The emergence of trust-based philanthropy contrasts with the data- and results-driven approach of strategic philanthropy. How do donors differentiate and reconcile these two approaches? How could trust-based philanthropy help reimagine the funder-grantee relationship and address the inherent power imbalance? What does each approach mean for nonprofits, and how does this translate to donors?
SSIR publisher Michael Gordon Voss will explore answers to these questions in a conversation with Philip Li, president and CEO of the Robert Sterling Clark Foundation, Nadia Roumani, a philanthropy consultant and cofounder of the Effective Philanthropy Learning Initiative at the Stanford Center on Philanthropy and Civil Society, and Julia Reed, director of relationship management with Schwab Charitable.
(Scroll further down the page for a full transcript of the discussion.)
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MICHAEL GORDON VOSS: Welcome to season three of Giving with Impact, an original podcast series from Stanford Social Innovation Review, developed with the support of Schwab Charitable. I’m your host, Michael Gordon Voss, publisher of SSIR. In this series, we strive to create a collaborative space for leading voices from across the philanthropic ecosystem to engage in both practical and aspirational conversations around relevant topics at the heart of achieving more effective philanthropy.
Since the late 1990s, the philanthropic sector has been focused on data- and results-driven approaches often referred to under the umbrella of strategic philanthropy. It can be argued that this thinking has strengthened the field of philanthropy in many ways, helping to bring greater rigor and focus to the hundreds of billions of dollars in annual charitable giving. At the same time, some have argued that an unexpected outcome of these practices is a distancing between donors and those grantees who are doing the work of effectively addressing issue areas, lessening their voice, and reinforcing systemic inequities.
These critiques have led to the emergence of the movement known as trust-based philanthropy. At its core, trust-based philanthropy is about redistributing power systemically, organizationally, and interpersonally in service of a healthier and more equitable nonprofit sector. So as a donor, how do you reconcile these two approaches, what does each mean for giving strategies, and are they really as disparate as some would believe?
To help us explore these questions and uncover the win-win possibilities in both for donors and the nonprofits they support, we are joined today by three individuals who have been actively involved in the work of effective philanthropy for some time.
Philip Li is president and CEO of the Robert Sterling Clark Foundation, as well as a member of the Steering Committee of the Trust-Based Philanthropy Project.
Prior to joining the foundation in 2016, Phil served as the Chief Operating Officer at the Century Foundation, a public policy think tank, and before that at the Brooklyn Community Foundation, where he helped the organization convert from a private foundation to a public charity. Phil currently serves on the boards of Grantmakers for Effective Organizations and the United Philanthropy Forum.
Next, I’m happy to welcome a friend and Stanford colleague, Nadia Roumani. Nadia is a philanthropy consultant and former cofounder and director of the Effective Philanthropy Learning Initiative at the Stanford Center on Philanthropy and Civil Society, as well as the senior designer of Stanford’s Hasso Plattner Institute of Designs’ Designing for Social Systems Program. Nadia has facilitated design thinking strategy workshops for foundations, nonprofit organizations, and businesses around the world and integrates design thinking, systems thinking, and strategic planning to help organizations better scope the challenges they want to address.
Last but certainly not least, returning to the podcast, is Julia Reed, Director of Relationship Management with Schwab Charitable. Julia leads the Schwab Charitable Relationship Management team, serving advisors, family offices, and donors nationwide with charitable planning, consultation, and resources designed to help wealth management professionals and their clients maximize impact. Julia is a subject matter expert on all aspects of effective philanthropy, including complex assets, legacy planning, and social impact strategy.
Julia, Nadia, Phil, thank you for joining me today as we discuss these approaches and what they mean for donors and nonprofits. Let’s get started.
Julia, people familiar with the podcast are already noticing a change from our usual format, that there are four of us instead of three. So let’s break from the norm a little bit more, and let me ask you to bookend our conversation and help me to provide some context for this topic. Phil and Nadia are going to address two approaches to effective giving, a trust-based approach, and a strategic approach. Why do you think that this is an important and timely topic for donors?
JULIA REED: Well, there are as many approaches to philanthropy as there are philanthropists. Recently, MacKenzie Scott has garnered a lot of press around her recent gift to nonprofits, and there’s been a lot of discussion around her trust-based approach. There is also a strategic approach that donors can use in their giving strategy.
MICHAEL: And it’s easy to misconstrue these as opposing approaches, but Julia, you and I were discussing before we started recording that these aren’t mutually exclusive, correct?
