Trust-based grantmaking: What it is, and why it’s critical to our sector

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ducklingThe Walking Dead is back on TV. After last season’s finale, and this season’s opener, I am not sure I will continue watching. But zombies do make me think of funding dynamics, so that’s why I am bringing it up. In The Walking Dead, the zombies are scary, but they are the least dangerous. Zombies eat brains; they don’t have brains; they don’t have hidden motives and plans; you know exactly what a zombie will do. It’s the humans who are terrifying. Pushed into survival mode, they calculate, lie, betray, and refuse to use the Oxford Comma (#OxfordCommaForever). No one trusts anyone, and it’s more often than not that groups of humans end up killing one another before a zombie actually gets to munch on anyone’s flesh.

What does this have to do with funding dynamics? Well, there seems to be a pervasive lack of starting with trust between funders and nonprofits, and it’s affecting all of us and our abilities to survive and do our work. The default starting relationship between funders and nonprofits is one of suspicion of the latter by the former, which leads to funders enacting policies and practices designed to make nonprofits more “accountable,” such as restricted funding, individualized applications, bespoke budget forms, customized reports, and other things that drive us nonprofits nuts. This in turns leads to nonprofits’ hiding of information, especially about challenges, from funders, which in turn reinforces the suspicion. All this perpetuates a depressing cycle of waste of time and energy and lots of complaining, usually at bars, and all that could have been used to deliver programs and services.

This is why it’s been inspiring to learn of The Whitman Institute (TWI)’s philosophy of “Trust-Based Grantmaking” (TBG). I am highlighting it here, because I will be discussing effective funding practices more often on this blog, and I think TWI’s work yields some critical lessons for our sector. Disclosure, my organization is now a grantee of The Whitman Institute.  

(By the way, this post may be long, so I’m inserting pictures of little ducklings and goslings, to keep you reading).

The concept is simple: Funders and nonprofits are most effective when the relationship starts ducks-1211676_1280with trust, not suspicion. The default right now, as I mentioned, is one of mistrust: Is this organization legit? Do they have their 501c3? Are their staff even qualified? Will they spend my money properly? Will they do what they say they will do? Do they even know what they’re doing? Will they embarrass my foundation? All these concerns are often unconscious, and are very similar to the concerns society has about poor people. They lead to the ineffective and frustrating practices that on a daily basis make nonprofit professionals want to abandon civilization to live in a van by a river.

Trust-Based Grantmaking starts with these questions instead: What is this leader’s story and purpose?  What’s the organization’s intent? Are dialogue and relationship key strategies to advance this intent?  What is the approach? What roles does it play in the sector? How can my foundation be most useful to it? What can I and my foundation do to free up this organization’s time so it can focus on its work? How can we maintain a trusting and mutually-beneficial partnership? How do we support the amazing staff so they don’t burn out? What lessons can we glean through this relationship?

This philosophy is what The Whitman Institute has adopted, and it shows in TWI’s 9 Key Practices of Trust-Based Investment, which include:

  • Providegoslings-583085_1280 unrestricted, multi-year funding
  • Do the homework
  • Partner in a spirit of service
  • Offer open and responsive communication
  • Solicit and act on feedback
  • Encourage transparency
  • Simplify and streamline paperwork
  • Support beyond the check
  • Host restorative retreats
  • Have quarterly karaoke between foundation and grantees (OK, this is not one of the Key Practices of the Whitman Institute, but I thought I would throw it in)

The Whitman Institute elaborates on each of these practices on their website. I am writing from a grantee’s perspective on why it is important for funders start with trust:

It saves us a ton of time: Trust-Based Investment saves everyone so much time, time that we can use to implement programs. Especially multi-year, general operating funds. Let’s face it, the fact that so many funders still refuse to give general-operating funding is due to the fact that they deep down don’t trust nonprofits. Many funders are still in this mindset that nonprofits are like contractors hired to fix the plumbing, who are followed around to make sure they don’t steal stuff in the house. This is why so many grants are restricted. There is a lack of trust that nonprofits won’t use the money unwisely, leading to aggravating funding restrictions. I’ve written plenty on this topic (see “Ordering a cake and restricting it too” and “The myth of double-dipping, and the destructiveness of restricted funding”)

But this lack of trust results in hundreds of thousands of wasted hours trying to prove that we are trustworthy, versus doing our jobs, which is what everyone wants. Fixing the leaky pipes of society is complex and time-consuming enough without us spending all this time proving that we can be trusted. Yes, there are irresponsible, untrustworthy nonprofits out there, but acting as if they are the default in our sector does a huge disservice to our community.

