Trust-based philanthropy is an approach that centers on humility and collaboration with the philanthropists often granting nonprofits multi-year, unrestricted funding to achieve their goals. It avoids the power imbalance that can occurs between a philanthropist and a charity, when the philanthropist calls the shots on how their donation is allocated and used.
The trust-based philanthropy movement is still in its early stages, but it has the potential to transformative for grant makers and grantees.
History of trust-based philanthropy
According to the The Trust-Based Philanthropy Project, the approach was inspired by The Whitman Institute. Although TWI had been operating and giving grants since 1985, it wasn't until much later that they began to describe what they were doing as "trust-based philanthropy".
When TWI made the decision to spend all their resources and cease business activity by 2022, this meant, accelerating and increasing grant giving. As part of this process they commissioned a report in 2014 to gain feedback from grantees about their work.
The report highlighted the value of multiyear, unrestricted funding; focus on conversations and learning over paperwork and reporting; and the genuine sense of relationship we conveyed through transparency, communication, and care. These insights eventually were developed into six grantmaking principles of trust-based philanthropy .
The 6 principles of trust-based philanthropy
1. Give multi-year, unrestricted funding
Unrestricted funding comes with no strings attached, it can be used for anything within a charities objectives, including covering overheads and wages. Unrestricted funding is the lifeblood of charities because without it they can't operate. It comes with the flexibility to invest in the most pressing needs and when it's also multi-year funding enables the charity to plan for long-term goals and achieve greater sustainability.
2. Do the homework
Oftentimes, nonprofits have to jump through countless hoops just for the chance to submit a proposal. Trust-based philanthropy moves the onus to grantmakers, making it the funder’s responsibility to get to know prospective grantees, saving nonprofits’ time in the early stages of the vetting process.
3. Simplify and streamline paperwork
Nonprofits spend a huge amount of time and resource on funders requirements for applications and reports, which can distract them from their work. For example, only ask questions that you: a) cannot determine on your own, and b) really need to know.
4. Be transparent and responsive
Open, honest, and transparent communication supports relationships rooted in trust and mutual accountability. Shaady Salehi, Executive Director at The Trust-Based Philanthropy Project says: "mutual accountability is a core part of trust-based philanthropy. Without it, funders run the risk of “trustwashing” – which is an emergent phenomenon that has major implications for the long-term credibility of the trust-based philanthropy movement."
5. Solicit and act on feedback
Philanthropy doesn’t have all the answers. Grantees and communities provide valuable perspectives that can inform a funder’s strategy and approach, inherently making the grant makers work more successful in the long run.
6. Offer support beyond the check
Responsive, adaptive, non-monetary support bolsters leadership, capacity, and organisational health. This is especially critical for organisations that have historically gone without the same access to networks or level of support than their more established peers.
You can read more and download a guide to the six practices of trust-based philanthropy from the Trust-Based Philanthropy Project, which shares insights and practical recommendations on how to implement trust-based grantmaking practices.
Criticisms of trust-based philanthropy
Common criticisms can include:
"It is too risky, especially if the nonprofit is not well-managed or if it does not have a good track record." However, trust-based philanthropy recommends that the funder takes responsibility for getting to know prospective grantees, by doing due-dilligence and building a relationship with the nonprofit.
"It is difficult to implement". Trust-based philanthropy will require donors to have a shift in their mindset but it's achievable and there is plenty of support available to help with this change.
"Trust-based philanthropy favors large, well-established nonprofits over smaller, grassroots organisations" Actually, it's the opposite, trust-based philanthropy evens the playing field by removing the requirements for time consuming applications and reports that small charities don't have the skills to or time to complete.
Some critics may argue that "it is not accountable", however a charitable trust by it's very nature is accountable. A board of trustees ensures that donations are spent on the charities objectives and mission.
Trust-based philanthropy examples
The most well known example is billionaire MacKenzie Scott who has donated over $14 billion to over 1600 different causes, including education, climate change, and racial equity. In the UK, the Global Fund for Children has adopted a trust-based approach to giving grants. They say:
"Trust is at the center of our funding model and long-term relationships with partners: We trust our partners to seek solutions, lead, manage funds, and evaluate outcomes. Instead of asking, “What could go wrong?” we ask, “What could go right?”
There are also many other examples of UK grant makers implementing elements of trust-based philanthropy in their work such as IVAR's Open and Trusting Grantmaker initiative, which saw over 100 trusts and foundations sign up to eight commitments to managing grants and relationships in a way that reflects funders’ confidence in and respect for the organisations they fund.
Trust-based philanthropy isn't common in the UK but as the Trust-Based Philanthropy Project says, "Together, we’re building a more impactful and trust-based approach to philanthropy, one funder at a time."