JULIA: Correct. No, they’re really not. They may be combined to achieve particular goals for both donors and the nonprofits that they support.
MICHAEL: That’s great. So we’ll begin to understand a little bit more of this by handing things over to Phil.
Phil, let’s help people to better understand what we mean by trust-based philanthropy… How would you define the approach?
PHIL LI: I think the way that I look at it and those of us who are practitioners of trust-based philanthropy look at it, it’s really re-imagining the funder-grantee relationship by addressing the inherent power imbalance between foundations and grantees. And it really explores the notion of power and control through incorporating values, such as equity, humility, curiosity, and collaboration. In essence, it’s an expression of a set of values in action.
MICHAEL: And, Phil, what are the key characteristics of a trust-based approach to philanthropy?
PHIL: There are probably six primary practices that incorporate or encompass a trust-based approach.
And none of these ideas are actually new, right? And many of them have been practiced for years and decades by grant-makers across the country. They’ve been codified and bundled together and given a name. And so it gives people a bit of a short handle of saying or describing the approach that they use.
But the six practices, in essence, are… one, is multi-year unrestricted funding, and that at its core is saying that we think that the grantees have a better understanding and knowledge of what needs to happen in their organizations and in the community, and really gives them the latitude to decide how to deploy those resources.
The second two are really related. But the first one is to do the homework, which is really shifting the onus and responsibility of due diligence onto us as the funders. And that’s really saying that our role in this system is to provide the resources and understand the nonprofits, and the nonprofits really should focus on the work that they’re doing in the community and do that as opposed to educating us. And so it really is an invitation for us as the funders to really dig deep and better understand them.
And then related to that is simplifying and streamlining paperwork. And for us, that really means let the nonprofits engage in their important work and not have to fill out reams of paper and applications for us, with word counts and budget templates and things of that nature, but really honors their time and lets them do their important work.
The next two are related to communications or behaviors. One is being transparent and responsive to grantees. It’s a way of honoring or just respecting time. And so it addresses a bit of the power dynamic in its core, right, in terms of being clear, what we fund or don’t fund, or if we’re going to step away as funders, things of that nature.
The next one is really about soliciting and acting on feedback. And that’s really making this more of a two-way conversation, right? There are practices and things that our grantee partners have seen that would be helpful for us to do better, or they can give feedback on things that we’re doing that don't sit as well with them that would be helpful for us to know. Getting that kind of feedback opens a conversation, as well in terms of going both ways that it’s not a unilateral way of doing work.
And then the final one is really supported beyond the check. What can we do as funders in terms of supporting the important work that our grantee partners are doing? So whether it’s making introductions or convening them, it gives them a chance and all of us to think about different ways that we can support each other and do something more than just writing a check.
And so those, in total, are the six practices that encompass the trust-based approach.
MICHAEL: And, Phil, the point you made at the beginning was important, that these aren’t necessarily new approaches, but thinking of them in these terms as trust-based approaches, what might be new? I think that in the past year and a half, we’ve seen many foundations and donors leaning into things like providing more general operating support, streamlining the application process, but they wouldn’t necessarily have characterized these as taking on a trust-based approach to philanthropy.
PHIL: I think there definitely has been that moment, right? There was the COVID-19 pledge that was shaped and created by the Ford Foundation on the Council on Foundation’s website. And many of the ways in which foundations were invited to change up, if you will, their practices are really informed by the trust-based approach, and more than 800 foundations nationally have signed on to relax and change some of the ways that they have done their grant-making.
MICHAEL: We’ve definitely seen that too.
Nadia, it’s great to see you. We’ve worked together at Stanford PACS, and, you know, one thing I think is that both EPLI and SSIR were founded with many of the principles of strategic philanthropy in mind. So how would you explain what characterizes this approach and what it means?
NADIA ROUMANI: Hi, Michael, it’s great to be here, I think a strategic approach has been central to the work I was doing at Stanford and continue to do.
But before diving into strategic philanthropy, one of the things I’d want to do is just take a step back and talk about why taking a strategic approach is important to the social sector at large. There are so many needs in the social sector, from addressing issues of poverty or affordable housing, health equity, the list is endless. So it can be hard for practitioners or donors to figure out where to focus. And that’s why having a strategic approach in this sector is important, which means having organizations clearly define their desired outcomes, articulating how they’re going to get there, and then monitoring and tracking their progress along the way.