Meanwhile, streamlined paperwork: I nearly wept upon learning that TWI encourages the baby-duck-574920_1280acceptance of “proposals and reports crafted for other funders.” I know, some funders have been pushing for years for the acceptance of a common application. Many of us in the sector would love to see that. If we can just write a single comprehensive application and just submit that to all funders, imagine the time and energy we could save. I don’t know why that has not caught on in many places, but individual funders who adopt the Trust-Based model can simply trust that what nonprofits propose to another foundation will remain true. Reports too. Just think of all the time saved being put to good use advancing program goals.

One funder, inspired by TWI’s approach, told me “Send me any proposal you submitted to another foundation. Don’t even worry about changing the name of the other foundation. Just forward me what you emailed them, if you’re happy with it.” The program officer’s thoughtfulness freed up 10 or 15 hours of my time that I could use to focus on programs. The blank stare I gave him covered for the Foreigner song that played in my head: “I’ve been waiting, for a funder like you to come into my life. Yeaaaah, waittting, for someone who, can make me feel all right…” (That was before Foreigner changed their lyrics).

It makes us more honest: In my years in nonprofits, I’ve worked with many program officers. Most are incredibly nice people. Some have become friends and mentors who are instrumental to my work and personal and professional development. Many, through an encouraging word or action, have prevented me from quitting the sector in rage or stress. I remember one time, my program director and I were demoralized from the sudden low-attendance at our after-school youth program designed to help kids who just arrived to the US. It was sunny, and only 16 kids attended, when we normally had twice that many. Feeling like a failure, I called a program officer whose organization funded our program. Because our relationship was built on trust and genuine partnership, I was able to be honest when challenges arose. It allowed for better problem-solving and creative collaborations.

Unfortunately, despite the many amazing program officers in the sector, the relationship we have between funders and nonprofits is one marked by a severe power differential reinforced by mistrust. As I mentioned, this leads to fear, suspicion, and oftentimes, the obfuscation of information, especially around challenges. These things paralyze many of us from being able to effectively tackle our work. We can only address entrenched society problems by building stronger relationships between nonprofits and funders. And we can only build strong relationships by being honest with one another. And it is much easier to be honest if there is trust.

It strengthens partnerships: I appreciate the Whitman Institute’s philosophy of partnering in the spirit of service. Which means practices we traditionally take for granted have to be reexamined. For instance: Whenever we nonprofits meet with a funder, we have likely spent some time researching the foundation’s priorities, giving history, values, etc. We peruse annual reports, white papers, tweets, blog posts. Sometimes we stalk program officers on LinkedIn. We ask board members if they know staff who work at this foundation. Some of us consult a psychic medium to determine the best time to ask for a meeting.

Funders are not expected to do the same amount of research on potential grantees. Which is why it was shocking when I had my first call with the The Whitman Institute and they already knew my organization’s history, mission, values. They call it “Doing the Homework.” They scanned our evaluation map and read our 36-page formative assessment report, which highlights the stuff we did well and all the things we suck at. I got slightly freaked out that they knew so much and ask such pointed and incisive questions. But then, it made me feel really acknowledged, like our work matters (because it does). Even if we didn’t get the funding, it was just refreshing to be treated like a potential partner, and not just another needy nonprofit asking for money.

It improves morale: Nothing destroys morale faster or more assuredly than feeling like people duck-717257_1280you work with don’t trust you, that you must constantly work to earn their trust, and that even this tentative level of faith in you is ephemeral and could disappear at the slightest mistake. It does not feel like an actual partnership. It feels more like a boss-employee relationship, with a boss who is constantly on alert.

