Top-down, transactional philanthropic funding has long been the norm, with donors determining their priorities and nonprofit beneficiaries being tasked with arduous proposal and reporting requirements to receive grant dollars. In pockets of the sector, momentum is shifting, largely thanks to a push toward trust-based philanthropy. Institutional funders have been the first to champion this concept, which seeks to better level the power dynamics between donor and recipient by advocating for mutual accountability and a more balanced exchange of information and influence. Multi-year, unrestricted funding is a key element for trust-based philanthropy, but the approach also calls for feedback loops and deeper connections with the served community, which tends to require a more robust infrastructure than most individual philanthropists have at their disposal. 

For non-staffed family foundations and individual donors, trust-based philanthropy practices may seem out of reach. Funders may be interested in having a less transactional relationship with grantees but do not have the capacity or know-how to stray from the status quo. MI Philanthropy advises and offers foundation management services to families and individuals. As such, we have acquired some insights that could be particularly useful to individuals seeking to model trust-based philanthropy.

#1: It Doesn’t Need to Happen Overnight

Moving toward trust-based philanthropy can be a progressive, rather than instantaneous, process. If needed, take small, slow steps and build on those. For example, many individual funders have traditionally awarded annual grants to support specific programmatic activities within an organization. If this type of restricted funding represents the bulk of your grant making, consider making gradual adjustments toward general operating support for the grantees whom you have the strongest connection or feel the most comfortable in making this switch. If resources allow, commit to multi-year funding so that these organizations can better plan for the future and carry out strategic endeavors with a longer time horizon. After offering this funding flexibility to some beneficiaries, explore doing the same with a larger percentage or perhaps the remaining grantees in your portfolio. 

#2: It Doesn’t Have to Be All or Nothing

Consider adopting trust-based practices in stages if the wholesale transition feels too inaccessible. For example, eliminating all grantee reporting requirements is unnecessary, but some small changes could simplify or streamline the process for funding beneficiaries. Instead of posing specific reporting questions in a grant agreement—which therefore necessitates an organization to prepare customized documentation—the organization could, instead, simply share its annual report. If desiring a more personal touch than an annual report can offer, perhaps a phone call could serve as the status update and replace the need for a formal report. Determine what levels of information are truly desired, seek out only those details, and do so in a way that recognizes the administrative burden that this request puts on an organization. In this way, transitioning to trust-based philanthropy can resemble a series of small adjustments rather than a drastic switch. 

#3: It Might Take Some Unlearning and Reeducation

Business savvy can generate wealth for an individual, but it may not necessarily translate to the nonprofit sector. Similarly, those with means may not be equipped with on-the-ground insights regarding how to effect societal change. Conventional grantmaking can reinforce notions that a funder is best positioned to make decisions, but trust-based philanthropy encourages a more equal exchange between a philanthropist and the community served. Perspectives from those with lived experience should inform grantmaking strategy and approaches, which can only happen when a funder regularly and earnestly solicits feedback. Speaking with leadership of organizations representing the community it serves is likely the most straightforward way to seek this input. If these organizations are not currently in your grantmaking portfolio, make an effort to understand why this is the case and direct future funding to these entities. Challenge current assumptions, humbly recognize gaps in knowledge, and proactively broaden one’s awareness of and accountability within the larger community. If operating within family philanthropy, step into the role of championing this reeducation process across all family members. Bring in outside support as needed. 

In Summary 

An obvious and critical aspect of trust-based philanthropy involves establishing trust between funder and recipient, which is only possible by cultivating healthy relationships. Rapport building is an ongoing process, so philanthropists should take the time to deepen relationships with existing grantees and/or build new connections with those on the ground. Be proactive in reaching out, be willing to listen, and be open to change. A robust infrastructure is not required to do this work, but it does take some energy and dedication. Ultimately, though, trust-based philanthropy is a force multiplier. It fosters more balanced engagement between funders and nonprofits, building bridges and advancing equity in the sector and well beyond. In this way, philanthropic practices can contribute to a better world on two tracks: by deploying charitable resources strategically while strengthening the nonprofit sector.