Episode 143: Trust-Based Philanthropy - Unrestricted Opportunity with Responsibilities

Welcome to another edition of "Around with Randall" your weekly podcast for making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett. I welcome you back to a new edition and this edition of "Around with Randall" today we talk about this concept of trust. And maybe take it to a little bit more macro level, and at the end we'll talk about some tactical things that are a part of this conversation as well. I've been reading a lot more about the five-year project that was really established out of Stanford about trust-based philanthropy, and when you first think about the concept of trust space philanthropy you get basically, do donors trust the the charity, non-profit to do the work that's being done. Do they have good relationships? And it's much deeper than that. And what I want to do is take this concept apart a little bit, talk about how it might help us. Why some things that we do might actually mean to be enhanced to get to where we need to go, and how this might actually affect us down the road.

So trust-based philanthropy is really the concept that is about a redistribution of power. What we sense in today's world is, and you've heard me talk about this I can't tell you how many times, but that the idea of unrestricted giving is dead in that the ability for us to build deep, meaningful, radical connections as Nathan Chappelle and Brian Crimens talk about in their book Generosity Crisis. It's critical and none of that changes, but we've learned if you want to raise the largest dollars most of the time it has to be for very specific things that the investment philosophy of philanthropists is I give you X; it's going to be used for a, b, and c; and there's going to be an outcome or an output that we're going to measure. And what trust-based philanthropy is indicating is is that they're really advocating that organizations, foundations, donor-advised funds, grantors, philanthropists give unrestricted dollars to the nonprofits and that those nonprofits then use those dollars for the best interest of their particular area of responsibility in the community. And that is contrary to almost everything that we are experiencing today with some of the largest donors and some of the campaigns that we deal with every day.

I found this concept interesting. What it's saying is is that the power structure of our communities has shifted so far away from the nonprofits who are on the front lines of serving the community in the particular mission place that you might be, or that a non-profit is to the philanthropists that it's not allowing basic needs. Organizations have the resources to take care of those needs at the core level because we've catered too much to political influences, personal preferences, and choices, and that it's compromising our ability to move the needle.

So let's start with the bigger concept of trust. Why would this work well? First and foremost, I think we all have seen and heard various studies and things of that nature that indicate that philanthropy and nonprofits is one of the most trusted areas of our world. In the news that you watch every day you see this constantly on the other end of the spectrum. Number one is most people don't trust the news and if they do trust the news it's because the news actually isn't factual, it meets with an individual's perspective of the world, the social media world, or kind of evolution that we've lived through. Maybe more Revolution and the idea that we can get news from places like Facebook and from other different Avenues online, we tend to buying the news that agrees with our perspective. So the news in person, per se, isn't actually trusted. Governmental agencies are not trusted anymore, and in fact, even some places like the Supreme Court which has always been the highest trusted governmental entity that we have is seeing dramatic changes to the trust levels that the country has, both maybe by party, by state, or individually diminished dramatically.

We've seen a diminishment and trust from educational institutions. We've seen it in a decrease in trust in our religious areas, but what we found is that nonprofits generally are the most trusted entities out there. More than three out of four people in a study done a couple of years ago indicating a great deal of trust in the nonprofit sector, in particular its ability to solve problems and that in the different nonprofit kind of areas, generically your church not religion but your church, the people you know if you go to church are amongst the most trusted and most transparent as we look at corporations, governments, and all these other other different parts of our community, trust is diminished to nothing.

The project about the idea of trust-based philanthropy was the concept that fewer people are making bigger decisions that are costing the community's ability nonprofits kind of generating a lot of that support to be nimble to solve the actual problems. So let me give you some examples to think about, and I'll keep it generic. I have a client, interestingly enough they have a food bank as a part of their organization, and they are not a food bank nonprofit so it's a very kind of unusual but they live in a community with incredibly high levels of in food insecurity. They're finding struggles in raising money for that small portion of the large organization which is the food bank because there seems to be a con, a perspective out there amongst the larger community that that's not really needed, and that's not really a direct effect of what their non-profit mission is all about. Yet they can show that people with food insecurity have worse symptoms in terms of the type of work that they do, so getting food into people's hands creates a better scenario for the community as a whole. They can't raise money for, it's really a struggle.

I have another situation that I'm not directly involved with where a philanthropist has a strong bent on something that he believes very heavily in and has raised an immense amount of money, nine figures, to address this situation. I'm not saying he's wrong, but it's going to be run, it's going to be managed, it's going to be built through the confines of a very small group of people that are not affiliated with other parts of the community, so the expertise that might be out there isn't actually going to be a part of the day-to-day world that this newer nonprofit is going to execute. I'm very influenced, I have a familiarity with a place where a very small group of people have such control of the philanthropy that if you're not one of the chosen projects or even more stronger consternation in my book, at least the things I struggle with, you're not one of the chosen Consultants or people who raise the money for this small group of people that are affiliated with those kind of Consultants, that you can't get into those pocketbooks even though your nonprofit's doing great work.