Imagine if you are hired on to a new job. Now imagine that the boss is paranoid that employees will steal office supplies and won’t be on task. So at the beginning of each day, everyone must record exactly how many staples, pens, and paperclips they plan to use and exactly what tasks they will do and what they will accomplish. At the end of each day, they must do inventory and return all the supplies they didn’t use to the supply room and report on the status of each task and how much time was spent on it. Randomly, there are physical searches to make sure no one is stealing, and the boss hovers behind people throughout the day to make sure no one is slacking.

That would be a horrifying and demoralizing place to work, right? Unfortunately, this is what it feels like to many of us nonprofits in many of our funding relationships. Starting any relationship on trust reverses this. It increases morale. Considering the burn-out rate in this sector, morale is critical. 

It makes us more effective: One thing funders and nonprofits have in common is both want nonprofits to be effective at carrying out our missions. And yet so many practices—restricted funding, a cap on overhead, endless customized budgets and paperwork—directly prevent us from reaching this goal. If starting with suspicion instead of trust actually results in many of us being better at reaching outcomes for our community members, then by all means, let’s continue doing that.

But that’s not what’s happening. The opposite is true—funders’ not starting with trust hurts our community. It burns people out. It wastes time and energy. It distracts from the actual, highly complex work. Starting the funding relationship on trust saves time, increases transparency, strengthens collaborations, and improves morale. All of these things lead to nonprofits being better at their work, at reaching outcomes.

***

goose-379393_1280In order to advance the work of the nonprofit sector, funders and donors must move toward starting every relationship on trust and act accordingly. Yes, there are bad apples. But the bad-apple method of determining policies does not work, in funding or in the workplace or anywhere, and is often devastating to morale and effectiveness. When we punish 95% of the people for the sins of the 5% who are a-holes, we are likely going to demoralize everyone and probably turn a few good people themselves into a-holes (which furthers justifies our policies, leading to a vicious cycle of a-holism). Honestly, I think the solution is simple: If you don’t trust a nonprofit, don’t fund it. Just like if you think an employee will steal or embezzle from you, don’t hire them. 

I am glad to see funders like The Whitman Institute challenge traditional funding practices. Please read TWI’s Co-Director Pia Infante’s blog post from the funder’s perspective on why Trust-Based Grantmaking matters. It gives me hope also that other funders are also inspired to base their grants on trust. The Robert Sterling Clark Foundation is also using Trust-Based Grantmaking. The Peery Foundation has developed a model called Grantee-Centric Grantmaking.

All these practices are awesome and great signs that the wall of ice between funders and nonprofits is melting, and that we are moving toward an era where funders and nonprofits are equal partners working to solve society’s most pressing problems. It’s great. Because we and our community are running out of time. We need to start with trust. Otherwise, we are all going to get devoured by zombies. Foreigner would probably say it’s urgent.

Let me know your thoughts.

(Although, if you are going to say that this is why we need to give up grants and focus on individual donors, please read “Why individual donations strategies often don’t work for communities of color.” And if you are going to say that funders and donors are giving us nonprofits their hard-earned money and so we should be grateful and fall in line, please read “So you don’t think you directly benefit from nonprofits.”)

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  • Pete Noll

    I couldn’t agree more.

  • betty barcode

    About the one single application form: the State of New York adopted one form for use in all granting agencies within State government. It is called the Consolidated Funding Application (CFA) and it is still mighty onerous. But maybe non-governmental agencies in New York can now be persuaded to simply request your CFA if you have one.

    P.S. Annoying copy editor moment: I think there is a surplus “don’t” in the last sentence of the paragraph with the final duckie.

  • Jerry Hauser

    I love this post and everything you describe about TWI’s practices, Vu. This is my favorite part: “But the bad-apple method of determining policies does not work, in funding or in the workplace or anywhere, and is often devastating to morale and effectiveness. When we punish 95% of the people for the sins of the 5% who are a-holes, we are likely going to demoralize everyone and probably turn a few good people themselves into a-holes (which furthers justifies our policies, leading to a vicious cycle of a-holism).”

    The pictures of ducklings made me hungry.

  • Carrie Avery

    So happy to see the excellent work of The Whitman Institute highlighted here. Thanks for showing how their trust-based approach affects practitioners on the ground, and how damaging the bad-apple approach is.

