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A deeper dive into LGT Venture Philanthropy's work

October 11, 2021

LGT VP's CEO Oliver Karius discusses the role that venture philanthropy can play in supporting effective, scalable solutions to systemic challenges.

Oliver Karius SDG 8
Oliver Karius SDG 8

Mr. Karius, what does it mean to be philanthropically active today? Can I help bringing about change by filling in a check?

Oliver Karius: (Smiles) We all wish it was that easy. Unfortunately, things are more complex. We are living in interesting times. Systemic failures lie at the heart of challenges such as the Climate Crisis, the COVID-19 pandemic, youth unemployment, lack of affordable healthcare and biodiversity loss. Effective solutions require systemic responses and a more coordinated approach between the public, private and also the philanthropic sector as well as different types of capital. These challenges are a call to action for a more engaged form of philanthropy, one that takes risks and supports new solutions to old problems – this is where venture philanthropy can play a significant role.

So, today’s complex challenges ask for “a more engaged form of philanthropy” – you’re talking about venture philanthropy in particular. What do you mean by that?

Oliver Karius: Impact-oriented organizations and companies can offer effective solutions to tackle societal and environmental issues, but often lack the resources and the know-how to operate at scale. Venture philanthropy not only provides access to funding, but also helps to build organizations’ strategic, operational and management capacity, enabling organizations to scale and replicate their model more effectively.

I assume that LGT Venture Philanthropy also takes this holistic philanthropic approach?

Oliver Karius: We do. LGT Venture Philanthropy (LGT VP) applies a hands-on, long-term approach, by providing its portfolio organizations with tailored financing, organizational support, guidance on impact measurement and management as well as access to its networks.

Access to its networks? What does that mean?

Oliver Karius: One example is the LGT Impact Fellowship Program. It was designed to strengthen organizational capabilities, by placing experts with relevant business expertise into portfolio organizations to provide know-how and fill important operational gaps. For example, one Fellow joined Educate Girls to work on their expansion strategy, which will allow them to expand from 12’000 schools in 2016 to 34’000 schools in 2023. Another Fellow, a fundraising expert, worked for the Mara Naboisho Conservancy in Kenya and raised USD 123’000 for the organization.

Raising USD 123’000 is one part of the equation, achieving impact with the money and network you have is another. How can grants achieve true impact?

Oliver Karius: From a risk-return perspective, grant capital is “scarce,” it can take on maximum risk and seeks to maximize social and environmental impact. It is therefore very valuable and, in my opinion, not “soft” funding as long as it is tied to the overall impact potential.  A well-placed grant that is targeted not to programmatic funding but to funding the core of the organization can be catalytic for an organization’s impact. We engage with organizations with a proven business model and proven impact that are looking to scale. Our funding in the form of non-programmatic grants enables organizations to allocate funds to whichever organizational areas need to be strengthened and to focus on maximizing impact.

But you only fund them once they have proven that their business model works, right?

Oliver Karius: To a certain degree, yes. Similar to venture capital, we provide follow-on funding only if the organizations have achieved their milestones, ensuring that the funding is used efficiently and effectively. In our experience, grant funding can also unlock vital funding from governments or development finance institutions to scale the impact even further.

So LGT VP focuses rigorously on impact results.

Oliver Karius: Yes, this focus helps our portfolio organizations develop a new form of financing linked to impact results. These Payment-by-Results structures make payment contingent on the independent verification of results. This is another example of how grants can be leveraged successfully.

Your founder, H.S.H. Prince Max von und zu Liechtenstein, has a clear vision: “All human beings should be able to live under dignified conditions and be given a fair chance for personal development in their lives.”

Oliver Karius: We have translated this vision into our mission which is to improve the quality of life of disadvantaged people, contribute to healthy ecosystems and build resilient, inclusive and prosperous communities. To that effect, we focus on organizations that are active in three thematic areas – education, healthcare and environment – each with its clear objectives. 

How does LGT VP select organizations with “effective, innovative and scalable solutions”?

Oliver Karius: Across our three themes – education, healthcare and environment – we have taken a strategic approach to understand which solutions give you a high impact return, for example Early Childhood Development. We then look for organizations that have a scalable model to implement effective Early Childhood Development programs. We engage only with organizations that have not only demonstrated innovative solutions and produced scalable models but are also led by strong management and are data driven.

In other words, the organizations you support have to be guided by a great idea, but in order to achieve a great impact, they also have to be replicable and scalable.

Oliver Karius: Exactly. Over time, we have developed a certain “pattern recognition” for organizations that have demonstrated that their models are replicable within and across different countries.

And before investing in an organization, you do your due diligence.

Oliver Karius: Yes, we conduct a rigorous due diligence process at the beginning of each engagement to assess whether the organization is effective, efficient and reliable. This allows us to get to know the management and the organization and creates a basis of trust. This is imperative for a long-term, partnership-based approach of working together. But we don’t focus only on each organization separately, but also on synergies between portfolio organizations.

In order to achieve an even greater impact?

Oliver Karius: Yes, this is part of our 2023 strategy to deepen our impact in each respective sector. Focusing on each solution and how they complement each other has proven to be catalytic and deeply and widely impactful in the long term and is the key to systematic change.

What do such synergies look like in concrete terms?

Oliver Karius: For example, as part of our healthcare strategy, we help strengthen community healthcare systems on the ground by engaging with organizations that provide training for community health workers in low-income communities. Unfortunately, many public healthcare systems in Africa and India do not have the capacity to implement new solutions at scale. So, in addition to advancing local community health systems, we engage with organizations that help Ministries of Health generate critical funding and strengthen their own management and leadership capacity to implement these innovative solutions. Where possible, we apply this complementary approach in all three of our strategic areas.

Thank you very much for your answers.

Oliver Karius: Thank you. And we cannot thank the Princely Family, LGT and its employees enough for their dedication and ongoing support of our work.