Trust-based philanthropy

Last updated

Trust-based philanthropy is an approach in philanthropy that emphasizes shifting decision-making power to nonprofit leaders, providing them with the flexibility and resources necessary to address complex and evolving community needs. Core practices include providing unrestricted funding, offering multi-year grants, and minimizing administrative burdens, which allows grantees to allocate resources efficiently and pivot strategies when new challenges or opportunities arise. [1]

Contents

Relationship with traditional philanthropy

The trust-based model counters traditional philanthropy, which often ties funds to specific projects and imposes rigorous reporting requirements. [1] By contrast, trust-based philanthropy relies on building open, trustful relationships between funders and grantees. [2]

These relationships foster a collaborative environment, enabling funders to gain a deeper understanding of grantees' needs. This approach can be seen as more strategic, as it acknowledges the expertise of nonprofit leaders and provides them with the latitude to make timely decisions in response to shifting conditions. [3]

Use by donors

While it existed before the pandemic began, the trend of trust-based giving has been accelerated by the COVID-19 pandemic. [4] Many funders reduced reporting requirements, converted restricted grants to general support, and streamlined application processes, allowing nonprofits to adapt swiftly and allocate resources where they were most urgently needed. [5]

Examples of organizations which have explicitly embraced the trend include Yield Giving, led by MacKenzie Scott, the Altruist League, led by Miloš Maričić, as well as Sheng-Yen Lu, Durfee, Satterberg, and Stryker Johnston foundations. [5] [6]

Challenges

A challenge in adopting the practice is maintaining meaningful impact measurement while reducing reporting requirements for the grantees. Foundations must balance the need for accountability with a commitment to trust, often by finding alternative methods, such as open conversations or simplified reporting options, to ensure they stay informed without imposing excessive administrative burdens. [7]

A strategy for addressing this challenge has been the deployment of artificial intelligence techniques for discovering suitable grantees and tracking their achievements. [8] [4] Some organizations have had success at scale with this approach, combining a network of analysts with machine learning techniques involving web scraping and Natural Language Processing. [9]

Related Research Articles

Philanthropy is a form of altruism that consists of "private initiatives for the public good, focusing on quality of life". Philanthropy contrasts with business initiatives, which are private initiatives for private good, focusing on material gain; and with government endeavors that are public initiatives for public good, such as those that focus on the provision of public services. A person who practices philanthropy is a philanthropist.

<span class="mw-page-title-main">Tides Foundation</span> American public charity and fiscal sponsor

Tides Foundation is a left-leaning donor advised fund based in the United States that manages over $1.4 billion in assets. It was founded in San Francisco in 1976 by Drummond Pike. Tides distributes money from anonymous donors to other organizations, which are often politically progressive. An affiliated group, Tides Advocacy, is a "massive progressive incubator." Tides has received substantial funding from George Soros.

<span class="mw-page-title-main">Judith Rodin</span> American philanthropist, academic and psychologist

Judith Rodin is an American research psychologist, executive, university president, and global thought-leader. She served as the 12th president of the Rockefeller Foundation from 2005 to 2017. From 1994 to 2004, Rodin served as the 7th president of the University of Pennsylvania, and the first permanent female president of an Ivy League university. She is known for her significant contributions to the fields of behavioral medicine and health psychology, higher education, and philanthropy, as well as championing the concepts of impact investing and resilience.

<span class="mw-page-title-main">Charity Navigator</span> Charity assessment organization that evaluates charitable organizations in the U.S.

Charity Navigator is a charity assessment organization that evaluates hundreds of thousands of charitable organizations based in the United States, operating as a free 501(c)(3) organization. It provides insights into a nonprofit's financial stability, adherence to best practices for both accountability and transparency, and results reporting. It is the largest and most-utilized evaluator of charities in the United States. It does not accept any advertising or donations from the organizations it evaluates.

Venture philanthropy is a type of impact investment that takes concepts and techniques from venture capital finance and business management and applies them to achieving philanthropic goals. The term was first used in 1969 by John D. Rockefeller III to describe an imaginative and risk-taking approach to philanthropy that may be undertaken by charitable organizations.

GiveWell is an American non-profit charity assessment and effective altruism-focused organization. GiveWell focuses primarily on the cost-effectiveness of the organizations that it evaluates, rather than traditional metrics such as the percentage of the organization's budget that is spent on overhead.

The Center for Effective Philanthropy (CEP) is a nonprofit organization focused on the development of comparative data to enable higher-performing philanthropic funders.

The Office of Social Innovation and Civic Participation was an office new to the Obama Administration, created within the White House, to catalyze new and innovative ways of encouraging government to do business differently. Its first director was the economist Sonal Shah. The final director was David Wilkinson.

National Philanthropic Trust (NPT) is an American independent public charity that provides philanthropic expertise to donors, foundations and financial institutions. NPT ranks among the largest grantmaking institutions in the United States.

