In order to fulfill their missions, social-good organizations need funders who care about creating impact and driving social change. As funders, you have a responsibility to invest in organizations where your money will be used to create equitable outcomes. This can be challenging because it requires gathering and analyzing large quantities of information to understand both the organizations and the challenges they face. Last week, philanthropy leaders, grantees, and community members throughout Ohio came together at Philanthropy Ohio’s annual conference. The goal of the conference was to examine future-oriented trends impacting Ohio’s philanthropic sector, including equitable grantmaking and trust-based philanthropy.
What is Trust-Based Philanthropy?
Traditional relationships between funders and grantees are often based on a system of compliance and control where the funder dictates how and when their money is spent. Though this model is intended to create responsible spending, it often creates structural barriers that make it challenging for nonprofits to use their resources in the most effective way.
Trust-based philanthropy can be an antidote to these unnecessary challenges. The concept of trust-based philanthropy is a holistic approach based on mutual accountability for both funders and grantees. It requires alignment in a grantmaking organization’s four interrelated areas: practice, leadership, culture, and values. Funders can help their grantees by being open about what they are doing, why they are doing it, and what outcomes they are trying to improve as part of their mission. Grantees can then be equally transparent in how they are using their resources, their strategic plans for the future, and what outcomes their beneficiaries experience. Developing relationships based on trust and collaboration can shift the power dynamics inherent in the funder/grantee relationship and lead to more impactful solutions to societal needs.
The Trust-based Philanthropy Project provides a Self Reflection Tool to help funders get started with the process of developing a trust-based internal culture. It is equally important for grantees to establish a trust-based culture both internally and with their funders.
Change, however necessary, is never easy. You may see the promise of creating a new approach but have no idea how to apply these concepts at your own organization. To help you get started, the Trust-based Philanthropy Project provides six concrete steps that you can take as a funder to help build trust-based relationships with your nonprofit partners.
Give Multi-Year, Unrestricted Funding
One of the challenges created by compliance and control-based funding is siloed resources. A nonprofit may have adequate or even excess funding in one area of operations, and inadequate resources in another area that may have a higher need. It may seem logical to provide funding that is designated for a specific program or service. But the truth is that nonprofits cannot run their programs without operational budgets for their organization. As a result, a strict restriction can actually hurt the programs you are trying to support.
When you build a transparent relationship with nonprofits, it allows you to develop the trust to know they will spend money wisely and in the way that makes the most sense to drive impact. Instead of restricting funding, build a relationship where you can trust your partner organizations to spend your money wisely.
Do the Homework
While deciding who and what to support, do your homework. Get to know both the nonprofits and the communities they serve. Better understanding the challenges they are trying to overcome will help you support your grantees now and in the future.
Simplify and Streamline Paperwork
Burdensome reporting creates a resource drain on both the grantees who have to create it and the funders who have to read it. Accurate and timely reporting is an essential piece of creating a relationship based on trust. But it is important to streamline the process by only asking for information that is necessary for making decisions and understanding situations. The right technology tools are invaluable in the process of turning data sharing into an asset instead of a burden.
Be Transparent and Responsive
According to Trust-based Philanthropy, “Open, honest, and transparent communication minimizes power imbalances and helps move the work forward.” Funders and grantees who can build a relationship with transparent communication and feedback are able to increase the effectiveness of their interventions. We would like to take that one step further and state that openly communicating and sharing real-time data helps both sides understand the true impact of their interventions and find ways to continuously improve.
Act on Feedback
One way to build mutual trust is for both sides to seek and act on feedback on their performance. As a funder, you can continuously improve your process by encouraging and acting on feedback from both your grantees and the organizations you choose not to support.
Offer Support Beyond the Check
Dollars and cents are a necessity for any nonprofit, but they are not the only way you can provide support. Do you have physical resources such as building space that they could utilize? Do you have partners or other resources in your networks that might be able to benefit your nonprofit partners? Do you have access to subject matter experts who could provide consulting or other guidance? Building trust-based relationships goes beyond financial support and allows you to become familiar with all of the needs of your nonprofit partners.
Trust-based philanthropy has the potential to help both funders and nonprofits achieve their missions of providing equitable outcomes and positive social impact.
SureImpact provides a way for funders to understand the extent of the change they are making through their investments, and how they can improve each step of the way – while connecting their entire social sector ecosystem.
SureImpact is a user-friendly data collection, reporting, and analytics platform that connects funders, collaborators, grant managers, evaluators, and grantee staff with real-time impact data. With SureImpact, funders can standardize the data collection requirements for the whole network, increasing data quality and simplifying grant reporting.
The platform was built for the social sector by people who have been working in the government, nonprofit, and collective impact initiatives for over twenty years and have a deep understanding of the unique needs of social sector organizations and their funders.
Watch our SureImpact for Funders interactive video tour to learn more.