One of the stranger (to me) developments in philanthropy circles in 2024 has been the fierce debate about trust versus strategy, applied to funder approaches. Perhaps for the sake of argument, trust has been described as an alternative to strategy, as if the two were quite separate. This is a distinction made in a much-discussed recent article by Mark Kramer and Steve Phillips with the eye-catching title Where Strategic Philanthropy Went Wrong. But I don’t actually think the article is about weighing the merits of trust versus strategy.
In my recent blog I reflected on the suggestion made by Kramer and Phillips that the best role for philanthropy is to stay away from grand strategy and focus more on trusting and empowering people and communities to solve their own challenges. This is valid advice. But does it mean that trust-based philanthropy is therefore “better than” strategic philanthropy? The proponents of a trust-based approach feel strongly about the importance of removing conditions and restrictions. The proponents of a strategic approach believe that it is important to set goals and to measure progress. Both can be true and important. I think Kramer and Phillips would not disagree with that. But the contrasts between these approaches have been exaggerated for effect both in this article and in other public debates about the role of philanthropy.
Some have talked about this difference as being essentially about power: keeping it or shifting it. Adopters of trust-based funding are said to want to share the power that money gives them. So-called strategic philanthropists are assumed to want to keep the power to make decisions about how and to whom they allocate their money. Kramer and Phillips introduce power (and who holds it) as an element of their suggested “new” approach to philanthropy by describing it as “empowerment” philanthropy. In their view, “philanthropists need not come up with the answers to other people’s problems but should merely help empower people to improve their own lives as they choose.” They think that this way of thinking is “at odds with many of our current philanthropic and nonprofit practices”, implying that we must discard these practices if we as philanthropists want to truly make a difference in people’s lives. But while many foundations are indeed rethinking practices such as onerous written grant applications, single year funding and restricted program dollars, I am not persuaded by Kramer and Phillips’s insinuation that donors must throw out their own interest in setting goals or thinking strategically.
Phil Buchanan of the Center for Effective Philanthropy reacted with some exasperation in his recent blog to the tendency of commentators such as Kramer and Phillips to “invent” new roles and approaches for funders. Buchanan says bluntly that “there are no silver bullets when it comes to the practice of philanthropy. It’s complicated and goal- and context-dependent. It requires humility. That’s why I find simplistic takes on philanthropy that suggest that there is one, new, superior way so unhelpful.” He suggests, as do others, that Kramer and Phillips are setting up strategic philanthropy as a “straw man” so that they can contrast it with their proposed empowerment philanthropy. I agree. This is what many in the debate between strategic and trust-based approaches do. They maintain that the foundation world is privileged and without the lived experience necessary to solve social problems or to come up with innovative solutions. But this should not mean that strategy gets thrown out with the bathwater. As Buchanan concludes, and I strongly concur, “I’d agree with the article that empowering those closest to issues and problems to chart solutions can be an effective approach to making progress toward certain goals, and probably isn’t common enough... But these observations shouldn’t be positioned in opposition to strategy; recognition of these realities can be, in fact, essential elements of a good strategy”.
Rhodri Davies, the UK-based philanthropy commentator, has weighed in at length on the trust versus strategy debate with his article Why Isn’t All Philanthropy Trust-based Philanthropy?. For those interested in a historical perspective, Davies describes how so-called strategic philanthropy evolved as an effort to rationalize and formalize the informally generous practice of philanthropy as charity. I think it is important to remember, as Davies reminds us, that the push to become more strategic has been an effort to increase the impact and effectiveness of philanthropy without losing the individual impulse to generosity that is at its heart. He acknowledges the push back on strategic philanthropy that has become most obvious since 2020 with the actions of major donors such as Mackenzie Scott and Melinda French Gates, as well as a newer generation of wealth inheritors who are publicly espousing a philanthropy that is much less donor-directed and much more trust or participation-based. Their commitment to social justice and equity is an important driver of this shift.
The value of Davies’s article is that he is much more nuanced than Kramer and Phillips in assessing the opportunities and challenges of a more trust-based approach. It can’t be a one-sized fits all way of thinking, as Buchanan also notes. It is dependent on context and the goals of both philanthropic and community partners. I think one of the key points made by Davies and others is that philanthropic strategies are highly dependent on relationships. Trust is an aspect and outcome of relationship. Effective strategy also arises from strong working relationships. It is difficult to divorce either element from relations between and among funders and partners. So, to my mind the “trust versus strategy” dispute is a bit of a provocative red herring. The better question for a foundation to ask itself, I think, is how can we deepen our relationships with our partners, to gain their trust and to build better strategies that will help us achieve our mutual goals?
Note: I wrote a blog in 2022 on the challenges of practising trust-based philanthropy which offers some useful tools to funders.
