Collaborative funds could mature into a coherent, high-impact marketplace—enabling donors to move further, faster, together. That will take clear-eyed engagement from donors and concentrated investment in marketplace infrastructure.

Collaborative funds are emerging as a powerful, yet underutilized, philanthropic asset class. Much like diversified investment funds in the financial sector, collaboratives enable donors to access specialized expertise, share risk, and pursue impact at a scale most individuals could not achieve alone.

Although collaborative vehicles have grown rapidly over the past decade, they still represent only a modest share of most philanthropic portfolios. Research and practitioner experience suggest they offer distinct advantages: greater efficiency through outsourced due diligence and grantmaking infrastructure; deeper field expertise and networks; and enriched donor engagement through peer learning and shared accountability. At the same time, collaboratives are no panacea. Many donors hesitate because of strategic questions about fit, tactical challenges in sourcing and evaluating funds, and relational dynamics around governance, trust, and shared, collaborative decision making. Nevertheless, there is evidence and reasoning to demonstrate collaborative funds' potential.

To help donors navigate this asset class, three actions are critical. First, donors should clarify their motivations, capacity, appetite for shared control, and the specific gaps that collaboratives can fill in their portfolios. Second, effective partnerships often require adapting traditional diligence and grantmaking processes to account for collaboratives’ unique structures, governance models, impact measurement approaches, and time horizons. Early alignment on expectations is essential to achieving strong outcomes. Third, realizing the full promise of collaborative philanthropy will require investment in field-level infrastructure—including new and improved discovery tools, shared definitions and standards, and stronger networks that connect donors and funds.

Philanthropy is entering an era defined less by individual action and more by coordinated capital and collective learning. With thoughtful engagement and ecosystem investment, collaborative funds can mature into a coherent, high-impact marketplace—enabling donors to move further, faster, together, displaying collaborative funds' potential as a philanthropic asset class.

Read the full article about collaboratives by Neha Dalal, Kimberly Dasher Tripp, and Alison Powell at The Bridgespan Group.