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Trust-Based Philanthropy: A Welcome Shift from Patronage to Partnership

  • Post published:June 8, 2023
  • Post category:Blogs

Don’t tell me what you value. Show me what you spend your money on, and I’ll tell you what you value.

Hip hop artist Immortal Technique

Partnership in the Nonprofit Sector

I was recently thinking about partnership. Specifically, what it is and isn’t in the nonprofit space.  Found in many nonprofit names, the word “partnership” is used to describe coalitions, alliances, and collaboratives, often more aspirationally than accurately.

We nurture many partnerships at Charitable Ventures, some transactional, some not, some years-long, some new, some small, some keeping me up at night. All of them good causes.  We understand that we cannot effect change in silos but must align our efforts and resources to make progress.

We recently celebrated the launch of one of our early sponsored projects, Project Kinship, now a separate 501(c)(3) doing amazing work with justice-impacted individuals.  “We’re not your sponsor anymore,” I recently told the founder (with not a small amount of glee, given the complexity of his organization’s work).  “Now, we get to be your partner!”  As the contractual, financial, and legal intricacies of our engagement fell away, it was a wonderful surprise to find that opportunities for real partnership began to emerge.

This serendipity prompted me, in turn, to think about other potential partners.  For instance, for all the discussions we have about how to partner for good, the term partnership is NOT frequently used in describing our investor or donor relationships.  And arguably, that is where we need partnership the most. What would it look like if we were able to embrace our donors and investors as true partners, and not just as revenue sources?  If the contractual, financial, and legal intricacies of the donor-to-donee exchange did not take precedence over the purpose of the partnership?  And what would have to change to make this happen?

The nonprofit sector is where values and money collide, which makes the discussion around HOW the industry is capitalized a topic of great debate.  Philanthropy exists, both personally and professionally, to support causes that make society better. But philanthropy – and the fundraising juggernaut it has generated – can also manifest as a “wild west” of causes, strategies, good intentions, and social obligations

But let’s pull back a bit.  Before we can talk about investor partnerships, we need to talk about how nonprofits are capitalized. 

Contributed Income: Donations, Grants, Sponsorships

501(c)(3) nonprofits are private businesses that can accept charitable donations.  According to the National Center for Charitable Statistics, in 2021, approximately 91% of nonprofit income was contributed or donated, while 9% was earned.  While a new generation of nonprofits is pulling away from the 100% charity-model (seeking new sources of revenue to drive operations, including fee for service or social enterprise models), donations are still the life blood of the industry. 

Putting aside the potential of earned income for a moment, we can separate nonprofit contributions into three categories: traditional philanthropy, grants, and corporate social responsibility.  

  • Traditional philanthropy encompasses small one-time donations, annual gifts, donor advised funds, major gifts, and bequests. Donating money is driven by a desire – usually personal and individual – to advance the public good.  It is simultaneously an act of generosity and social imperative.
  • Grants come from both private foundations and public agency sources and typically aim to generate social returns through strategic allocation of capital. The driver of investment is the desire to generate change, profit, momentum, innovation, and sustainability through a selected vehicle, usually a service or system solution. 
  • Corporate social responsibility (CSR) varies greatly across industries and can manifest as internal employee initiatives, sponsorships for nonprofits, or general awareness raising around issues. CSR does, however, have goals beyond social impact, among them brand recognition, shareholder value, and talent recruitment, which can erode the commitment and deeper investment needed for real change.

While the motivations for these investments are different, all three approaches are critical to capitalizing the nonprofit sector.  But what if some of this funding became relational?  What if the driver for investment became a shared goal, and the vehicle for change was the relationship itself?  Enter, trust-based philanthropy.

Trust-Based Philanthropy

Trust-based philanthropy is a new term[1] for a once rare but now a growing trend in philanthropic investment – the building of strong, collaborative partnerships between funders and grantees that are less “top-down” and transactional in nature. Its core principle is a belief that the people closest to the problems facing their communities are best positioned to develop solutions.  Instead of imposing specific goals, trust-based philanthropy seeks to empower grantees to define their own goals and strategies for achieving them.

When I hear nonprofits talking about this new trend of trust-based philanthropy, it is usually with gratitude for the flexibility and reduction in reporting that comes with unrestricted funding.  What is missing from that sigh of relief, however, is an understanding that with the shift away from transaction comes a higher standard of accountability.  First, you don’t let your partners down.  And second, relationships take effort to maintain.

Charitable Ventures benefited from trust-based philanthropy before it was a term.  More than fifteen years ago, a conversation with my local community foundation inspired me to launch a regional incubator.  The mythology of that launch is that the foundation gave a $5,000 grant to get us started, transferred some projects to incubate, and today we are a $25M nonprofit. 

“Now that is leverage!” we jokingly say of our founding.

While it is true that the original small grant was catalytic, that is not the full story.  I, too, as many other nonprofit leaders do, have perpetuated the idea that even small, symbolic expressions of support can be catalytic, and are enough.  While they are helpful, they are not enough.

It wasn’t the original $5,000 grant that birthed a regional nonprofit incubator.  

  • It was 15+ years of referred business.
  • It was letting us sublet quality office space at much reduced pricing.
  • It was the loan of legal experts when things got complicated.
  • It was introducing us to the best governors that we could have … and who I never would have presumed to ask to guide us as a Board of Directors… who today hold oversight of a large enterprise.

No check presentation.  No sponsorship banner.  No plaque on the wall.  Just blood, sweat, and shared pain, and the knowledge that we were building something together that the region needed.  (Oh, and by the way, unrestricted grants beyond that original seed funding.) We continue to be grateful for this founding and long-lasting partnership.

What if instead of a one-time sponsorship we asked for years-long partnership?  What if instead of a mural on a corporate volunteer day, we asked for access to lawyers, HR consultants and IT gurus for our own under-scaffolded businesses?  What if instead of a grant we asked for a line of credit and a strong banking relationship?  Connections to city managers and vendors for our leaky roofs?  What if instead of one grant request per year, we asked for advisement on issues as we face them, or support when we need it … which is usually “right now.”

What makes a good partnership?

  • There is trust
  • There is grace
  • There is honesty
  • There is patience
  • There is accountability
  • There is immediacy
  • There is equity of voice
  • There is room for failure
  • There is room for risk
  • There is space to grow
  • There is space to leave

Sounds like a relationship to me.


Anne Olin
Charitable Ventures, President & CEO

[1] The Whitman Institute coined the term “trust-based philanthropy” in San Francisco in 2014. The Whitman Institute is a philanthropy that supports social change initiatives in the San Francisco Bay Area. The institute defines trust-based philanthropy as “an approach to philanthropy that is rooted in trust, collaboration, and mutual accountability.