A complete guide to trust-based philanthropy

When you give, you want to ensure that you’re giving effectively. But how do you determine whether you’re giving is effective? 

With any donation, there are three parties involved: the donor, the nonprofit, and the community served by the nonprofit. However, the traditional strategies for effective giving focus mostly on only two of these parties: the donor and the nonprofit. For example, some strategic giving centers around nonprofits using valuable time and resources to prove themselves to funders. 

Trust-based philanthropy looks to shift the power dynamics by increasing trust and accountability to focus more on how nonprofits are supporting the communities they serve. Read on to learn more about this approach to giving and what principles you may want to include in your own giving strategy. 

What is trust-based philanthropy? 

Trust-based philanthropy is a charitable giving approach that’s committed to fostering collaboration between funders and nonprofits. It’s rising popularity is felt across the industry and prevalent from its increase of searches on Google since 2020. 

The core tenet of trust-based philanthropy is to rebalance the power between funders, nonprofits, and the communities served by the nonprofit. Rather than focusing on what a donor wants from their donation, it refocuses the attention on the communities served and their needs. By extension, it requires more trust in the nonprofits established to serve these communities. 

While much of trust-based philanthropy is focused on foundations as funders, the same values can be applied to donors, particularly those who leverage donor-advised funds (DAFs) for their giving. 

The intention isn’t to leave foundations or donors without a means to determine where funds will be best utilized. Instead, the increased trust draws donors and nonprofits together to work more as partners than as separate forces for good. As the Trust-Based Philanthropy Project puts it, this approach is about “helping funders authentically partner with grantees in a spirit of service.” 

So, by placing more trust in nonprofits and communities, donors can focus more on the impact and less on the nuts and bolts of the nonprofits they want to support. After all, nonprofits have considerable expertise and knowledge of the communities they serve. Donors can lean on that expertise and support more of the programs that will generate a positive impact. 

How donors can give in accordance with trust-based philanthropy’s principles 

If you’re ready to shift your focus away from funding agreements and more toward the communities relying on your support, then trust-based philanthropy could be the ideal approach for your giving. 

You don’t need to completely upend how you give—chances are you may already be acting in alignment with the core principles of trust-based philanthropy. Review these examples of how donors can engage in trust-based philanthropy and see how they could fit into your giving strategy. 

Unrestricted Granting 

A grant can be made with a specific purpose in mind, which is called restricted granting. For example, you might be giving to a large organization with many programs, but you want grant dollars to go to a specific one. Or you may not want grant dollars supporting salaries. 

However, a central value of trust-based philanthropy recognizes that nonprofits are the experts in their work, and they know best where grant dollars should be directed. Furthermore, overhead that covers the cost of salaries and keeping the lights on is crucial for a nonprofit to continue driving forward its mission. 

So rather than restricting grant funds, as a donor, you can choose the route of unrestricted granting, trusting that the nonprofit will use those grant dollars wisely. 

Do your research 

Nonprofits may spend countless hours assembling documents for donors, making the case for why they can be trusted with donations. But with much of this information already publicly available, couldn’t the nonprofit’s time be better spent elsewhere? 

As a donor, see what you can discover on your own. By taking on this responsibility, you are acknowledging that you as a donor are also an accountable party, not only the nonprofit. By simplifying the process for nonprofits, you acknowledge they’re doing important work that requires valuable time. 

Consider multi-grant opportunities 

While a large, one-time gift is a welcome gift, communicate with the nonprofits about the best timeline for your support. For many nonprofits, having a steady stream of recurring grants is much better for their budget. This will depend on the nonprofit, so this is where being a good partner and communicating is crucial. 

Don’t want the hassle of sending a check every month or having to set reminders to donate again? Consider a Vanguard Charitable donor-advised fund to simplify your recurring grants. 

Increase Communication 

You can try to adhere to all the best practices for giving, but you may still be missing the mark for your favorite nonprofit because every nonprofit is different. 

If you want to truly be a good partner to your favorite nonprofits, it’s important to increase your communication with them. Don’t let the onus always be on them to reach out to you. Reach out to them and see if there are ways you can better support their mission with your funds. And when they share what they need, trust what they are telling you. 

How can you place more trust in nonprofits? 

You want to make a difference in the world, but as a donor, your role in giving is to support nonprofits. Nonprofits are established by people who are experts in their field and passionate about continuing to improve to make the greatest impact. 

When you place trust in nonprofits, you can feel good about your donation serving the charitable cause you care about. There are many resources to help you discover charities with a track record of serving communities reliably and effectively. 

If you are ready to engage in trust-based philanthropy and want to make the greatest impact, a donor-advised fund (DAF) is an excellent giving vehicle for you. You can contribute and invest charitable assets, so that when you’re ready to grant, not only could your account grant more than you contributed, but you can easily schedule grant recommendations. Learn more about how a DAF can support your new trust-based philanthropic approach.