Here’s Why Trust Goes Deeper Than Unrestricted Funding
By Danielle Sielatycki
6/12/24
Photo courtesy of Prevention Works featuring Peer POWER ladies.
Several years ago, several nonprofit CEOs in Michigan came up with a big idea: what if we could work together to more intentionally meet the needs of youth and families in our community? Over a series of monthly breakfast meetings, we realized we could be significantly more impactful in our community if we teamed up to address the challenges that prevented all of our organizations from truly fulfilling our missions.
A Budding Trust-Based Relationship
We approached a local foundation with our big idea – to create a central hub for collaboration amongst the multiple founding organizations, resource-sharing, and a collective voice to address the dysfunction in the nonprofit sector which creates barriers to lasting impact. We invited the foundation to partner alongside us, understanding how large and significant this transformational experiment was. We were seeking a trust-based relationship – a true partnership where we could share openly and transparently together as we modeled a new way of creating community change by developing solutions to the historical brokenness in our sector.
The funder was excited to partner in this ambitious endeavor, investing a significant amount of flexible funding over three years to bring our vision to life. Having this trust-based financial investment was thrilling; but perhaps even more exciting was the opportunity to build a long-term trust-based relationship with a major funder and the opportunity to transform philanthropy. Over three years, we used the funding to 1) establish equitable compensation across four organizations, 2) build robust human resources and other critical operational functions within each organization, 3) identify key barriers to creating impact for our community, and 4) successfully navigate the devastating effects of the pandemic by using shared resources and support. Due to the scarcity of traditional nonprofit practices, these efforts were transformational for our four organizations and the people we served.
Photo courtesy of Unsplash.
A Dramatic Shift in the Relationship
However, after years of positive feedback during monthly meetings and conversations about continued funding to sustain our effort, we experienced a surprising shift. Just several weeks before the end of our three-year grant term, we were informed that we were no longer eligible for renewal funding. This came as a complete shock to us, since, months prior, we had been invited to submit a proposal and budget for our next phase of our work. Moreover, we had gone through months of back-and-forth responding to their extensive requests for information and materials to supplement our proposal.
With the rug pulled out from under us, we were left with more questions than answers.
When did this apparent shift in priorities happen? Why didn’t it come up in any of our monthly conversations? And, more importantly, would we be able to sustain the progress we had built – or would we have to dismantle it all?
Fortunately, since then, we’ve been able to meet our immediate needs with the support of other funders. Still, the future of our multi-organization collaboration is uncertain. When we were finally able to take a step back and evaluate what had gone wrong, we recognized that the funder had identified as a trust-based funder without practicing the relational values that go beyond giving unrestricted, multi-year grants.
Lessons Learned
The main lesson we have learned is that trust-based philanthropy relies on much more than multi-year unrestricted funding. Effective collaborations between funders and nonprofits require a deeper ethos and intent to be in partnership with one another. And given the inherent power dynamic, the onus is on funders to be proactive in communicating, soliciting feedback, and holding themselves accountable. Moreover, it behooves funders to think ahead about the implications of their investments (and disinvestments) and to forecast and plan around the impact of their decisions. In this case, such a large transformational endeavor posed a significant risk for the organizations and required a longer-term relationship to undertake bold initiatives toward change.
As a longtime nonprofit executive who is committed to supporting and advancing the movement for trust-based philanthropy, I want to share a few key lessons from our experience so that funders can be mindful of what it takes to practice the rigor that trust-based philanthropy demands:
Photo courtesy of Prevention Works (Family Program Participants) Jelisa and Cornelius Lesley.
Trust-based philanthropy is about building a partnership toward a shared goal. It requires funders and nonprofits to get to know each other and what trust looks like together. Funders striving to be “trust-based” sometimes tend to defer to the nonprofits, fearing that making suggestions or asking questions brings power into the room. But if there is a concern, question, or suggestion, it is important to bring it up in real time, otherwise, it can lead to a false sense of alignment. We believe that mutual trust and honest dialogue is key to the impact of this model. When both parties have developed a deeply rooted respect for each other, it creates a solid foundation for working together through challenges and opportunities.
Recommended Action: Take time to get to know each other and build an authentic relationship from the beginning, setting agreed-upon rules of engagement and identify behaviors that will uphold the mutual commitment.
Mutual accountability is crucial to achieving the potential of trust-based philanthropy. It is not enough for a funder to say they’re trust-based and to give unrestricted funding. This work is also not about funders deferring completely to their nonprofit partners. In a trust-based relationship, both parties must equally commit and practice the tenets and values of trust-based philanthropy throughout the relationship – especially when things get hard. This requires each party to hold the mission they are on together above individual priorities, failure modes, capacity limitations, and agendas.
Recommended Action: Consider how you intentionally make pivots and communicate any challenges or changes with grantees providing an appropriate runway to preserve their well-being. Funders and grantees should hold each other accountable when they see others not practicing the commitments they are voicing. Being open to critical feedback and behavior change is essential in a trust-based relationship.
Structures and systems are necessary to uphold a commitment to trust-based philanthropy – through good times and bad. Given that relationships are dynamic, and the work we do is unpredictable, there should be structures in place to help navigate challenging situations or divergence. For example, in our case, we should have had clear agreements at the outset of our relationship that established mutually agreed-upon terms for how we would work together, what we needed from our funder, and how we would keep one another informed about course changes that could affect the others’ work. Funders must figure out how to show up effectively and meaningfully in partnership with the grantee to advance their work together.
Recommended Action: Funders should analyze the systems and structures you have put in place to uphold your commitments to grantee partners and be committed to initiating hard conversations around how you handle conflict and manage your power dynamic. This includes admitting when you’ve made a mistake and committing to rectifying the situation.
If a grant relationship must end, do it responsibly. If you’re a funder and there is a change that requires you to end a multiyear relationship, develop a thoughtful plan that ensures your exit doesn’t threaten the progress you made together in partnership toward your shared vision. Make sure that your exit plan is proportional in time and resources to your investment and partnership together. Maintain your commitment to going beyond the check by engaging other funders and exploring opportunities to reduce the possible harms that will come about as a result of your exit.
Recommended Action: Consider the implications of the exit. Be prepared to have direct conversations about this strategic shift and why, leaving space for honest, open dialogue. Plan ahead and build in a budget for transition grants and other support beyond the check that can help the organization plan ahead for the shift in funding. Don’t leave the nonprofit unclear and confused.
I firmly believe in the power of trust-based philanthropy. It is a necessary change in our sector. I am committed to elevating conversations around how to achieve the structural change that is so desperately needed for a thriving social sector. If you’d like to share your own experiences or learn more about our journey please contact us here.
Danielle Sielatycki is Chief Executive Officer of Prevention Works.