<span class="mw-page-title-main">Holden Karnofsky</span> American nonprofit executive

Holden Karnofsky is an American nonprofit executive. He is a co-founder and Director of AI Strategy of the research and grantmaking organization Open Philanthropy. Karnofsky co-founded the charity evaluator GiveWell with Elie Hassenfeld in 2007 and is vice chair of its board of directors.

TheThiel Foundation is an American private foundation created and funded by billionaire Peter Thiel, co-founder of PayPal and an early investor in Facebook.

The Center for High Impact Philanthropy (CHIP) is a center at the School of Social Policy and Practice at the University of Pennsylvania in the United States focused on high impact philanthropy, both in the US and internationally. The Center translates the best available evidence in areas such as education and early childhood development, disaster relief, poverty, democracy, and public health into actionable guidance and educational programs for those looking to make a difference with their giving.

Effective altruism (EA) is a 21st-century philosophical and social movement that advocates impartially calculating benefits and prioritizing causes to provide the greatest good. It is motivated by "using evidence and reason to figure out how to benefit others as much as possible, and taking action on that basis". People who pursue the goals of effective altruism, who are sometimes called effective altruists, follow a variety of approaches proposed by the movement, such as donating to selected charities and choosing careers with the aim of maximizing positive impact. The movement has achieved significant popularity outside of academia, spurring the creation of university-based institutes, research centers, advisory organizations and charities, which, collectively, have donated several hundreds of millions of dollars.

<i>Stanford Social Innovation Review</i>

Stanford Social Innovation Review (SSIR) is a magazine and website that covers cross-sector solutions to global problems. SSIR is written by and for social change leaders from around the world and from all sectors of society—nonprofits, foundations, business, government, and engaged citizens. SSIR's mission is to advance, educate, and inspire the field of social innovation by seeking out, cultivating, and disseminating the best in research- and practice-based knowledge. With print and online articles, webinars, conferences, podcasts, and more, SSIR bridges research, theory, and practice on a wide range of topics, including human rights, impact investing, and nonprofit business models. SSIR is published by the Stanford Center on Philanthropy and Civil Society at Stanford University.

<span class="mw-page-title-main">Creative Capital</span> Non-profit arts funding organization

Creative Capital is a 501(c)3 nonprofit organization based in New York City that supports artists across the United States through funding, counsel, gatherings, and career development services. Since its founding in 1999, Creative Capital has committed over $50 million in project funding and advisory support to 631 projects representing 783 artists and has worked with thousands more artists across the country through workshops and other resources. One of the "most prestigious art grants in the country," their yearly Creative Capital Awards application is open to artists in over 40 different disciplines spanning the visual arts, performing arts, moving image, literature, technology, and socially-engaged art.

<span class="mw-page-title-main">Ruth Shapiro</span> American author and academic

Dr. Ruth A. Shapiro is an American author and academic who is the Co-Founder and Chief Executive of the Centre for Asian Philanthropy and Society (CAPS).

Charity assessment is the process of analysis of the goodness of a non-profit organization in financial terms. Historically, charity evaluators have focused on the question of how much of contributed funds are used for the purpose(s) claimed by the charity, while more recently some evaluators have placed an emphasis on the cost effectiveness of charities.

An exit grant is a grant made with the clear expectation that the donor will not make any further similar grants to the donee.

Philanthropy poses a number of ethical issues:

The New York Community Trust is a community foundation that serves New York City's five boroughs, Long Island, and Westchester County. The Trust administers more than 2,200 charitable funds.

References

  1. 1 2 "The Strategic Value of Trust-Based Philanthropy (SSIR)". ssir.org. Retrieved 2024-11-07.
  2. ↑ Miller, Tom (2022-03-16). "Trust-Based Philanthropy: A Primer for Donors". NPTrust. Retrieved 2024-11-07.
  3. ↑ "The Rise of Trust-Based Philanthropy (SSIR)". ssir.org. Retrieved 2024-11-07.
  4. 1 2 Maričić, Miloš; Chernova, Ekaterina (June 16, 2021). Fixing Philanthropy: Six Principles for Actually Improving the World When Giving Away Money (1st ed.). Geneva: Altruist League. p. 135.{{cite book}}: CS1 maint: date and year (link)
  5. 1 2 Finchum-Mason, Emily (2022-05-04). "Some funders are embracing 'trust-based philanthropy' by giving money without lots of obligations". The Conversation. Retrieved 2024-11-07.
  6. ↑ "Milos Maricic - Artificial Intelligence & Philanthropy - UNIGE". www.unige.ch. 2023-08-09. Retrieved 2024-12-06.
  7. ↑ Weingartner, Eric (August 7, 2024). "Trust-Based Philanthropy Isn't an Excuse to Ignore Metrics — It's the Opposite". Chronicle of Philanthropy. Retrieved November 7, 2024.
  8. ↑ Ugazio, Giuseppe; Maricic, Milos, eds. (2025). The Routledge handbook of artificial intelligence and philanthropy. Abingdon, Oxon ; New York, NY: Routledge. ISBN   978-1-032-74301-1.
  9. ↑ Altruist League (November 7, 2021). "Altruist League's methodology: a factsheet" (PDF). Altruist League. Retrieved November 7, 2021.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.