned from the first years of practice in Germany.

Definition of Venture Philanthropy and Social Venture Capital

Venture philanthropy is the transfer of methods from the venture capital industry to the social sector. This means that few projects are intensively promoted, not only with financial means but also with network and consulting. In this context, an engagement is designed to run for a long period of time, during which the impact achieved by the organization and the use of funds are reviewed. In this way, venture philanthropy differs from the traditional way of working of foundations and donor organizations, which often support a large number of small projects for a small period of time - often without sufficiently reviewing the use of the donations. Venture philanthropy can help to identify, promote and further develop good organizations and thus make the best possible use of existing donations - after all, around 4 billion euros annually in Germany.

Social venture capital can be seen as a special case of venture philanthropy (FYB 2007, p. 122 Achleitner). Here, not only the methods but also the financing instruments are adopted from the venture capital industry. Instead of focusing solely on donations, customized financing is offered to social organizations with a combination of equity, loans and mezzanine capital. The aim is to generate a cost-covering minimum return so that the invested capital can be used again for social projects after repayment.