    I hope this post will cause more funders to question why they do things the way they do. Wouldn’t it be amazing if every funder took a hard look at all of their practices, from whether they provide useful information on their website to what they ask for on grant applications, and scrapped everything that didn’t promote trust and help nonprofits achieve their goals? Time to put an end to the Head Games (another Foreigner reference, in case anyone thinks I’m losing my mind).

  • Vu, as always I love this post, and am delighted to hear some major foundations are getting their priorities straight. The Whitman Institute is a shining example. I would however like to add to something you said about foundations not trusting nonprofits. It seems to me, although I don’t have any hard data to prove it, that many nonprofit leaders reciprocate by failing to trust their own funders. I am not sure which comes first here, the gosling or the goose, but foundations appear to have “trained” their grantees to distrust them, and now those grantees and prospective grantees have a counterproductive dynamic going on. Back in the 80’s and 90’s, when I was in the mainframe computer business, programmers referred to this phenomenon as the “deadly embrace,” because the internal conflict could lead to a total system shut-down.

    Like you, I think the impetus has to come from the foundation, but the recipients also have to avoid the syndrome as well. It would be refreshing to see more nonprofit leaders break away from this deadly embrace. It would be even more refreshing to see grantmakers invite them to do so.

    Please keep talking about effective fundraising.Conventional wisdom is not serving the sector very well any more.

  • John Mulvey

    In the 90s a consortium of funders in the New York metro area developed the New York New Jersey Common Application Form. I think a few local funders still use it. Problem was that is was significantly more cumbersome than most foundation forms–this in part because banks were part of the consortium. One of (though not the only) ridiculous requirement was a list of current and prior year funders with amounts, side by side on the same page, and for the prior year reconciled with the audit. I spent a whole weekend just doing just this.

    The other problem with common application forms is that they cannot account for the myriad interests and nuances of funders. So endless tailoring for each application will still be needed to maximize chances of success.

  • Molly Thompson

    How do I get this message to our local community foundations anonymously?

  • Pollination Project

    Always appreciate the truth telling, Vu. Pia and the Whitman Institute have done a beautiful job leading the way and inspiring so many of us around relationships based on trust. One thing I want to underscore even more is decision making that is not only “grantee centric” but led by grantees. We have found when we identify grantees who can be funding partners with us, give them the reins and allow them to decide where the money goes, we make better grants. Nearly all of our funding decisions at the Pollination Projects are made by teams of grantees. We also love the “flow funding” model pioneered by Marion Weber (flowfunding.org) where you entrust money into the hands of a grassroots activist or organization and let them give it away where they see fit. So many trust based models out there- the important piece is not the WHAT we do but HOW we do it- so if we can find the spaces of actually trusting our grantees to know what they need and know what their communities most need, then so much more is possible. It is all about shifting the power out of the hands of the funders and into the hands of the people actually doing the work.

    • Pia Infante

      Thanks for sharing Alissa! Love the pollination project decision making model. I note how often institutions claim to value “equity” but put grant seekers through processes that we incredibly inequitable. Glad we are both seeing hopeful trends!

  • Rhiannon Orizaga

    https://uploads.disquscdn.com/images/1e91c2417fc9f3f550942ab9d62ff1d1bbd3b3a20e6d53b064efe19caed64362.png This is a great sentence to sum up humanity: “they calculate, lie, betray, and refuse to use the Oxford Comma.” Also, you forgot the most important gosling of all:

  • Patrick Taylor

    While I think this trust-based grantmaking is a great approach. Several points are simply good grantmaking: do your research, provide support beyond the grant, be open and transparent, etc. For some of the other points, I see conflicts with several trends and practices in grantmaking. These aren’t insurmountable, but they are issues that will need to be addressed.

    For one, there’s a conflict between giving multi-year GOS and a Program Officer proving that their strategy is causing impact. GOS grants can be a tougher sell to foundation leaders and boards than program grants that are more targeted and thus demonstrate the input of the program officer and foundation more clearly. Asking for $200,000 to fund a specific program is more comfortable than asking for $200,000 in GOS to an org doing great work. Also, many grantees have multiple programs, not all of which will be aligned with any given funder.

