January 7, 2022
Trust-Based Philanthropy
I’m encouraged by a conversation topic that seems to be coming up more and more regarding philanthropy, trust-based philanthropy. It’s not a new topic, but one that has and will take time to become the norm. As with most changes, it is understood and adopted at varying rates and levels of engagement. For the sake of our communities, I hope we hurry!
A strong nonprofit sector is critical to the success of any community. Yet, there is an inherent power dynamic that exists between funders and the nonprofits potentially receiving funds. If not acknowledged and addressed openly, it can hinder the development of open and trusting relationships, which is the ultimate goal of trust-based philanthropy. To truly provide impactful support to our community, funders must recognize this dynamic and work toward building authentic relationships with open and honest dialogue.
How do you work toward this authentic relationship? First, recognize that both funders and nonprofits are needed in reaching their shared goals. The individuals or organizations with wealth are looking to fund programs and organizations who are working to directly address the needs that both parties see as important to their mission. The nonprofits are transparent about their missions, goals and who they seek to help. When the two parties’ missions and desired impact goals align, it should be a beautiful partnership. It sounds simple, but conflict can occur unintentionally. To help overcome this, it requires intentional focus on seeking understanding, not evaluating or judging, during conversations. No one is served well if the nonprofit fears saying the “wrong” thing and being denied funding. Discussing only the nonprofit’s successes and programs that went well are certainly more comfortable to talk about; however, when a funder seeks true understanding of the work and allows the nonprofit to share its struggles and failures, they are able to reshape and continuously improve their programs which should lead to better results in the long run.
It is also important to be mindful of the position of the nonprofit. They are running a business. They have clients with needs, staff that require support (especially right now), and funders that are willing to partner, but many times with varying, and even contradictory, requirements. The nonprofit business may have very few reliable sources of revenue. Federal and state funding can disappear or change drastically year to year. Grants from foundations are often made for a one-year period of time and must be applied for again, sometimes with onerous reporting requirements to prove historical success in their work. Donations from individuals and others can change with little warning as well.
On the expense side of the nonprofit business, there are often more requests for support than the organization has funds for. As any business would do, they work to control expenses, improve efficiency and increase income. This can lead to hiring part-time staff in lieu of full-time, difficulty in offering competitive wages and benefits to employees, settling for donated or low-cost office space, using older computer and security equipment, reducing programs offered or the number of people it is offered to, and an overall environment of doing as much as possible with the limited resources they do have.
Trust-based philanthropy encourages funders to honestly review their process. Ask yourselves questions such as: Have I visited the nonprofit’s website to get a better understanding of their work? Have I reached out to the nonprofit leadership to set up time to hear their story first hand? Have I asked the nonprofit which practices or requests of funders cause them the most conflict or stress? If I am comfortable with a nonprofit organization, should I give them a multi-year gift to allow them more time to work before needing to fundraise again? Am I understanding and supportive when there are typos in an application, or tough lessons learned from programming, or other issues that the nonprofit team faces?
The collective nonprofit workforce has incredible potential to make a positive impact within our communities. They are doing so in an environment of unpredictable income, rapidly growing needs, and a desire to provide greater support to their staff, particularly now in a pandemic-stressed world and intense labor shortage. When funders find an organization that shares their mission and impact goals, and they have sought true understanding of the nonprofit’s work and their plan for impact, it then turns to trust in the leadership and ability to implement their plan of action. So the relationship continues post-funding, allowing the nonprofit leader to share, openly without fear, the parts of their programming that didn’t go perfectly or failed. True partnerships will allow for adjustments as they learn and grow.
Keeping the end client that both the funder and nonprofit aim to support top of mind is imperative. Showing up for those in need includes showing up and supporting those nonprofits on the front lines. Expecting excellence in every program the nonprofit provides with low cost administration, all with the looming fear of losing funding, is a model that is broken and changing. Imagine an environment where funders and nonprofits work together to inspire and seek shared values, to talk openly and supportively. That is trust-based grant making. I believe there is an achievable and needed balance of measuring impact and seeking true partnerships. With an understanding of the nonprofit’s work, their successes and their challenges, and open, clear communication, together the funders and nonprofits can make a difference!