In the world of nonprofit funding, a dynamic shift is occurring, driven by the need for equity and the reduction of power imbalances between nonprofits and funders.
Traditionally, the relationship between these groups has been uneven, with funders holding significant influence over how nonprofits operate and report.
Subsequently, nonprofits often find themselves aligning with a funder’s specific requirements, including their theories of change, metrics requirements, and reporting standards, in order to secure essential grant funding.
Bureaucratic Hurdles
The resulting bureaucratic nature of traditional grant-making can pose a significant challenge for nonprofits, requiring them to navigate complex and demanding processes, and necessitating extensive documentation to prove their credibility and worthiness of funding.
This approach, while primarily focused on mitigating risk, ends up placing a heavy and expensive administrative burden on nonprofits, favoring funders in the process.
But this landscape may be changing.
The COVID-19 pandemic catalyzed a shift towards more agile and unrestricted grant-making, driven by urgency and a heightened awareness of social and racial inequities.
Trust-based philanthropy emerged as a new paradigm, emphasizing stronger, collaborative relationships between funders and grantees while also promoting mutual accountability.
Principles of Trust-Based Philanthropy
The concept of trust-based philanthropy centers around a set of principles aimed at rebalancing power dynamics.
Rather than focusing primarily on funding; it’s about fostering stronger, more empathetic relationships with grantees.
One of the first steps in adopting trust-based philanthropy is a thorough internal review of practices, policies, and relationships.
John Brothers, president of the T. Rowe Price Foundation, has experienced the potentially frustrating grant application process firsthand.
During Impact Studio 2023 he noted the lengthy and often demeaning nature of these applications, which can belittle applicants rather than empower them.
Shaady Salehi, executive director of the Trust Based Philanthropy Project, underscores the importance of intentionality in this process.
She advocates for a more inclusive approach to grant-making, utilizing technology to make the process more equitable and accessible, such as offering language options and accepting alternative forms of responses like video testimonials.
One significant advantage of technology in trust-based philanthropy is its ability to gather data on user experience, identifying areas that contribute to inequities or burdens on grantees.
Analyzing patterns in application completion can lead to insights that help streamline the process and support a more user-friendly experience.
Streamlining Processes with Grant management software (GMS)
Another essential element of trust-based grant-making is simplifying and streamlining paperwork. This is particularly important for smaller nonprofits or those led by underrepresented groups.
Salehi points out that reducing paperwork is a step towards equity, but it doesn’t automatically result in a trust-based approach.
Grant management software (GMS) is integral in this evolution.
Modern GMS systems are designed with an applicant-first approach, accommodating a diverse range of users and promoting transparency about accessibility.
They are being reimagined to prioritize the needs of applicants, with features like complete visibility of grant forms, progress saving options, and minimizing data re-entry by integrating with existing data repositories.
Trust-based grant-makers are also exploring new formats for applications and reporting, such as video submissions, to cater to different communication styles and urgencies.
The pandemic also accelerated the adoption of digital payment methods for grants, streamlining the funding distribution process.
A final key aspect of trust-based philanthropy is the shift in due diligence.
Traditionally, grant-makers have relied on nonprofits to provide detailed information about their work and impact.
In a trust-based approach, funders take on more of this homework, utilizing software and data to gather information and minimize the administrative load on nonprofits.
Essence of Trust-Based Philanthropy
While technology is a valuable asset in this journey, the essence of trust-based philanthropy lies in the relationships and the intentionality of funders to prioritize people and equitable practices.
Software can facilitate various trust-based practices like simplifying processes and gathering feedback, but the core of the shift is a human-centric approach.
Overall, trust-based philanthropy represents a significant shift in the nonprofit funding landscape.
It emphasizes the need for equitable, empathetic, and collaborative relationships between funders and grantees.
While technology plays a crucial role in facilitating this transformation, the essence of the approach lies in a commitment to systemic equity, power redistribution, and centered relationships.
The journey towards trust-based philanthropy starts with intentionality and a focus on people, setting the stage for a more equitable and efficient grant-making ecosystem.
