Philanthropy is a different experience for every donor. For some, it is a deeply personal process that allows them to donate their time and wealth more intimately to a smaller set of causes. For others, it is a broader gateway to discovering emerging issues and having an impact across multiple areas.
Whatever the inspiration, there are different approaches you can take to support the causes you care about. The more traditional, evidence- and relationship-based methods of philanthropy involve a closer partnership between donors and nonprofits. One alternative approach is trust-based philanthropy, which has grown in popularity in recent years among high-profile donors like Mackenzie Scott. It gives organizations greater decision-making independence when allocating charitable dollars.
It is important to remember there is no one-size-fits-all approach to grant-making. Many donors will adopt elements of these three strategies at the same time, depending on their goals, preexisting commitments and relationship with an organization.
As you craft and evolve your approach to philanthropy, take a closer look at these established methods to see how incorporating aspects of each can ensure your preferences for giving align with the impact you seek to create.
Evidence-Based
Traditionally, many philanthropists have favored an evidence-based approach to giving. This approach typically begins with funders trying to solve a specific problem. They will invite nonprofits to apply for funding that meets certain criteria, and funding approval is based on an agreement between the funder and the nonprofit. From there, a grant agreement outlines expectations and reports on progress to the funders.
Data-driven grant-making empowers philanthropists, foundations, and government entities alike to measure the impact of their initiatives while facilitating collaboration within philanthropic organizations, grant-makers and state and local governments. In most cases, each year, the grant report is reviewed and approved to continue the work.
High-Level Steps for Evidence-Based Philanthropy
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Invite nonprofit to fill out letter of interest (LOI).
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Extensive grant application if invited.
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Formal presentation or site visit.
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Specific project identified for the grant.
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Draw up grant agreement outlining expectations and outcomes, and single-year or multiyear grant.
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Grant report expected at the end of the grant cycle.
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Potential to share data and outcomes with other funders.
Relationship-Based
Many philanthropists incorporate relationship-based giving into their approach, which creates a dynamic between grantor and grantee that is less transactional and more grounded in partnership.
Relationship-based giving is founded on the principle that grantor and grantee play an equally important role in effecting positive impact in a particular issue area. Donors incorporating this approach into their giving typically meet with prospective grantees to better understand their mission and their needs. Grants are rooted in a mutual understanding of how best to allocate funding based on a nonprofit’s needs.
Donors also have the opportunity to extend more than financial support. They may offer their time as volunteers or board members, or contribute their skills in areas such as marketing, branding, or legal acumen. The focus on dialogue and mutual understanding often translates into streamlined impact reporting as the donor is in regular contact with the nonprofit and aware of its progress through the relationship they have formed with their grantee.
High-Level Steps for Relationship-Based Philanthropy
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Meeting with the nonprofit to listen and learn about needs.
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Identify projects or overall work to fund.
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Identify the best way to leverage support (time, talent, network, treasure).
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Identify the best way to fund (a single-year or multi-year grant).
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Become part of the organization’s support system (committee, board, advisory).
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Simplified grant report used as a check-in to validate more funding.
Trust-Based
Trust-based philanthropy exploded during and after the pandemic. Organizations were in survival mode and needed funders to trust their judgment to save the organizations. It was a monumental shift for the industry, and many donors continue their funding with few or no guardrails.
The approach provides unrestricted funds and empowers nonprofits to make their own decisions. Funders recognize the importance of nonprofits’ ability to budget and therefore offer multiyear grants and request reports that are either simplified or nonexistent.
Funders may be focused on listening and learning while trusting those closest to the issues to offer solutions. Many funders offer their contacts and connections as non-financial resources in pursuit of greater impact. At its core, it is a partnership model between funders, nonprofit organizations, and the community that acknowledges all stakeholders.
High-Level Steps for Trust-Based Philanthropy
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Meet with leadership to learn about the problem they are trying to solve and their approach to it.
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Validate viability (landscape study, review Form 990, site visit, GuideStar).
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Identify the best way to fund the outcomes (a single-year or multi-year grant).
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Send check for general operating expenses.
Taking Action
Philanthropic trends have evolved continuously and will continue to do so. Reflecting on these three approaches, it is easy to see how each can offer valuable components to guide charitable work and lasting change—whether through deep research, strong donor-nonprofit relationships, or autonomy for those closest to the issues at hand.
Increasingly, philanthropists find the ideal approach to be trust-based giving that appreciates the importance of data, research, and reporting as well as an understanding of the inner workings of nonprofits through relationships with grantee leadership. No matter the route you choose, taking the time to consider your options and the unique needs of the organization or work you are supporting can help guide an approach that most benefits everyone involved.