    As more and more grantmakers move to online portals, the trend seems to be to have grantees filling in more boxes vs. just submitting one proposal to all potential funders of a project. For funders, there is a big advantage in having grantees fill out fields in our databases so that we don’t have to do the data entry or cut and paste. It is not easy to get foundation staff to see the grantee perspective on the online portal experience, especially when it makes the live of the program staff or grants management staff so much easier.

    Finally, the current foundation interest in impact will potentially require more specialized reporting and applications for grantees, not less, as we all ask grantees to track metrics and outcomes that we think are relevant. One potential solution is to have grantees drive the impact measurements, but I am skeptical that most funders will simply accept a grantee’s metrics without insisting on some of their own.

    Again, these aren’t insurmountable, and there is already work underway in the funding community to address them. I think there will always be a tension between what charities want foundations to do, and what foundations feel they need to do to be the most effective.

    • Pia Infante

      Patrick,
      Thanks for sharing these thoughts and the sense that these tensions aren’t insurmountable. I think there’s lots of room for creative tension to find a way forward that is cumbersome on neither the funder or the grantee. The idea that funding a strategy over an organization creates more impact is one that I’d love the field to continue to reconsider. Strategies are carried forward by leaders and organizations, there’d be no movement without the people. Is there a way to interrupt the trend in the sector that somehow divorces impact from people (and “how” that impact transpires)? I’m thinking of the great pieces lately that challenge funders to see “overhead” and “staffing” as not marginal but central aspects of creating impact. I do agree that tailored proposals and reporting to match a foundation’s priorities/interests are likely quite necessary. My invitation to fellow funders is to carry that workload more than they require partners to. The truth is – our nonprofit partners are the ones doing the actual work, and I see our purpose as ensuring they have the time and space they need to make that impact. Thanks again for sharing. I appreciate your thoughts very much.

  • Becca

    Thank you, Vu, you always make me smile on a Monday morning.

    Most of our funding comes from government contracts rather than foundations. A few of them have truly awful, morale-killing reporting requirements. Others I’ve seen do some work behind the scenes to at least mitigate the burden that is put on CBOs. Any time I bring this up, my ED always says that this is what happens when certain political parties are in power >.> Regardless, I’d really like to see reform in government regulation and some more trust in CBOs on that end too.

  • Christina Sunley

    Brilliant! I have the great good fortune of working with several program officers right now who are of the new trust-based, grantee-centric model and I love it! Problem is, their boards are not always on board with the shift, especially to unrestricted and multi-year funding. It’s a transition for sure. PS My ED vows to continue using the Oxford Comma even when the Zombie Apocalypse arrives!

    • Pia Infante

      Christina, Thanks for mentioning that boards/trustees aren’t always aligned with PD’s and ED’s. Our hope at TWI is that the conversation will continue to “trickle up.”

  • Christina Sunley

    PS There is definitely a surplus “don’t” here, or I need another cuppa: Just like if you don’t feel like an employee will steal or embezzle from you, don’t hire them.

  • Tarn

    We were just having this discussion the other day…wouldn’t it be amazing if there were one standard grant application form across funders? As it is, they all basically want the same information, but ask it in just different enough ways as to have us spend a ton of time working the same information into their different sized boxes. I’ve often seen the same exact question on different applications, one with a limit of 80 words, one with a limit of 800 words. It’s a lot of work to expand and/or shorten the same answer!

    Grant writing is my chosen profession, so I certainly don’t want to knock it too much, but I’m sure I could just do more of it, and more effectively, if the more detailed wordsmithing requirements were reduced! 🙂 If foundations’ requirements were more trust-based and streamlined, it’s amazing how much more we could do to engage the community in supporting the work we do.

    It is exciting to watch this evolution unfold, though. I started out in food banking about 15 years ago, when the philosophy was very much about just handing over a box of whatever food to a hungry person. Since then, it has evolved to include helping hungry people select and receive fresh, healthy, nutritious, culturally appropriate food, and finding ways to personally and legislatively advocate so that everyone can cultivate their own food. The problem is not solved, but it is being addressed in healthier and more sustainable ways. I see this same pattern happening in trust-based funding. As the generations and needs change, so will the process, and we get to be a part of it and help it along!

