“Our biggest challenge is higher volatility in giving. More foundations than we would expect in a typical year have reduced or dropped their support.”  – A nonprofit leader on challenges and principles for trust-based philanthropy

This statement, included in CEP’s unflinching report on the state of the nonprofit sector, isn’t just about too little money; it’s about too much uncertainty. The importance of foundations not hoarding financial capital is well covered by others. The importance of funders hoarding uncertainty, however, needs an advocate, and principles for trust-based philanthropy should be laid out. So here I am.

Some uncertainty is normal – even helpful. It’s fuel for creativity and innovation; it pries open windows of opportunity. But too much uncertainty can have the opposite effect. And right now, nonprofits are awash in uncertainty, underscoring the importance of defining principles for trust-based philanthropy. There’s uncertainty created simply because a sector fraying from strain and swelling demand cannot hold forever, yet we don’t know if or when it will break. There’s uncertainty created by a volatile context that is grinding down staff and constituents’ wellbeing. And there’s a larger uncertainty about the viability of so much that seemed at least somewhat solid a few years ago: that a federal grant once awarded will be honored, that staff with temporary protected status will continue to have that status unless given a long lead time of notice — those were a few of the many background certainties that seemed so obvious we didn’t state them as assumptions when constructing our theories of change, when tweaking our strategic plans and principles for trust-based philanthropy.

But volatility in foundation funding isn’t an inevitable by-product of all this external chaos; it’s manufactured within our sector, demonstrating the need to lay out principles for trust-based philanthropy. It can be true both that much of the uncertainty crushing nonprofits is not directly caused by philanthropy, and also that philanthropic behavior is stoking highly consequential uncertainty and hobbling the sector at the very moment we need it to be dancing.

Principles for Trust-Based Philanthropy: When Unbridled Uncertainty Is Costly

As nonprofits’ uncertainty goes up, so too do costs, measured in dollars, trust, impact, and productivity. Scenario planning, making and then reversing decisions, pivoting, insulating staff and communities from anxiety — these take energy and time, focus and money and should be factored in when considering principles for trust-based philanthropy. Every leadership team meeting, board meeting, weekend, and late night spent generating, analyzing, tweaking yet another spreadsheet is a leadership team meeting, board meeting, weekend, and late night not spent on actual leadership toward that organization’s mission.

Read the full article about uncertainty in philanthropy by Katya Fels Smyth at The Center for Effective Philanthropy.