Dana Bezerra on Combining Private Equity with Philanthropy

In this cheeky podcast Business without Bulls—t with Andrew Oury and Philipa Sturt, our CEO discusses how the Greater Share model works and what it means for the way nonprofits and charities do business.

Disclaimer** This podcast was done in the United Kingdom and for a non-U.S. audience.

Below is a clip from the full episode #216. You can also learn more about Dana Bezerra’s career journey in episode #217 and “what keeps her up at night” in episode #218.

Transcript:

Andy Oury: Hello, and welcome to Business Without Bullshit. I am Andy Oury, and alongside me is my fabulous co-host, Pippa Sturt.

Pippa Sturt: Hi, Andy.

Andy Oury: And today, we are joined by Dana Bezerra. Dana is the CEO of Greater Share.

Dana Bezerra: So Greater Share actually comes from... We have three founders, three principals who are all of the private equity business. And I think in that instance, they were at a place in their life where they were very familiar with private equity. They were also serving on a number of NGO boards, and they were having the same experience, which is lots of wealth creation and private equity. And then they would serve on NGO boards, and they would find their very, very talented executives having to spend a ton of time fundraising, because funding is fickle and slim.

So what they started asking was, could you take what they know, private equity and the wealth creation and the longtime horizon and the investment acumen, and could you marry it to deliver the same long-term, reliable, repeatable, unrestricted revenue to the NGOs? That's the question they were trying to figure out. Could we take this industry-generating thing that we know and make lives easier for NGOs? And in trying to solve for that, they created Greater Share, the vehicle.

So investors come into Greater Share, Greater Share moves their money to investment, which will generate returns. And our investors take those returns, they take return of capital, but every dollar of gain they have, over and above return of capital, they share with philanthropic endeavors. In the case of the first fund, it's education. In the case of the second fund, it'll be a different theme.

Andy Oury: So whoa, whoa, whoa. So just slow that down a bit. So I invest in an NGO...

Dana Bezerra: You invest in Greater Share, who invests in private equity.

Andy Oury: Who invests in private equity, who invests in NGOs.

Dana Bezerra: Nope, who invest in business-

Andy Oury: Invest-

Dana Bezerra: ... to create return. As the return flows back to the investor-

Andy Oury: Half of it goes into the NGO.

Dana Bezerra: Correct. Half your gain.

Andy Oury: Okay. Okay, half the gain.

Dana Bezerra: Yes.

Andy Oury: So you take some of the profit-

Pippa Sturt: So you get half your gain.

Andy Oury: That's good. That's good.

Dana Bezerra: Yes.

Pippa Sturt: Yeah.

Andy Oury: We actually slightly highlighted it before, talking about the prisons thing. I mean, the problem of the NGOs and charities and things like that is they just get stuck on every decision, because they're sort of... You dial up the ethics, you start having to say what, everything, and then you've got five people and 20 trustees, and everyone's... I work with charities. Now, you can't get the most simple thing decided, so they're very, very inefficient. I mean-

Dana Bezerra: They can be.

Andy Oury: ... it's a real problem though, you know.

Dana Bezerra: Yeah. And a big part of the inefficiency factor is their funding is restricted. So most funders... Think if you were Apple and you're creating, dating myself here, the iPod. If your investors come in saying you can only use their money for the iPod, you don't have any R&D function, you don't have the-

Andy Oury: No.

Dana Bezerra: ... opportunity to say, "Oh, here's this other thing, let's go..." So all NGO funding tends to be restricted and it's a very difficult environment to operate in, because they're only getting a dollar for things they've already shown. So the ability to think about the problems in their universe and decide how to address them is very limited by the provision of unrestricted revenue, which is what we're trying to do. So think of it as unrestricted dollars to say, "Management believes we need to move there. We need to move from the iPod to an iPhone, which is capable of all these things." How do you give NGOs the same liberty to design their future?

Andy Oury: Give them an income stream, is what you're saying.

Pippa Sturt: Hand over the cash and tell them to get on with it.

Andy Oury: I think your idea's great, but then they can't go and invest stuff in something really nasty and then give it... I mean, can they? I don't know. I mean, do they then have to think about what they have to invest in anyway, that they're going to make money from?

Dana Bezerra: Correct.

Andy Oury: And what's the rules, like prisons?

Dana Bezerra: On the investment side or on the NGO side?

Pippa Sturt: The investment side.

Dana Bezerra: On the investment side, sure, there are limits. You may not want to be part of the drug supply system. So things that, and you're into the opioid crisis, for example, or you may not want to be part of lots of people-

Andy Oury: Oh, the classics. Okay. Okay, I'm getting an idea for it.

Pippa Sturt: So there's some ethics on both sides.

Dana Bezerra: Absolutely. There would have to be for our model, certainly.

Andy Oury: And then they get this money forever? No, they've then got show what impact they're doing. They've got to report to you.

Dana Bezerra: Yeah, they do report, but the general idea is private equity tends to be 10, call it 12 years in duration. So the provision of support to the NGOs matches that period of time.

Andy Oury: Okay. If you get approved, then it's like we're basically going to give to you, like a charity-

Dana Bezerra: Correct. If something goes really off on a ditch, then you cannot fund them. But the assumption going in is that the duration of the private equity matches the duration of support for the NGO, so that they have runway and visibility into future revenues.

Andy Oury: I don't know whether we all know what an NGO is, a non-governmental... I mean, to me really, it's not-for-profit, which also doesn't mean anything in English law. It basically means charity.

Dana Bezerra: It basically means you don't have shareholders who are going to get wealthy off your business. Nonprofits can make a profit.

Andy Oury: Yes. You're limited by guarantee or you're a straight charity. That's an English language. Okay. And then, if someone's listening to this, how do you get in touch to say, "We would love some of this money. We're doing something good." I'm sure I'm just going to ruin your life.

Dana Bezerra: Yes, thank you for that. So it doesn't work that way for us. With each fund, the private equity partners are selected at the outset and the NGO partners are selected at the outset, so there's no rolling application process or anything like that. When we decide to start a second fund, it'll be the same. We will then vet and bring on-

Pippa Sturt: So this is for a 10-year, 12-year period?

Dana Bezerra: Correct. Yes. The idea is really visibility into reliable revenue. So it's a set basket. If we do a second fund, then we'll have an open period where we'll evaluate new private equity partners and an open period we'll-

Andy Oury: We'll put your email address on the open internet.