Key takeaways:
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- Trust-based philanthropy calls for shifting the power disparities between corporate funders and grantees to form more collaborative relationships with shared leadership. Many claim this approach can actually create a larger impact.
- It’s crucial to listen to your community’s needs — if not, you could be unintentionally ignoring the areas where support is most needed.
- Offer your nonprofit partners greater flexibility and support where needed. Conditions like reporting requirements can create challenges for grantees, particularly small organizations.
- Social impact measurement can be a challenge with this approach. Work closely with grantees to determine the best forms of measurement.
Demands for social justice have highlighted traditional power disparities between funders — particularly corporate funders — and the community organizations depending on their money.
Many have pointed to “trust-based philanthropy” as a means of addressing this inequity and rebalancing the power dynamic. In fact, The State of Corporate Purpose by Benevity deemed trust-based philanthropy one of the biggest corporate giving trends in 2021.
The Trust-Based Philanthropy Project — a peer-to-peer funder initiative — states, “At its core, trust-based philanthropy is about redistributing power—systemically, organizationally, and interpersonally—in service of a healthier and more equitable nonprofit sector.”
What does this approach look like on a practical level, and can enterprises actually make the shift? Let’s dive into the common misconceptions, challenges, and opportunities for large companies.
The misconceptions
While unrestricted funding is at the core of trust-based philanthropy, this approach is not about writing a check and trusting nonprofit groups unconditionally. Shaady Salehi, Executive Director of the Trust-Based Philanthropy Project, said this is the most common misconception.
In an interview with the Do One Better podcast, Shaady said, “The trust-based approach is really about a partnership-oriented, relational approach where funders are shoulder to shoulder with the leaders on the ground—learning from them, learning with them, providing a systems mindset to how they’re working with nonprofits, and thinking about ways they can bring other supports beyond financial resources.”
The approach calls for more transparent, collaborative relationships between corporations and nonprofit groups with the mindset that better trust will lead to better impact.
Still, what does trust-based philanthropy look like on a practical level, and would it change the grantmaking process?
Listen to your community
Proactively listening to your community’s needs is an essential aspect of trust-based philanthropy.
Last year, ESG & CSR Board members touched on this during a confidential benchmarking session.
During the discussion, one foundation leader said that after a high-profile period of unrest in their city following a police shooting, they did a deep dive into listening to community concerns and found that the number one issue neighbors brought to them was access to fresh fruits and vegetables – an insight they never anticipated.
It’s clear that if you’re not listening to your community’s needs, then you may be neglecting the areas where help is most needed.
Ali Mathias, Head of Community Responsibility Strategy and MassMutual Foundation Vice President, also emphasized this during a public ESG & CSR Board panel discussion.
She said, “We are not the experts. We are not here to tell anyone what they need to do. We’re here to support or amplify the good work that’s happening in the community.”
Offer your nonprofit partners support and flexibility
It’s not enough to listen to your community’s needs; trust-based philanthropy also calls for considerable adjustments to the grantmaking process and requirements.
Trust-based philanthropy has been gaining momentum since the onslaught of COVID-19 when nonprofits were grappling with the compounding crises of the pandemic, according to Benevity’s State of Corporate Purpose report.
Amid the upheaval, nonprofits requested greater flexibility from corporate donors so they could respond quickly. Companies responded by streamlining their grant request forms and reducing reporting requirements.
Many corporate funders found that their own efforts and their grantees’ efforts were only amplified.
An article by the Trust-Based Philanthropy Project states, “Funders discovered that the sky did not, in fact, collapse when they responded to the urgency of the moment by reducing reporting requirements and giving grantees the freedom to use the money as they saw fit.”
Today, many corporate foundations are still cognizant of the hurdles nonprofits face in seeking funding.
During the ESG & CSR Board panel, Karem Perez, Executive Director of the Motorola Solutions Foundation, said there’s a lot of discussion in the industry around being cautious about asking too much of your nonprofit, particularly for small organizations.
This is something the Motorola Solutions Foundation is cognizant of, and as a result, grantees are permitted to use a portion of their funds, when needed, to help them develop impacting reporting.
Karem called this strategy a “win-win for both parties.”
Social impact measurement
Translating social impact work into reportable data is a struggle for many corporate philanthropy leaders, and getting this data is especially challenging from a trust-based philanthropy perspective.
What does social impact measurement look like under trust-based philanthropy practices?
The Trust-Based Philanthropy Project states this is the most frequently asked question from funders, and it can be a massive hurdle in adopting trust-based philanthropy practices.
The project’s guidelines state, “Whereas in traditional frameworks, funders define impact goals for grantees to live up to, trust-based philanthropy recognizes that grantee partners are the ones who are best-suited to define and assess their own success.”
Karem touched on this approach during the panel discussion, saying at the Motorola Solutions Foundation, they allow their grant patterns to largely determine what metrics they feel are most appropriate for their program.
“You know your program and your capabilities best; you tell us what you’re able to report on based on this specific program. Then we’ll hold you accountable for reporting on that,” she said.
The Trust-Based Philanthropy Project also suggests turning the lens away from grantees and onto your own organization by reflecting on how well you’re meeting your own goals as a foundation.
“You know your program and your capabilities best; you tell us what you’re able to report on based on this specific program. Then we’ll hold you accountable for reporting on that.” – Karem Perez, Executive Director of the Motorola Solutions Foundation
During the ESG & CSR Board’s confidential conversation, one member said that they told grantees that it was not about evaluating if they “did a good job” as they were not doing programmatic funding anymore, but rather a means of reporting on the company’s own community goals.
Benchmark strategies with corporate philanthropy leaders
We know that no corporate foundation is the same, and different companies will have different approaches to implementing trust-based philanthropy practices.
Still, there’s a lot to learn from other corporate philanthropy leaders who are navigating these challenges.
The ESG & CSR Board is where senior ESG, social impact, and sustainability leaders benchmark their strategies in a confidential setting.
