Interview: Shaks Ghosh
The Private Equity Foundation chief executive tells David Ainsworth about the virtues of venture philanthropy.
When Shaks Ghosh became chief executive of the Private Equity Foundation in 2007 after a decade in charge of the homelessness charity Crisis, it took many by surprise.
The hard-nosed, data-driven approach of private equity seemed a million miles away from her previous job. But Ghosh wanted the opportunity to do something different and was attracted to the foundation’s business model.
The model is copied from the private equity industry, which provides most of the charity’s funding: find effective organisations, invest funds and support to build up their expertise and then exit once the job is done.
In the business sector, these methods have caused controversy because they have often involved large numbers of redundancies when a firm is taken over, followed by a quick profit for the investors. But Ghosh says she doesn’t believe the industry has a bad reputation.
"Private equity is about building great companies," she says. "It’s focused on value, metrics and leadership. And that’s the model we’ve applied to the charity sector."
The charity is not a public relations exercise by the private equity industry, she says. "There are easier ways for the industry to get a good press," she says. "It’s a community that’s keen to engage, is ready to engage and has a lot to give."
Ghosh says her charity’s "venture philanthropy" approach is part of a new attitude to charitable funding that focuses on the people in the back office.
"It’s not that hard for a voluntary organisation to get project funding," she says. "But it has to have a strong back office to enable it to use that funding. We try to build up the abilities of charities in that area."
Ghosh says the foundation uses various methods to improve the effectiveness of charities. "One of the things we work on is the cost per beneficiary," she says. The education charity SkillForce, the latest recipient of a grant from the foundation, has already cut its costs from £1,400 to £900 per beneficiary.
"Charities say they are doing X, Y and Z," Ghosh says. "We look at how effective each of those is, then say ‘if you did more of Y and less of Z, you could have more impact’.
"We also help them to harness market intelligence. Charities are often not able to identify those who most need their help.
"It might be the ones they do help are the most literate, the most aware, the best informed. It’s the people who most need their help who are least likely to ask for it."
Ghosh says the foundation became interested in SkillForce, which offers young people training by ex-service personnel, because it was effective at building self-reliance and confidence in its beneficiaries. But its business model needed work.
"SkillForce received a lot of central government money, which gradually dried up," she says. "Now it derives most of its income from selling its services to schools.
"We put in about £270,000 and helped it make that transition by investing in its leadership.
"We paid for and helped it find a new chief operating officer. We brought in a ton of support to help it with cost modelling and strategic planning. And we’ve helped with its metrics and evidence base."
Focus on measurement
Ghosh says SkillForce is now more focused on measurement. "It was difficult to prove the organisation was really helping people," she says. "Now it can show it."
The foundation’s grant helped to improve the charity’s sales and marketing. "SkillForce has needed to learn how to sell its services directly, and that’s been a difficult transition," says Ghosh. "We were really worried it might not make it. But it’s been a fantastic success story."
The foundation, she says, is one of several organisations reaping the benefits of this approach. Other ‘venture philanthropy’ organisations have sprung up using similar methods, such as the Impetus Trust. But more of the same is needed from the foundation, she says.
"There’s no shortage of business people keen to put their skills to work in this sector," she says. "But there is a shortage of effective intermediation.
"You can’t just throw volunteers at an organisation and get them to help. It has to be brokered. It has to have a plan. It needs a timeline.
"There’s a shortage of intermediaries getting that done.
We don’t have the capacity to help all the people who would like to offer their services."
She is confident more venture philanthropy charities will emerge. "We’re borrowing from the market approach and moving it into the charity sector," she says.
"Everything in the sector is focused on the front-line intervention. I think in the future you will see more businesslike charities."