She gives away lots of - other people's - money to charities, but they have to meet tough business targets and prove they can rise to the challenge.
By Patrick Butler
Daniela Barone Soares had spent a decade working as a private equity banker when she began to reassess her career goals. Her initial plan had been to amass a fortune and give it all away to charity. But life, she realised, was too short. "It came to a moment where I was thinking 'enough is enough', and that I wanted to do something now." She took a huge pay cut to join the charity sector - "When I went to Save the Children, what I earned in salary was less than I paid in tax in my last year at Boston Capital" - but now, she says, she's living her values.In April, Barone Soares found herself on an Independent on Sunday "Happy List" for the way her work in philanthropy helps to make the UK a "better and happier place to live". "I don't know if happier is the right word," she says, cautiously. But Barone Soares is not a philanthropist in the traditional sense. She certainly gives away (other people's) money to good causes, but she does it in a way that owes more to the hard-headed principles of business investment than the more paternalistic values of conventional grant-making.
Barone Soares is chief executive of Impetus, set up in 2003 by the venture capitalist Stephen Dawson. It is still relatively small - it marshals resources in cash and kind of £10m, with plans to increase this to £30m by 2012; it has just six full-time and three pro-bono employees; and it is partners with a highly select band of 11 charities. But already its presence is being felt. Two of the five charities chosen from 90 applicants in March by the Department for Children, Schools and Families to share in £27m of funding for disadvantaged children were Impetus partners - the disability advocacy Speaking Up, and the conflict resolution youth organisation Leap.
Impetus works as a kind of charitable private equity fund: it raises cash from individual and corporate donors, and uses this to lever in co-investment from charitable foundations and pro-bono expertise from business institutions. This resource is invested in a small portfolio of partner charities and social enterprises. The object is not to make a profit but to ensure donor money is spent in a way that maximises "social return", by injecting capital and management knowhow into often underperforming organisations it believes has the potential to be high performers.
Any charity working in the broad field of human welfare can apply, but only a handful make the cut. For every 30 charities that Impetus holds exploratory meetings with, just one ends up as a partner. Potential partners are subject to a full market analysis. Who are their competitors? How do they compare with their peers? Costs are analysed, beneficiaries are interviewed, and the quality of senior management and trustees is assessed. "It has to be a charity that is ambitious for a much greater social impact," Barone Soares says.
But surely all charities seek greater social impact? Barone Soares is unconvinced. There's an element of "risk aversion" in the sector, she says. "Sometimes, when they come to us with what they call an ambitious plan, it is not really ambitious at all. It's like: 'We've been growing 2% a year, we want to grow 3% a year.' Well, that is not that ambitious. We say: 'What you could do is this.' And they say: 'Woah, too ambitious. We don't want to go there.'"
Anyone seeing the trust as an easy source of short-term project funding is quickly disabused. Under the terms of the deal, unrestricted money is on offer, but to get it charities have to meet tough development targets over three to four years, and that will normally entail disruption, critical self-examination, and uncomfortable decisions. Not all senior staff or trustees, for example, are likely to be considered to be up to the task ahead. "We say to charities: 'This is not [the kind of charitable] funding where we ask you for a little progress report in a year from now," Barone Soares says. "We are going to be walking that journey with you and helping you achieve more than you would achieve on your own.'"
Some in the voluntary sector will bridle at a model in which the funder takes such a hands-on approach. Barone Soares is unapologetic. "Even though charities may have a good business model to tackle the root causes of social problems, they probably don't have the management and business skills to take it to the next level and make that impact much greater." The point of the partnership, she says, is not to change what the charity does, but how it does it. "That's not what we do. We buy into their plan. We challenge it, of course, but we buy into what they are doing and we help them focus on what is their core, because usually they are not focused."
Dependence on grants
The results so far appear to speak for themselves. Speaking Up has been transformed in four years from a small Cambridge-based charity running a single project into a £2.5m provider overseeing 27 projects. Average annual income growth has been 53%. It has increased its earned income and reduced its dependence on grants. There's been a sixfold increase in [people] using the charity's services, and the number of people helped in one-to-one advocacy work has grown 30-fold.
Organisational growth alone is not the point, Barone Soares says, and measuring a charity's performance is never solely a numbers game. A successful charity, she insists, is one that can demonstrate it makes a real difference to beneficiaries' lives. "As [the charities] grow, the thing we pay attention to is: are they becoming lighter touch, touching more people but in less depth? Or are they managing to keep the depth of impact while they grow?"
There have been no failures so far, but Barone Soares accepts that at some point one of its investments will begin to struggle. It may be, she says, that the charity has been hit by tough, unforeseen market conditions, and simply needs more cash - which they would supply. Or "it might be they are underperforming and we say, 'My goodness, they haven't done what they said they were going to do', and we suspend payment until they do it. And we have done that. That really focuses people. But we haven't hit a situation where we felt [we needed to make] an early exit. That would have to be a quite drastic situation.
"We don't have unlimited resources, which means if we are putting resources into a charity which is not impactful it means we are not allocating them to someone who might. If I'm brutal about it, some charities do deserve to go under because they are just incompetent, and they don't use resources efficiently and are not necessarily adding a lot of value."
The ultimate aim, she says, is to effect a kind of rationalisation in some sub-sectors of Britain's vast charity market to ensure the best-performing charities survive and prosper. That will be uncomfortable for many in the charity world. But Barone Soares's focus is on the beneficiary. "I don't believe all the number of charities that exist are all efficient and deserve to be there."
Curriculum Vitae
Age 37.
Born Belo Horizonte, Brazil.
Lives London.
Status Single.
Education Unicamp, Brazil, economics degree; Harvard Business School, MBA.
Career 2006-present: CEO, Impetus; 2004-06: head of institutional support, Save the Children; 2003: independent environmental consulting; 1997-2002: Bancboston Capital (private equity); 1995-97: Harvard; 1996: Goldman Sachs, New York, investment banking; 1992-95: Citibank, Brazil, commercial banking.
Interests Raja yoga meditation; poetry (published one book); scuba diving.
Source:
http://www.guardian.co.uk/society/2008/jul/09/voluntarysector
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