In early April, the leaders of two relatively new Canadian foundations, Definity Insurance Foundation and Daymark Foundation, joined me at the annual conference of the Canadian Association of Gift Planners to share their experiences and insights on the evolution of strategic philanthropy. Here is some of what we talked about...
We live in a better country than we did 20 years ago, even if the media paint a different picture. For example….
In every case, a Canadian grantmaking foundation provided the seed funds, the connections, the training or the advocacy support to make it happen. And most people don’t know about it.
Why not? Foundations don’t often tell their own stories. And they need to. Because there are many other stories out there not told by foundations.
Some are benign (foundations exist to help those in need). Some are aspirational (foundations are the risk capital for much-needed social innovation). But others are conspiratorial (foundations are anti-democratic vehicles for the wealthy), or critical (foundations sequester urgently needed resources for today’s problems).
It’s true, there isn’t a single story. Philanthropic foundations are as different as the sources and uses of their capital. At the core, all foundation stories are about charity, caring for others. But foundations can also fight justice and seek equity. To do this, they must support social change.
Strategic foundations can tell a story about bringing about social change, using models and theories to determine and measure specific social outcomes and impacts. But this isn’t a story about the solo foundation in charge. That model is not ideal for social change. Even if it is appealing for a foundation to run its own show, it doesn’t open the door to more collaborative approaches. And it doesn’t consider the complexities of social change.
A strategic foundation works hand in hand with community partners to achieve mutually agreed goals, using its capital creatively and committing to active learning along the way. Definity and Daymark are this kind of foundation. The diversity of their work shows us that foundations contribute more than just financial capital. They can support knowledge-building, social research and development, network creation and convening, organization and infrastructure support. They can influence and they can advocate. They act as signals to others around innovations that may be crucial to us five or ten years from today.
In all philanthropic stories, we must acknowledge questions of power and inequality. Foundations are privileged. Their assets give them power. Foundations in Canada are being called out, as they are elsewhere, for lack of urgency in a world of rapid climate change and increasing inequality. Foundations, just like other organizations, need to be more transparent. To be accountable, foundations need to explain what change, what social impact, they seek and how they are going about it.
Arti Freeman, Chief Executive Officer of Definity Insurance Foundation, and Vani Jain, Executive Director of Daymark, are foundation leaders who know this well. They and their boards share some essential qualities with other strategic philanthropic leaders:
The Daymark Foundation is a family foundation created in 2020 to focus on mental health in two specific areas: women’s mental health (with an initial focus on perinatal mental health) and bipolar disorder. The Foundation has clearly set out its theory of change to improve outcomes in its chosen areas, in an unusually open manner. It uses a “more than money” approach, deploying intellectual, social, human and financial capital to act on its priorities. The Foundation has eliminated its grant application process in favour of an open invitation to potential partners to contact the Foundation for a call to discuss the organization’s vision for systems impact. As Vani Jain puts it, “competitive grantmaking promotes self-interest and hinders collaboration. We want to help organizations see their role within a larger system and explore the contribution they could make alongside others.” Daymark uses convening as a tool to help orient stakeholders toward these higher-level goals.
Definity Insurance Foundation is an independent foundation established and funded through the demutualization of the Economical Mutual Insurance Company. Since its public launch in February 2022, the Foundation has been focused on the roots of inequality, working particularly with Black Indigenous and racialized populations. Like Daymark, it has chosen to work with partners to advance community-led solutions that further climate, health and socio-economic justice goals. Like Daymark, Definity thinks of its capital as more than simply financial. It is also boldly moving into seeding initiatives that catalyze more private capital for the social outcomes that it seeks. It is deeply committed to providing the funds for capacity building of the partners with whom it has chosen to work. For example, it provided a $750,000 multi-year grant to the Raven Indigenous Impact Foundation, an organization focused on improving the wellbeing of Indigenous peoples, co-creating financial solutions that will result in better outcomes in climate and health for Indigenous peoples by centering the needs and voices of Indigenous communities. The Foundation provided the seed funding to design and structure the fund, hire a CIO and raise capital through investor engagement. Once the fund was in place, the Foundation also made a commitment to invest in the fund. Arti Freeman notes that this investment has a multiplier effect that accelerates impact. “If we want to achieve our mission, we can’t do it just with granting dollars,” says Arti. “We use our relational, social, intellectual and financial capital to advance solutions, and we learn as we do, always in collaboration with others, because how we show up is as important to us as what we fund”.
These two foundations exemplify a strategic approach being taken by Canadian foundations featuring innovative uses of capital, collaboration and a clear focus on outcomes. The foundation story is evolving rapidly, and we will hear more of it directly from these new leaders as a new generation comes in to Canadian philanthropy.