April 30, 2024

There Is a Trust Gap in Philanthropy. Donors Can Help Close It.

Trust alone won’t build a more equitable and effective nonprofit sector and a more democratic society. It requires donors to reckon with systemic inequity and their implicit biases. 

By: Shaady Salehi

In the mainstream narrative of social impact, donors are the celebrated protagonists, and nonprofits are the background characters.

This narrative is a manifestation of a profound power imbalance in the social sector. Donors hold the purse strings when it comes to the issue areas and organizations that get priority for funding. They also call the shots on the quantity and frequency of funding flows and impose budget restrictions that dictate what nonprofits can and can’t do. In many cases, donors also define their own measures of success, with the explicit goal of proving the impact of their investments.

Shaady SalehiShaady Salehi
Executive Director
Trust-Based Philanthropy Project

Beneath the surface lies an inherent distrust in nonprofits’ ability to deliver on their missions. This mindset has given way to a skewed sense of purpose among donors. Many see it as their duty to monitor nonprofits so they don’t fail or falter. In this narrative, nonprofits have very little agency, let alone expertise, in the issues they work on every day.

Over the last several years, however, a new narrative has been emerging—one that recognizes the collective power of nonprofits working alongside donors toward a shared North Star. This movement is part of a shifting tide in philanthropy, wherein donors are reckoning with their power, listening to nonprofits, and shifting their practices to reflect a more collaborative and relational approach. Other donors are finding that they finally have a language and a framework to describe how they’ve always practiced philanthropy.

These shifts indicate donors are indeed willing to trust—and they are seeing the strategic value of taking a relational stance over a transactional one. But trust alone is not sufficient in advancing trust-based philanthropy’s goals of a more equitable and effective nonprofit sector and a more democratic society. Advancing this vision of social progress requires donors to reckon with their implicit biases and how they play into a bigger picture of systemic inequity.

More on Trust-Based Philanthropy

I appreciate Bridgespan's interrogation of the nuances of trust, especially as it relates to the complexity of social impact work. There is a deeper layer of trust in philanthropy that often goes undiscussed—the role of power and donors' implicit biases around trustworthiness. If donors can reckon with this, and evolve their actions accordingly, we can unleash the potential of trust-based philanthropy toward achieving a more just and equitable world.

The Uneven Distribution of Trust

Trust is generally predicated on familiarity. We are more likely to trust someone who shares a similar background or history. This has been referred to as characteristic-based trust.

In philanthropy, the majority of donors and foundation executives are white. This automatically puts white nonprofit leaders at an advantage over their non-white counterparts—simply because of the familiarity factor. For this reason, trust-based philanthropy can’t be truly effective unless donors recognize the role of race and racial bias in their decision making. Otherwise, donors run the risk of perpetuating the very inequities they seek to address.

Implications for organizations led by people of color

Bridgespan’s 2020 study with Echoing Green revealed significant racial disparities in the flows and access of funding in the nonprofit sector. One of the starkest findings was the disparity in unrestricted funding, which is one of the most practical ways for donors to extend trust: it allows nonprofits to allocate funds where they see the greatest need. While unrestricted funding is highly coveted among all nonprofits, the study revealed that white-led organizations had unrestricted assets that were 75 percent higher than those of Black-led organizations. This suggests that donors are much more likely to trust white-led nonprofits to make sound decisions about their funding. Consequently, Black-led organizations must work much harder to maintain organizational stability and flexibility, while still working to fulfill their missions.

Implications for entire sectors

Beyond its impact on individual organizations, the uneven distribution of trust in philanthropy also has major implications for entire sectors and movements. The Ford Foundation recently commissioned a study to examine the distribution of funds across the nonprofit documentary sector, a significant area of investment for the foundation. The study found that documentary organizations led by and serving communities of color, have played a vital role in this sector by supporting, mentoring, and funding diverse storytellers. Despite this, philanthropy has chronically underinvested in them. The report cautions that this continued pattern could threaten the integrity of the entire documentary ecosystem, and, relatedly, its potential for it to be a force for positive social change. (The study also led to the creation of a new grantmaking organization, Color Congress, founded with the express purpose of resourcing and networking nonfiction storytelling organizations led by people of color.)

Implications on a global scale

There is also evidence of the damaging effects of trust disparities on a global scale. A 2023 study by Human Rights Funders’ Network found that, among the $4.2 billion of global human rights funding from foundations, only 12 percent flows directly to organizations in the Global South and East—regions where there are a disproportionate number of human rights challenges. The study points to a “trust gap” in global human rights funding, wherein grantmakers are much less likely to fund, let alone trust, organizations on the frontlines of human rights challenges worldwide.

“This trust gap is evident across a range of funding decisions and practices, from where [funded] organizations are based, to the size of the grants they receive, to the extent they have the flexibility to decide how to use the funding,” says the report. It also cautions that global human rights funders will not be successful in their aims unless foundations act to address this systemic gap in trust.

Closing the Trust Gap: A Call to Action for Donors

While some of these systemic disparities may seem insurmountable, donors hold a lot of collective power and responsibility in redirecting some of the challenges of the social sector. Rather than scrutinizing individual organizations and nitpicking budgets, donors can be much more effective if they take a power-conscious, ecosystem-oriented approach to their giving.

  1. Lead with curiosity and humility when engaging with nonprofit leaders, acknowledge the power imbalance, and check yourself when you may be making assumptions about them and their work. Instead of asking them how they measure impact, consider asking them about their vision for change and how they define success.
  2. Recognize that decisions are influenced by implicit bias. Read about implicit bias, and consider how this may be showing up in your relationships and determinations about grantees and prospective grantees. Check yourself before reacting or making a judgment about an organization or leader and consider whether race bias may be a factor.
  3. Do your homework on your funding area of interest, get curious about where disparities are showing up, and consider where targeted funding may help strengthen the entire sector. Ask leaders if there are certain needs or efforts that are underfunded.
  4. Take stock of your grants. How many of the organizations that you fund are representative of the communities they serve? Are you more likely to extend trust and support to organizations with whom you are more comfortable? Are you able to think outside the box to identify new grantees you have not considered—especially those that may be consistently overlooked by other donors?
  5. Seek out intermediaries addressing disparities. Many intermediary grantmakers play a key role in filling gaps that are otherwise not met by institutional philanthropy. Make a donation to a regranting organization that demonstrates a deep sense of accountability to the community it serves and use it as an opportunity to learn about ways to direct your funding in the future.
  6. Understand that building trust takes time and cultivation. Many organizations, especially those led by women and people of color, have horror stories about their harmful experiences with donors. Donors committed to a trust-based approach must recognize that it may take time for nonprofits to reciprocate trust, despite a donor’s best intentions. Trust is built over time and through action and mutual accountability.

The path to social progress requires multiple actors working together toward a shared goal. Trust is the social currency that makes it all possible. When donors embrace their role with humility, collaboration, and a sense of self-awareness, it can unlock transformative potential. I am optimistic about that future.

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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.