How much faith should donors place in the people and organizations they support? The answer is “a lot,” according to a new movement called “trust-based philanthropy.” According to a recent article in The Chronicle of Philanthropy coauthored by the head of Girls Inc. and the vice president for programs at the Ford Foundation, donors should consider giving more “multi-year, unrestricted operating grants” because such giving is “crucial for nonprofits, especially startups, those serving marginalized communities and those led by people of color.” Earlier this year, the representatives of Ford, James Irvine, California Wellness, and other major foundations representing the Race and Equity Philanthropy Group published an open letter advocating trust-based philanthropy. “If foundations are going to reflect a genuine commitment to racial equity and justice, it is important to look closely at evolving practices that encourage power sharing between philanthropic institutions, grantees, and the communities they serve.”

The pressure to give money without strings attached has been growing in recent years. A recent report on MacKenzie Scott’s giving by the Center for Effective Philanthropy argues that “restricted funding creates challenges for nonprofit leaders in planning; in expanding their programming; in hiring and retention; and in investing in strengthening the capacity of their organizations.” Moreover, “nonprofit leaders as well as scholars and advocates have noted the short-sightedness of not funding in a way that strengthens organizations for the long haul, particularly when the goals of a donor and an organization align.”

In this view, demanding benchmarks for success or performing due diligence have become passé, or even a sign of structural racism; the often-white donors should simply trust leaders of color to make decisions for themselves. Lori Bezahler, the president of the Edward W. Hazen Foundation and chair of the board of Race Forward, says that unrestricted multiyear grants “would be a form of philanthropic reparations that could become the real game changer, providing steady streams of investment income to fuel the racial-justice movement and representing a true transfer of power.”

But this transfer of power, as it is called, has hit some bumps in the road. Over the past few years, donors have lavished hundreds of millions of dollars in gifts on race-based groups like Black Lives Matter, only to see most or all of those funds wasted or stolen. In retrospect, those donors would have achieved more if they had demanded accountability in the expenditure of those funds.

Nevertheless, nonprofit leaders continue to put forth jargon-laden directives, arguing that donors should be engaged, as the article in the Chronicle of Philanthropy put it, in “reframing sourcing, due diligence, and grantee selection,” “reshaping evaluations and impact,” and “rethinking how learning happens and is shared.” These are vague directives at best, but they seem to imply that donors should include grantees in foundation deliberations so that they can work out contributions on a collaborative basis. This is not a new idea and has been tried in areas besides philanthropy—putting students on university boards of trustees, for example, or giving unions representation on corporate boards. Charitable foundations frequently appoint executives and program officers who have worked for grantee groups and thus presumably understand the fields that they are considering for support.

Those working for foundations do not have to be told to listen to the people applying for funds. Reading proposals, raising questions, and meeting with grantees and applicants are all part of the job already. The new movement in philanthropy seems to want something more: to permit applicants to make decisions about their own grants, and to turn those interactions with foundation staff into a negotiating process, blurring the line between donors and recipients. 

This is unlikely to work as a general principle because too many groups are applying for funds to give them all a role in donor deliberations. By and large, donors work out relationships with grantee organizations over time, learning which ones to trust, which to monitor closely, and which to turn away.

Many foundations are known for supporting grantee organizations for decades while relying upon them for advice in regard to other applicants. The John M. Olin Foundation, for example, supported the Federalist Society for 25 years and worked closely with its executives to craft other programs in the legal field. The William E. Simon Foundation awarded long-term grants to Catholic schools and scholarship funds because they earned the foundation’s trust by demonstrating success over many years. But neither foundation would make long-term gifts to colleges and universities because these institutions had too often abused their trust. Other foundations on both the left and the right operate similarly, building trust with some grantee organizations and involving them in internal deliberations, while keeping others at arms’ length.

The recent experiences with Black Lives Matter and with alumni pulling funds from Harvard, Penn, MIT, and other schools due to concerns about anti-Semitism prove once again that donors should exercise diligence in awarding grants and evaluating them after the fact. The reasons for this are twofold: to make sure that their own purposes are carried out and to prevent those institutions from taking them for granted. Trust in philanthropy, as in other fields, is built organically and over time by performance. Calling forth a new movement, or coining new phrases, will not change that.

Photo by BrianAJackson/iStock


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