  • Anonymous11

    In Minnesota, there is a Minnesota Common Grant Application (available on the Minnesota Council of Nonprofit’s website) and it is accepted by some funders, but each year, more funders seem to require online applications which are nothing like the common application.

  • David Lynn

    Funders definitely could drastically improve their processes – even just evaluating time they cost the nonprofits – but I think your 95/5 ratio of bad apples is off. You forgot the other zombie effect: how many nonprofits are there in your region? How many should there be? Not saying they’re all bad apples, but many of them should be rolled together or disappear. Then you can move to mostly an outcome focused approach and it can clean up the funding landscape. Otherwise only one stapler-stealer gets paid next week.

    I do see many foundations in San Diego moving to a simpler letter of intent approach. Save the bigger grant app for applicants that actually have a shot at moving forward.

    Also, while TWI is certainly a great example of a solid approach, they don’t take unsolicited requests, right? So there’s certainly some balance there.

    • Pia Infante

      Hi David,
      Thanks for sharing these thoughts. Agree that focus and consolidation on the nonprofit side would be ideal, and glad to hear that SD foundations are streamlining the process. While we don’t accept unsolicited requests, we do take unsolicited meetings. Even if we do not end up funding the groups that ask for meetings, we are sometime able to use our networks to support in some other ways. The demand is always going to be higher than our (or any individual foundation’s) capacity, so there’s a bigger question about how to resource the good apple work more comprehensively and sustainably. What are you learning in your collaborative networks in SD?
      Thanks,
      Pia

      • Nancy Jamison

        Hi Vu and Pia and David (who in full disclosure is our board chair!) – Nancy from San Diego Grantmakers weighing in here – first to say that I am a HUGE admirer of The Whitman Institute AND Vu’s work. Soooo – first: I hope that before I leave this earth there is a common grant application to make the whole granting process easier for all parties. Based on progress so far, I better live a long time so we have time to achieve this dream! Second: regional associations of grantmakers like ours, must continue to proactively share the excellent practices of TWI with their members – hopefully inspiring widespread and authentic shift in funder philosophy to Trust Based Grantmaking. It was great to have a reminder about our need to do that from this blog. Third: Under the banner of the Real Cost Project, the regional associations of grantmakers in CA, are joining in on the rallying cry of some foundation and many/all nonprofit leaders to need to operationalize meaningful ways to change approaches and behaviors around indirect costs/overhead/full cost funding – by both funders and nonprofits. Fourth: I muse sometimes about how we must build muscles that ensure that the relationship between nonprofit and a potential funder is authentic and trust based, whether or not funding comes to the nonprofit. Funders cannot fund everyone that comes to them, choices have to be made, but trust and connection is ideally still present on both sides at the end of the day because the journey felt productive and respectful (i.e.shared learning occurred, networks were built etc). Fifth: I also muse about where all the $ is going to come from to do all the good work we need to do after everyone gets going on full cost funding. How will the math work out? If a funder only has $50K to give – and they determine now that they need to give it all to NP X to ensure coverage of their indirect costs, they will not also have $ left over to give to NP Y whom they used to fund. If NP X can have the best community outcomes, then so be it, and yet, maybe NP Y is also doing critical work. We need to motivate and activate expanded, innovative, funding streams and community investors to support all the community change we need. Lots to do.

        • Pia Infante

          Nancy, thanks so much for chiming in, and sharing your candid thoughts about streamlining the process so that it is an easier lift for both grant seekers and funders alike. Glad to hear from you and David about some of the advances being made in the San Diego funder community.

  • Dustin D Wilkinson

    What if you had an idea for an organized structure for a “peaceful dismantaling” of an all around out-dated system that involved consumers, life affirming businesses & non profits all combined…? Who would YOU reach out to… so many people (of all types) have said YES to this concept that’s been in development for 8+ years following a coma from meningitis that inspired a “new soul” to create as much harmony as possible… Today they tell me “it will work” but WHO do I talk to with so much skepticism & lack of patience dealing with someone who has a few screws loose…?