Trust-based Philanthropy: What Donors Need to Know

If you follow philanthropic trends, you are likely aware that trust-based philanthropy has become a “must-have” topic for conference sessions, webinars, podcasts and articles in popular philanthropy journals. The roots of some trust-based concepts are relatively deep, beginning with the development of common grant applications among funders in a specific geography, the use of community advisory boards by foundations and the efforts to streamline grantmaking paperwork led by the Grants Managers Network, now PEAK Grantmaking. Like other aspects of philanthropic practice, the trust-based movement gained critical momentum amid the turmoil of 2020. Despite its popularity, however, donors should be aware of the dangerous core mission behind trust-based philanthropy and avoid using that label to describe their thoughtful grantmaking practices. 

Driven by the uneasy combination of pandemic and racial unrest, trust-based philanthropy emerged first as a voluntary pledge to “do more now” to support nonprofits, and then as a movement to make grantmaking processes more equitable in order to drive more funds to organizations led by, and serving, people of color. This year, a webinar addressing this topic carried the title: “Put Your Money Where Your Mouth Is: Anti-Racist Grantmaking for White Funders.” Among the questions asked of the white panelists was how their whiteness had affected their work. One way these donors increased support to BIPOC-led nonprofits was to forgo both grant applications and reports.

The harsh rhetoric of trust-based philanthropy also includes frequent demands that funders share or cede the power and control they exert over nonprofits “in the guise of risk management, due diligence and good strategy.” Individual and foundation donors alike may well object to the implication that they are—either deliberately or unknowingly—using what might be considered practices that ensure accountability to oppress their grantees. Their critics, however, have not hesitated to suggest that those donors should transfer their “grantmaking power to nonprofit leaders, social entrepreneurs or community leaders with lived experience in a particular field.” Some trust-based proponents see this as the only way to guarantee tax-deductible charitable gifts serve a perceived “public good.” The most extreme proponents question the very legitimacy of those gifts, alleging that much of the wealth that drives philanthropy stems from exploitation, from an economic system “predicated on cruelty.”

Donors who encounter an appeal for trust-based philanthropy that sounds like “Support us without asking any questions and then go away till we ask you back” may understandably reject all talk of a new paradigm where there are no applications, no outcomes tracking, no reporting and no “strategic philanthropy.” Effective donors understand that although there is a power imbalance in philanthropy, they can utilize these good grantmaking practices to reduce barriers to funding while still ensuring accountability, pursuing an outcomes-driven strategy and protecting donor intent:

  • Be transparent about your mission and focus areas and also what you don’t fund.
  • Consult representatives of communities/populations you seek to assist.
  • Consider reaching out to organizations you don’t already know or work with.  
  • If you have sufficient staff, research new or unfamiliar organization and utilize applications that ask only for the additional information you really need for due diligence.
  • Consider using common applications in your geographic or issue area if available.
  • Consider general operating support and/or multi-year grants for mission-aligned organizations.
  • Streamline reporting requirements to collect actionable information about outcomes useful to you and your grantee and make reporting requirements proportional to your grant.
  • Maintain a respectful and responsive relationship with the nonprofit organizations with whom you interact. 
  • Consider providing additional support such as technical assistance and introductions to other potential donors.

Although the Trust-Based Philanthropy Project promotes six practices quite similar to those suggested above, its leadership has made clear that those practices—even when combined with a more trusting, less donor-driven relationship—are insufficient “if funders aren’t simultaneously applying a racial equity lens to their work.” They have reacted with consternation when well-meaning funders use the term “trust-based philanthropy” to describe only improved grantmaking processes. The most ardent proponents of trust-based philanthropy worry that the jargon is muddying the reality, warning that altering the mechanics of grantmaking is insufficient to bring about the transformational change they seek. 

The notion that philanthropy requires a “power reckoning” centered on racial equity has reached well into mainstream philanthropy. Earlier this year, the Monitor Institute by Deloitte published What’s Next for Philanthropy in the 2020s – Edge Overview: Balancing Power. I was struck by this passage which indicates how much of a threat to philanthropic freedom the seemingly benign term “trust-based philanthropy” might present if it leads to diversity mandates: 

“Power dynamics are inextricably linked to race, and many funders are beginning to reexamine both their external strategies (such as who and how they fund) and their internal practices (including operations, staffing and representation at leadership levels). In the coming years, as awareness of inequities continues to grow and organizations of many types begin to challenge their systemic biases, questions about navigating power will need to be addressed more explicitly and more often. Power dynamics exist, even when they aren’t spoken about openly, and they show up in how funders invest, who they hire, what they do, how they make decisions and how their efforts are judged and measured.”

Wise funders who adopt good grantmaking practices might want to consider the strong, and sometimes extreme, rhetoric around the “trust-based philanthropy” label and think twice before adopting the term. The buzzword may, in fact, be a buzzsaw in disguise.  

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