From Power Dynamics to Partnerships: Trust-based philanthropy in equitable grantmaking

May 18, 2023

Jamie Schloegel, Chief Executive OfficerBy Jamie Schloegel, Chief Executive Officer

Interest in equitable grantmaking increasing

The world of philanthropy has been undergoing a transformative shift in recent years, with an increasing emphasis on equitable grantmaking practices that prioritize long-term impact and community empowerment. Trust-based philanthropy, a vital concept in this shift, seeks to rebalance power dynamics between funders and grantees, fostering stronger relationships and more effective investments. It’s a practice we started implementing into our competitive grantmaking practices in 2018.

What is trust-based philanthropy?

Trust-based philanthropy is an approach to charitable giving that emphasizes transparency, collaboration and shared power between donors and grantees. In traditional grantmaking, funders develop the terms, and grantees comply. Trust-based philanthropy, however, encourages a more collaborative relationship, where both parties work together to define goals, measure progress, and share lessons learned.

Core principles of trust-based philanthropy

Core principles of trust-based philanthropy include:

  • Multi-year, unrestricted funding: Providing flexible, long-term support that allows organizations to plan, grow, and adapt to changing circumstances.
  • Simplified application and reporting processes: Reducing administrative burdens and focusing on the most relevant information to facilitate more productive relationships.
  • Collaboration and transparency: Engaging in open communication and feedback to learn from one another and improve the effectiveness of philanthropic investments.
  • Power-sharing and decision-making: Encouraging grantees to participate in decision-making processes, helping to ensure that solutions are rooted in the needs and expertise of the communities they serve.
  • Continuous learning and improvement: Embracing a growth mindset and being open to learning from successes and failures to strengthen philanthropic practice.

Trust-based philanthropy worth consideration

Trust-based philanthropy allows grantees more flexibility to optimize the effectiveness of philanthropic investments. It opens possibilities for further innovations and adaptation to meet changing needs in the community.

By shifting the focus to trust and collaboration, trust-based philanthropy fosters stronger, more equitable partnerships between funders and grantees. This approach empowers nonprofits to use their expertise and knowledge of their communities to drive lasting change, ultimately leading to more impactful and sustainable solutions.

Putting trust-based philanthropy into practice?

If you’re interested in adopting a trust-based approach to your philanthropic work, these steps can guide you:

  • Reflect on your motivations and goals: Begin by considering why you want to engage in philanthropy and what you hope to achieve. This reflection will serve as the foundation for your trust-based philanthropic journey.
  • Learn from the experiences of others: Research and connect with other philanthropists, foundations, and nonprofits that have adopted trust-based practices. Learn from their successes, challenges, and insights.
  • Establish open communication: Foster a culture of transparency and open dialogue with your grantees. Encourage feedback, listen actively, and be willing to adapt your approach based on their insights.
  • Simplify processes: Review your grant application and reporting requirements, and look for ways to streamline them. Focus on gathering the most relevant information while minimizing administrative burdens. (La Crosse Community Foundation can advise you on this or make it happen with any funds you have here.)
  • Share decision-making power: Engage grantees and community stakeholders in decision-making processes, ensuring that their voices are heard and their expertise is valued.
  • Commit to continuous learning: Embrace a growth mindset, and be open to learning from both successes and failures. Then, use these insights to inform and improve your philanthropic practice.
Testing the power of this new approach

Trust-based philanthropy is more than just an appealing concept; it’s an approach that can lead to demonstrable benefits for both donors and nonprofits. A study conducted by the Center for Effective Philanthropy (CEP) in 2018 found a clear correlation between strong funder-grantee relationships and various positive outcomes.

According to the report “Strengthening Grantees: Foundation and Nonprofit Perspectives,” grantees who perceived their funders as more open to discussing challenges and providing capacity-building support were likelier to report improved positive outcomes. The study revealed that when funders provided more than just financial support, 76% of grantees experienced improvements in organizational management, 69% in programmatic sustainability, and 68% in the effectiveness of their programs. These compelling findings reinforce the transformative potential of trust-based philanthropy, showcasing how a more equitable and collaborative approach to grantmaking can contribute to a greater, lasting impact within the nonprofit sector and the community.