What we’ve found is when nonprofits don’t take a strategic approach, they’re often not able to achieve their desired outcome, and even more so, the leadership of these organizations ends up burning out. We’ve seen that happen over and over again, and it’s really a disservice to the sector because we lose such great talent
And so without a strong strategic framework, these leaders and their teams end up responding to the multiplicity of needs that confront them, which almost always far exceeds their resources, whether financial or their human capital. So they end up being extremely busy but not necessarily moving the needle on what they’re trying to tackle or change in the system.
So if these leaders are able to take a step back from their day-to-day activities, apply some strategic rigor to their process, and decide where they’re going to allocate their time, talent, and energy, and articulate how they’re going to get there, it ends up leading to more impactful organizations and more sustainable leadership over the long haul.
MICHAEL: Nadia, I think that gives us a great sense of what a strategic approach means for nonprofits, but how does this translate to donors?
NADIA: So, for donors, I think they face many similar questions that nonprofits face. So amidst so many needs and demands, they often ask themselves, ‘Where should I allocate my time and resources efficiently and effectively to have the greatest impact?’ For donors, when applying a strategic framework… and what we mean by that is having a clearly defined evidence-based approach to their work that they’re trying to do. A strategic approach includes identifying a focus, deciding what approach you’re going to use, are you going to apply education, advocacy, a direct service approach, what will help you achieve the goal you’re trying to get to, and then track and monitor your progress along the way. Right? So that’s the arc of a strategic plan.
And so, for many individual donors and foundations, applying a strategic framework can be helpful. The first part of that strategic framework is figuring out where to focus, helping narrow the world of needs down for donors to a piece of a sliver of the system they’re trying to affect. So rather than tackling climate change, or education at large, which can be overwhelming, it can be helpful for donors to narrow that world and say, ‘I’m going to tackle access to education for under-resourced communities in a particular city,’ or something like that, to really identify a piece of the bigger puzzle they’re going to try and focus on.
Now, after that, some proponents of strategic philanthropy would say donors should continue along that arc, they should still have an evidence-based approach for their strategy, and they should track and monitor the impact of their individual philanthropic dollars. That’s where I feel that strategic philanthropy goes too far because when you do that, and you’re encouraging donors to track their philanthropic dollars, the impact of that is that nonprofits now have to expend their energy, aligning their work to the donor-specific strategic framework, and trying to track each individual donor that’s giving them resources, which takes a lot of energy away from the work they’re actually trying to do in the field, which is where you want them to focus their energy. So that’s where I feel like donors should focus on the first part, narrow the world of needs, and then after doing that, find organizations that are actually strategically doing this work.
I don’t think donors should accept that all nonprofits then have sound strategies, and they should just give blindly to any group working on that issue area because what we know is some nonprofits have great evidence-based strategies for their work, and some do not. So, instead, recommend that donors develop their own capacity to evaluate nonprofits’ strategies and do so by doing their own homework, collecting the research, and looking at the work of these groups.
Once the donor has identified these organizations, that’s where the difference comes. It’s a difference between is the donor imposing their strategic framework on the field and on these organizations or are they letting the nonprofits, those that are most proximate to the needs and to the people, to the challenges they’re facing lead, and then they’re stepping in as allies to support those organizations’ strategic framework.
MICHAEL: And to your point about donors doing their research that both you, Nadia, and Phil made, you know, we’ve spoken about this before, but what are some of the places that donors can use, or some of the resources donors can use to learn more about the nonprofits they’re considering?
NADIA: Yeah, so a starting point, I think, for donors if they’re evaluating an organization is to just do the homework and look at all the public materials that organization has developed, and is putting out on their website, and their annual reports, and any publications they have, to better understand the organization’s programs, and also to see if there’s an underlying strategy embedded within the work, or if there’s even an articulated strategy in there. And so I think just starting there before asking the organization to submit anything is a great starting point.
MICHAEL: Great. Phil, let me come back to you now. You have shared the six key principles that form the foundation of a trust-based approach. Can you tell us how donors can take action based on those principles?
PHIL: Sure. And I think I will carry the flag for a lot of nonprofits, including the one that I used to lead, is that the number one most requested thing from funders is really for general operating support. And if it can be multi-year, that’s even better, right? I think giving organizations that flexibility to drive and decide how to use those funds is really paramount, and I think we saw that last year when there was a dramatic pivot that happened as a result of COVID. But that would probably be the number one thing.
And then just two other things, one is just really listen and hear what the nonprofits are saying, or in some places, sometimes not saying as they communicate and share with you what’s happening. And the second one is just to be curious, and just ask them what is going on or how we as funders can be helpful to them, and you’ll get some really interesting answers, or I have gotten some interesting answers along the way.
