Recently, I came across this article on the City Journal website talking about Trust Based Philanthropy. While these articles are helpful, I often wonder how leaders in smaller nonprofits can actually use some of the lessons and insights this type of information provides.
The article presents a nuanced view on the emerging trend of trust-based philanthropy, a movement advocating for less restrictive, more trusting relationships between donors and nonprofit organizations. It highlights the growing call for multi-year, unrestricted funding, especially beneficial for startups, organizations serving marginalized communities, and those led by people of color. While this approach aims to empower grantees and address issues of equity and power dynamics in philanthropy, it also raises concerns about accountability and effectiveness, as seen in the case of recent controversies around large, unrestricted donations.
For smaller nonprofit organizations, this evolving landscape of philanthropy offers both opportunities and challenges. Here are some key implications and actions they should consider:
Embrace the Shift Towards Unrestricted Funding: Smaller nonprofits, often constrained by limited resources and strict funding guidelines, should welcome the trend towards unrestricted funding. This can provide them the flexibility to allocate resources where most needed and to adapt to changing circumstances more effectively.
Build Trust with Donors: Trust-based philanthropy hinges on strong relationships between donors and grantees. Smaller nonprofits should focus on cultivating transparent, open communications with their donors, demonstrating their impact, and sharing their successes and challenges honestly.
Demonstrate Impact and Accountability: While unrestricted funding offers more freedom, it doesn't eliminate the need for accountability. Nonprofits should develop robust mechanisms to track and report their impact. This can help in building trust and justifying the continued support of their donors.
Adapt to a Collaborative Approach: The trend suggests a move towards more collaborative relationships between donors and grantees. Nonprofits should be prepared to engage in dialogue with donors, involving them in discussions about strategies and goals. This collaborative approach can lead to more meaningful and effective partnerships.
Focus on Long-term Sustainability: With the possibility of multi-year funding, nonprofits have the opportunity to plan for the long term. They should use this opportunity to strengthen their internal capacities, invest in their staff, and develop strategies that ensure sustainability beyond the funding period.
Navigate the Balance between Flexibility and Oversight: While unrestricted funding provides flexibility, nonprofits must still maintain a balance between utilizing funds effectively and ensuring that they are not mismanaged. Establishing clear internal guidelines and ethical standards is essential.
Leverage the Shift for Advocacy and Systemic Change: For nonprofits working in areas like social justice or community development, the shift towards trust-based philanthropy could be leveraged to advocate for systemic changes. It provides an opportunity to address underlying issues and work towards long-term solutions.
Stay Prepared for Scrutiny and Criticism: As the trend evolves, there may be increased scrutiny of how nonprofits use unrestricted funds. Organizations should be prepared to respond to criticism and demonstrate how their approach is effective and responsible.
Educate and Inform the Board and Stakeholders: Nonprofit leaders should educate their boards and other stakeholders about this shift in philanthropy. Understanding the implications and benefits of trust-based philanthropy can help in aligning strategies and expectations.
Continuously Evaluate and Adapt: The philanthropic landscape is dynamic. Nonprofits should regularly evaluate their strategies and adapt to new trends and donor expectations. This could mean adjusting their fundraising approaches, program implementation strategies, and impact measurement practices.
In conclusion, while trust-based philanthropy presents new opportunities for smaller nonprofits, it also requires a proactive approach to building and maintaining donor trust, demonstrating accountability, and adapting to a more collaborative and flexible funding environment.
The Weekly Notebook
A few notes and ideas of things I am seeing and hearing on the nonprofit world.
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Online Learning Options from Texas A&M Announced
If travelling for professional development isn’t in the cards (or the budget), the Center for Nonprofits at Texas A&M University has some great offerings! I recently enrolled in one of their certificate programs and really enjoyed the online format and the online discussions that were developed. It was time and money well spent and I would highly recommend this program, especially for early or mid-career professionals. The next session begins in early February and you can learn more here!
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