Key takeaways:
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- The growing trust-based philanthropy movement aims to rebalance the inherent power disparity between funders and the nonprofits they support.
- Multi-year and unrestricted or operational grants are practical implementations of this approach at the enterprise level.
- Impact measurement is more difficult under this model but not impossible.
At the core of corporate philanthropy is an innate power disparity between funders and the nonprofits that rely on their support.
Trust-based philanthropy aims to systematically rebalance this dynamic and enable a more collaborative, transparent, and impactful philanthropic ecosystem.
Despite the growing movement toward this approach to giving, there are still barriers to implementing these principles at the enterprise level — internal skepticism, capacity issues, and measurement limitations, to name a few.
What are some practical and small steps organizations can take toward creating a more equitable grantmaking process? Let’s explore these opportunities and address how to overcome the obstacles.
1. Rethinking Your Grant Processes to Alleviate Burdens Faced By Nonprofits
In a recent ESG & CSR Board panel on impact measurement, panelists from the MassMutual and Allstate Foundations shared how they’re shifting their grantmaking processes toward these principles.
Dennis Duquette, Head of Community Responsibility, President and CEO of the MassMutual Foundation, said they’re currently “in the thick of it,” and they’re engaging in conversations about trust-based philanthropy with the foundation’s board.
“Part of it is about access,” Dennis said. “How accessible are we to the community?”
Dennis added that they’ve already made some adjustments by shifting from single-year to multi-year grants whenever possible, which he said is particularly beneficial for smaller nonprofits with less capacity.
With single-year grants, Dennis suggested that by the time the first grant is awarded and you’re beginning to measure outcomes, nonprofits already need to gear up to secure a renewed grant.
“In order to avoid that and really ease the burden for them, we’re really looking at where it’s appropriate to do multi-year grants more often than not.”
— Dennis Duquette, Head of Community Responsibility, President and CEO of the MassMutual Foundation
Amy Mart, who leads Social Impact Measurement, Evaluation, and Thought Leadership at The Allstate Foundation, echoed this sentiment and said they’ve also transitioned to awarding more multi-year and unrestricted grants.
Specifically, Amy said Allstate is looking to fund general operational grants as opposed to programmatic funding.
Traditionally, many funders want to see their dollars directly benefit the program, but the truth is all donations, whether they go toward functional operations or infrastructure, ultimately enable a nonprofit to deliver aid.
Oracle’s recent study Connecting Dollars to Outcomes, emphasized how this resistance and scrutiny around contributing to nonprofits’ functional expenses is hindering their capacity.
Annual commitments are similarly short-sighted, and ESG & CSR Board members suggested that connecting these dots helped leaders to see the value of multi-year unrestricted funding strategies that are at the heart of trust-based philanthropy.
“We’re funding organizations that we trust,” Amy said. “They have demonstrated a track record over time; they know the community they serve and the best methods for serving them.”
2. Securing Executive Buy-in and Overcoming Internal Resistance
The Trust-Based Philanthropy Project’s 2023 Grantmaker Report found that funders who practice trust-based principles are motivated by a belief that it is inherently more impactful and effective than traditional philanthropy models.
Still, winning over executives, many of whom don’t have deep knowledge of nonprofit work, can be a challenge.
Privately, ESG & CSR Board members met to discuss how they’re overcoming internal resistance to implementing trust-based philanthropy practices.
Speaking to Leadership in Their Own Language
One member sold the idea to leadership by drawing parallels with business investments — investors don’t put money into a single product line or project but rather the entire enterprise.
The same should be true for investing in a nonprofit’s general organizational funding vs. programmatic funding.
Another member shared a unique tactic they leveraged to win over leadership — a bus tour through the areas where they had invested.
The tour not only highlighted the successful impacts of their giving but also “bad investments” like a playground outside of a public housing complex that had never been used.
Identifying bad investments was easy, the member said, as they just asked community members where they were. The bus tour was curated around a theme, and afterward, multiple leaders who had missed the tour asked when the next one would be.
3. Focusing on “Learning-Oriented” to Provide The Highest Benefit
Translating your social impact initiatives into reportable data is a challenge under any giving philosophy, but gathering data from community partners is especially difficult from a trust-based perspective.
Privately, one ESG & CSR Board member shared the analogy one member made was going into someone’s home and making them step on a scale, telling them what they ought to weigh.
According to trust-based philanthropy principles, data belongs to the community, but community organizations have to be convinced that corporate funders really do respect their control over data.
One member told grantees that collecting data was not about evaluating if they “did a good job” but rather a means of reporting on the company’s own community goals.
Similarly, Amy shared how Allstate is focused on “learning-oriented” evaluation to ensure they’re providing the highest benefit to those with the greatest need.
While the foundation is funding more operational grants as opposed to programmatic, Amy shared that they’re still able to collect data.
“We’re still measuring our intended social impact outcomes in those situations,” Amy said. “And we are also moving toward trying to develop some tools for measuring organizational capacity.”
Additionally, the Allstate Foundation just instituted a partnership with the Center for Effective Philanthropy (CEP) to conduct a survey among their nonprofit partners in an effort to collect feedback as a funder.
“So, to what extent are we showing up in a way that embodies those trust-based philanthropy principles? And what impact are we having on their organization in the field?”
— Amy Mart, Social Impact Measurement, Evaluation, and Thought Leadership at The Allstate Foundation
At the time of the panel discussion, Amy said they were still awaiting that data but that the team was excited to utilize this feedback to promote their continued improvement.
4. Promoting Equity in Your Grant Making By Including Diverse Voices
As enterprises deepen their commitments to diversity, equity, and inclusion, it’s essential that their grantmaking and corporate contributions are serving communities in an unbiased and fair way — and equity and trust-based philanthropy go hand-in-hand.
Privately, ESG & CSR Board members shared that they’re focused on bringing more diverse voices to the table and trying to “get out of their own way.” Engaging grantees and community stakeholders in the decision-making process is essential to achieving this goal.
Funding Nonprofit’s Evaluation Efforts
With regard to impact data, several members said they are mindful of the burden on nonprofit partners or grantees. Members also expressed concerns with their partners “telling them what they want to hear” or favoring organizations with the resources to do data collection.
In recent years, many corporate funders have allowed for a portion of their investment to be dedicated to evaluation, which can be particularly beneficial for smaller nonprofits.
Amy said, “We are really moving toward an approach where If we are willing to invest money in funding an organization and their programming, we also are willing to invest in evaluation for that work.”
5. Comparing Your Strategy With Other Corporate Philanthropy Leaders
The Center for Effective Philanthropy’s State of Nonprofits 2023 research study found that more than half of surveyed nonprofit leaders perceived an increase in trust during the past year from their funders.
Despite this industry shift toward trust-based philanthropy, there’s still a lot of work to be done in this area.
Benchmarking your approach with other corporate philanthropy leaders can help you determine the practical steps you can take to design more equitable giving processes.
ESG & CSR Board membership offers confidential benchmarking and peer support on the most challenging aspects of this work — impact measurement, grantmaking, and more.
