Trust-based philanthropy has the power to transform how foundations fund nonprofits

(BPT) - When nonprofits receive grants from foundations or funders, the application, rules and reporting process are often arduous. Historically, the power dynamic leans heavily toward those providing the money, and because nonprofits need funds to do the good work they do, they have no other choice than to go through each tedious, time-consuming step.

There are numerous problems that emerge from this traditional partnership. One key issue is nonprofits have to take time away from the work they do to manage the grant process, which means less time toward the mission itself. Another is that foundations typically have the ultimate say in what's best for their community and people impacted because they determine what is funded or not.

"Why are foundations dictating what's best for their communities when it's the nonprofits that often have people on the ground and their finger on the pulse of what's happening in their neighborhoods?" said Samantha Plotino, executive director of The Provident Bank Foundation in New Jersey.

Plotino is a thought leader in a small advisory committee of forward-thinking practitioners formed by the Council of New Jersey Grantmakers and the New Jersey Center for Nonprofits which is spearheading a unique initiative called "Doing Good Better: Amplifying and Deepening Philanthropic and Nonprofit Partnerships in NJ." The goal is to reimagine how New Jersey nonprofits and philanthropy can work together more efficiently and foster better relationships.

"The purpose of the Doing Good Better initiative is to reimagine relationships among funders, nonprofits and government to create shared power rooted in collaboration, mutual trust and respect," says Theresa Jacks, acting president and CEO of the Council of New Jersey Grantmakers.

"The Provident Bank Foundation has spent the last two years shifting our culture, structures and grantmaking practices in ways that rely on trust-based values," Plotino said. "The backbone of this initiative has been the Trust-Based Philanthropy Project, which highlights recognizing the inherent power imbalance between foundations and nonprofits. We believe that philanthropy will be more successful, rewarding and effective if funders approach their grantee relationships from a place of trust, humility and transparency."

"By listening to what nonprofits and their communities need to be most impactful, foundations can be truly supportive," said Linda Czipo, president and CEO at the New Jersey Center for Nonprofits. "This is particularly important for smaller nonprofits or partners led by or serving people of color or other historically excluded communities."

Bold foundations are learning from the actions in New Jersey and making their own changes. Plotino shares some strategies for implanting trust-based philanthropy for any funder interested throughout the U.S.:

Advisory group: Form a group of dedicated, passionate people who can work together to determine areas for improvement. Meet regularly and maintain ongoing communication to determine what works, what doesn't and what can change. Solicit feedback and act on it.

Update applications: Nonprofits must apply for their grants through an application. This is an important process for funders to learn more about the nonprofit and its intentions for the funds. While an application is necessary, consider what is essential and what isn't. By streamlining the application process and maintaining communication with applicants, you'll help nonprofits save time and put their best foot forward.

Rethink reporting: Nonprofits want to share the good work they've done thanks to the generosity of funders, but required reporting is often difficult. Consider updating, cutting back or eliminating the reporting requirement. Evaluate the burden of having to track everything, and look for alternative ways to show accountability. Always strive to simplify and streamline paperwork.

Unrestricted funding: Remember the importance in investing in general overhead expenses. For example, it might seem obvious to fund food for a food pantry, but what about the cost of electricity to light and heat the space, cleaning supplies, administration, employee training and more? These overhead expenses are just as essential, but often don't get the attention and funding they desperately need.

Ongoing support: Don't stop the relationship with nonprofits once the check is written and the funds are distributed. Explore ways you can engage with nonprofits and provide additional support, such as professional counsel. Even a simple, friendly email to check in shows you care.

Changing the funder-nonprofit dynamic might seem overwhelming, which is why Plotino's advice to others is: "Start small in adopting trust-based philanthropy. Make adjustments over time. Find a place to start that makes sense and then build on it. We all have the same goal, which is improving quality of life in our communities. Small steps can lead to big impact."

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