Trust-Based Philanthropy

Have you heard the phrase “trust-based philanthropy”? This is an emerging model of funding that recognizes the power dynamics in philanthropy and includes mutual accountability between funders and nonprofits.

Maybe you remember back in 2020, in reaction to the Covid pandemic, when private and family foundations declared they would lift the restrictions from funding and make it easier for nonprofit organizations to apply. The goal was to provide more general support so charities could use the funds for services that were most needed rather than just meeting foundation metrics.

The Trust-Based Philanthropy Project was in the vanguard of this effort to shift a decades-old mindset. To date, more than 1,000 funders have joined the information-based platform run by the project, to learn more about this approach. About two-thirds of the project’s members have increased or introduced general operating support grants.

In addition to unrestricted funding, trust-based philanthropy also promotes multi-year funding and simpler application and reporting processes.

On the other hand, Chronicle of Philanthropy published an Opinion piece in January 2024, that stated, “without accountability, trust-based philanthropy is little more than a feel-good exercise.”

This essay describes the experience of a nonprofit endowment fund that tried trust-based philanthropy and found the results lacking. The fund changed their approach to include “rigorous assessment” and “awards grants to nonprofits that demonstrate the highest level of effectiveness, efficiency and integrity in placing veterans in quality jobs.”

The Call of Duty Endowment awards single year grants, provides coaching to nonprofit leaders, and tracks and verifies metrics quarterly. If quantifiable goals are met, the nonprofit receives another one-year grant.

According to the U.S. Census Bureau, 12.4% of the U.S. population live in poverty. The poverty dividing line is $30,000 for a family of four. The latest report by the Bureau of Labor Statistics says that our unemployment rate is 3.7%. That sounds pretty good until you realize that equals to 6.2 million people.

These statistics tell me that there is plenty of work to be done by our nonprofit and philanthropic sector and there is not just one right answer.

Michelle Crim, CFRE

Dynamic Development Strategies can help. We offer coaching, grant writing, and fundraising services for our nonprofit clients. We specialize in small to mid-size organizations because we understand your challenges. Please contact us for more information.

https://www.dynamicdevelopmentstrategies.com/