MICHAEL: So at the top of our discussion, Julia and I talked about win-win outcomes, can you share an example of where you’ve seen the trust-based approach be successful.
PHIL: I think the one that may jump out for me is one that’s really quite recent, and it happened as a result of what happened last year when everything was shut down, and we found a lot of our grantee partners feeling very vulnerable or uncertain about what the future held for them. And because of some of the relationships that have been developed over the last few years, a number of them came to us feeling like they’re really scared or feeling very alone in terms of what they had to do, where they needed to be strong for their staffs, and didn’t know where to turn because talking to their boards or to others felt hard. And just listening to a number of them speak, we developed something called a resource bank, which was really kind of a compendium of a number of different resources, human resources, to deal with staffing, and perhaps furlough or layoffs; legal; to deal with the other things, like, relinquishing space and things of that nature Also, how do you manage remotely, or with equity really sort of missing, as well, like how do you manage with a DEI lens in your work? And then also just scenario planning and the financial aspects of that work.
And so what we did is just created a group of resources that they had identified and said this would be helpful, and then we just sort of made them available, and have independent folks who are helping, and being able to do this work and support our grantees in this time where there’s a lot of questions about what the future holds.
MICHAEL: Questions that I think we’re all still trying to figure out the answers to, and we can look at the survey results from discussions with nonprofits, they’re still a lot of that doubt or those questions.
PHIL: Indeed.
MICHAEL: But, Nadia, earlier, Julia and I talked about how a trust-based approach and a strategic approach aren’t diametrically opposed. How do you think they could be combined?
NADIA: Yeah, I think they can be combined. My advice to donors would be to apply a strategic framework, to see where they want to focus their time, talent, and treasure. So spend time narrowing the world of needs they want to support. Maybe find some issues that they, or even they and their family, together, are passionate about. And so start there. And if they don’t want to do that approach, they can even find some community-based groups they want to support who are taking a more participatory approach, and really support them in deciding, so they can kind of outsource that deciding to community groups.
But once they’ve decided who is going to narrow the world of needs, then identify the organizations that they believe have a good approach in achieving their goals, that have some sense of a clear strategy and a way of trying to tackle the goals they’re trying to achieve.
NADIA: And then after identifying the organizations, apply the practices that are outlined in the trust-based philanthropy approach to really support these organizations and be more of an ally to them in supporting their work.
And what I think donors will find is that it's going to dramatically change the dynamics of their experience in grant-making, going from more transactional approaches to more transformational and supportive approaches.
MICHAEL: And Phil, anything you want to add about this intersection of trust-based and strategic philanthropy?
PHIL: Oh, in many ways, completely align with what Nadia is putting forward.
But as she was saying, really, and how do we be better partners, how we can be more supportive in the work that we’re doing. Like once we identify them and say ‘we believe in what you’re doing and keep doing the good stuff,’ how do we come alongside and how can we be good partners? And so I think that’s the area where there is really tremendous alignment and consistency between the two.
MICHAEL: Julia, I said, I’d ask for your help in contextualizing this conversation. So would you close us out with some thoughts for donors and nonprofits on these two approaches from your perspective?
JULIA: Sure. Plan giving vehicles and collaboratives, for example, have had a democratizing effect on giving, and make it simpler and more impactful for donors and the nonprofits they support. As you just heard, there are strategic and trust-based approaches to giving, among others, and whether a donor chooses to emphasize one over the other, having a plan and giving enough thoughtful, planful way will maximize the impact that donors and nonprofits can have on the causes they’re all working so hard to support.
MICHAEL: Well at the end of the day, that’s what I think we’re all working towards. So thank you for that thought.
MICHAEL: Well, there’s so much more we could explore on this topic, but, unfortunately, we’re out of time. I’d like to thank all three of you, Phil, Nadia, Julia, for your time and for sharing your insights on these approaches.
Hopefully, we’ve provided everyone listening with a lot to think about as they consider their giving, whether they’re donating at the level of MacKenzie Scott or far less.
MICHAEL: Thank you for listening. We hope you’ve enjoyed this episode. Please consider leaving us a review on Apple Podcast or your favorite listening app, as it helps others discover the show. We encourage you to listen to other episodes in this series, as well as other podcasts from SSIR. This podcast series is made possible with the support of Schwab Charitable, who played an important role in the selection of topics and speakers. For important disclosures and a transcript of this episode, visit schwabcharitable.org/impactpodcast.
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