April 30, 2024

How Trust Works and To Whom It Is Owed

We must look closer at how trust works and to whom it is owed to … to avoid reproducing the very dynamics we aspire to transform.

By: Aaron Horvath, Micah McElroy

Aaron HorvathAaron Horvath
Associate Director of Research
Stanford Center on Philanthropy and 
Civil Society
What is the nature of trust and how should it operate in the field of philanthropy? According to Bridgespan’s “The Trust-Based Philanthropy Conundrum: Toward Donor-Doer Relationships That Drive Impact” trust isn’t an on-off switch; it’s more like a dimmer that operates according to “opaque dynamics.” As to what those dynamics are, however, “Conundrum” leaves us largely in the dark. Fair enough. Scholars have long disputed trust, how it works, and whether it’s waning in various contexts. While we don’t pretend to resolve these debates, we believe there’s much to be gained—for donors, doers, and others interested in a just and effective social sector—from a richer conceptualization of trust. To that end, we explore two aspects of trust—how it works and to whom it’s owed—that were overlooked or underdeveloped in Bridgespan’s article. By illuminating these blind spots, we demonstrate what a deeper understanding of trust means for philanthropic practice, both trust-based and otherwise.

How is trust practiced?

While “Conundrum” portrays trust as desirable, we take a less sentimental approach. Put simply, “trust” is a convenient label for how we cope with the vulnerability of relying on others and the uncertainties we have regarding whether others’ actions will serve our interests.

Micah McElroyMicah McElroy
Associate Director of Research
Effective Philanthropy Learning Initiative 
Stanford Center on Philanthropy and 
Civil Society
The how here is important. The tools we use to ensure trust vary in accordance with the kinds of relationships on which we depend. Sometimes these tools emerge organically. You might loan a friend $100 because you know the same people, you know their reputation, and reciprocity is a norm between you. But sometimes the tools are purpose-built. You might loan a stranger money through an insured intermediary, after seeing their credit score, and once you’ve obtained collateral. In both cases, the goal is the same: finding ways to bridge the social and psychological distances that would otherwise keep you awake at night wondering if someone made off with your money.

Cast in this light, we’d contend that all philanthropy is trust-based philanthropy—at least insofar as donors make decisions about how best to distribute finite resources or wonder whether their munificence is doing any good. So, while the article advocates a softer, more personable, “Theory Y” approach to philanthropy, the formal, technocratic, “Theory X” methods mainstreamed at the turn of the century—everything from overhead ratios to measurable impact—were no less concerned with trust.

A neutral conceptualization of trust, however, doesn’t mean the practice itself is neutral. Imagine the consequences of subjecting your friend to the same coping mechanisms you used for loaning money to a stranger. You may undo years of goodwill, earn a reputation for stinginess, and cause others to doubt your friend’s integrity. How you trust has implications for the goals you pursue and the relationships through which you pursue them. Accordingly, donors must consider the consequences—both in terms of “getting results” and “opportunities to shift power”—implicit in determining which doers are accorded which kinds of trust.

More on Trust-Based Philanthropy

In terms of “getting results,” the article recommends that donors use the “command and control” of Theory X for organizations “where a solution and service is predictable and linear—think food banks and soup kitchens.” But such categorical determinations are inadequate given that food banks and soup kitchens (like many civic organizations) conduct copious “off-label” work connecting people to other providers, offering on-the-spot social services, and pivoting programs in response to crises. Denying organizations Theory Y treatment could stifle these often-unrecognized civic benefits.1

In terms of “shifting power,” we were struck that, in the article’s conception of trust-based philanthropy, the doers still act at the discretion of the donors. Perhaps owing to McGregor’s influence, this vision of trust resembles the relationship between managers and their employees. No matter how benevolent the manager, they retain the right to hire, promote, and fire at will. Under this analogy, the article’s proposals resemble a cuddlier version of the top-down, principal-agent dynamic that has long prevailed in philanthropy.

As we see it, Bridgespan’s version of trust-based philanthropy caters to donors who wish to retain control (i.e., deciding who to fund and how to trust them), albeit without attaching many strings or requiring much reporting. Certainly, this is progress. But we wonder how to reconcile this vision with other visions of trust-based philanthropy calling for a more radical devolution of power. What powers should donors retain? How are these powers justified?

Who is trusting whom?

Considered abstractly, trust is a property of any relationship between two or more entities (i.e., people, organizations, governments, etc.). While we often isolate relationships and analyze the trust therein, we shouldn’t forget that relationships are embedded in complex social environments where trust flows in multiple directions and between different kinds of entities.

Indeed, the article’s preoccupation with donors’ trust in doers, comes at the expense of other important relational considerations.

Consider if we flipped “Conundrum” on its head and focused instead on how doers can trust donors. Indeed, many nonprofits worry funders will leave them in the lurch or capriciously change their evaluative demands. What mechanisms exist to secure against donors’ abuses of trust? For inspiration, we might look to cases where donors served at the leisure of doers, such as where philanthropists forfeited control over their funding to citizen assemblies.

More broadly, how do we ensure that taxpayers can trust philanthropists, whose work is generously subsidized by the US tax code? At a time when countless donors sidestep regulations intended to ensure philanthropic accountability to the common good, limiting our focus to donor-doer relationships seems myopic. Perhaps we should hold philanthropists accountable to a higher standard of reporting and disclosure—something akin to Theory X —without them offloading these burdens onto their grantees.2

There are many reasons to believe that a renewed interest in trust signifies progress in the social sector. For some, friendlier approaches to trust are better suited for “getting results.” For others, less donor-centric philanthropy promises to address widening inequalities by “shifting power.” Whatever the reason, we worry that, if we fail to fully consider the complexities of trust, we are liable to reproduce the very dynamics we aspire to transform.


[1] “The Trust-Based Philanthropy Conundrum: Toward Doer-Donor Relationships That Drive Impact” frames trust instrumentally as a route to impact or “getting results.” But what if trust-based philanthropy fails on those terms? Do we then abandon deeper shifts of power between donors and doers? In some circumstances, trust may have an intrinsic value regardless of the outcomes it achieves. But if we regard trust as an end in itself, how will we know whether we’ve sufficiently achieved that end?

[2] Policy change is one means of accomplishing these goals. While not discussed in “The Trust-Based Philanthropy Conundrum: Toward Donor-Doer Relationships That Drive Impact,” philanthropy is a product of political choices—from special legal protections to accountability measures—and it is within our collective ability to revise those choices in ways that ensure trust between donors, doers, and the broader public. Such measures could include making donor-advised funds and limited liability corporations more transparent, creating more egalitarian charitable subsidies, or incentivizing contributions to nonprofits that meet enhanced reporting requirements. This historical precedent is strong: recall that the Tax Reform Act of 1969 served as a sort of “grand bargain”, a regulatory reassurance that philanthropy took its public role seriously and would benefit ordinary Americans.

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The Bridgespan Group would like to thank the JPB Foundation for its generous and ongoing support of our knowledge creation and sharing work.