I think the world is moving in this direction, that a smaller group of people who aren't necessarily on your board or who aren't a key volunteer in your community are driving the decisions about what they think philanthropy should be in the community, and what the needs are. And the experts aren't able to execute their plan because they can't access those those funds for the things they think are important.

Trust-based philanthropy is based on the concept of this unrestricted giving over multiple years, and that there is a streamlining of how to access those philanthropic dollars so non-profits don't have to sit through years worth of meetings or reams of paper to fill out granting opportunities that the funders have, to trust the people who are executing the nonprofit mission to use the money more effectively. The non-profit's responsibilities, transparency that obviously you use the money in the best interest, that you follow your mission, and that it's done in part in a circular motion because these nonprofit leaders can't have all the answers, so it's kind of a double-edged sword when I think about arrogance that the philanthropists can't have all the answers and so they shouldn't direct all of the dollars exactly where they should be used. And the non-profit leaders can't be that arrogant that they have all the answers because they don't. They probably have more expertise, but maybe not all the answers. The other thing is that the non-monetary support, the expertise, the knowledge of the community has to be embraced by the nonprofit and that's how you get to this concept of more unrestricted giving. Trust-based philanthropy, an interesting concept.

Now let's come into the real world, if you'll join me, and let's talk about what this means tactically for our nonprofits. I don't think anybody who is really truly a believer in the value of philanthropy doesn't articulate how important trust is overall. The problem I think that we have that's going to lead us into the tactical is that trust is diminishing overall, and that's why we have less unrestricted giving as a whole.

So, the first question tactically, if you want to build trust, if you want to receive more unrestricted dollars, if you want this idea of trust-based philanthropy to be even viable in your community, first thing you have to ask is what's your reputation, and not just as an organization, the leadership. I'm proud, and this will be discussed a kind of coming podcast that I have written a book, Vibrant Vulnerability, and it's the concept that written or at least written around the thought process that we're only going to go as far in philanthropy as our CEOs take us. And I'm not talking about the head of philanthropy, the chief Development Office, Chief advancement officer, Chief philanthropy officer. I'm talking about the CEO. The one making the decision. And so if our leadership isn't trusted both organizationally and individually this can't work, and so part of this is we've got to get our CEOs out in the community more often where they actually have real relationships. Now we may be the catalyst or the the impetus for that to happen, but at the end of the day we've got to make our CEOs more available and more engaged.

So number one is how much trust do you have in the organization, in the community individually. And as an organization, what's your connection? Number two is, does your mission, what you should be operating under fulfill a need in the community and is it a core need? The more core it is the more trust you need to get those unrestricted dollars. I've said and I say in the book that'll be discussed obviously a lot more is that the community needs three key aspects. I think these three things are the most important in philanthropy. It doesn't mean museums and zoos and other things and Humane Society and aren't valuable, but if you don't have infrastructure, fire, police, safety, trash, just function your community is going to suffer. If you don't have health care your community is going to diminish because those who need Healthcare will go find it, and which is concerning because we're seeing a reduction in healthcare being provided to the enrolled communities but also in inner cities.

And number three is if you don't have great education, and I don't mean you need to have a land-grant university in your community, but is your public school strong, do kids go and become successful, are they, have a base learn of knowledge. Do you have a community college? Is it embraced, smaller school? Is that a university, higher ed, is that embraced? If you're missing any one of those three infrastructure - education, and or health or Health Care, your community will eventually die. So those are the basic things that are necessary for trust because if you have those things or they need support and you have great leadership that can help provide those things, you can build out a deeper trust with the community that you can use their money more effectively with unrestricted dollars.

First thing is, do you fit into the community? And if you're at a Humane Society or you're at the zoo or the museum or a food bank which I have food bank, I'd actually put in basic Services. If people don't have anything to eat that's a problem. Housing is a problem. It's like Maslow's first level of need, kind of security, safety, food, shelter.

Then how do you fit in to make community a better place. Second thing is, do you have the right connections? That could be a board, but it doesn't have to be. I'm learning and watching a lot of key philanthropists, leaders, and communities not want to serve on boards. They find it restricting. So are you connected to them? I want to give credit to someone that I watched work for a number of years, and Dr. Hal Moore who was the chancellor at the University of Nebraska Medical Center. He had what he called his kitchen cabinet. These weren't board members, they had no official duty. They were a community group. They were the most influential people in Omaha and what I appreciated in doctor more than, more than anything else, no pun intended, is he was willing to listen as well as talk in proper proportion. Listen two-thirds of the time, two years, talk one third of the time. But he would talk about his expertise, Healthcare, education, how it fit into Omaha. He had this unique way of surrounding himself with these people who are going to drive success. They weren't formal board members. They had no governance responsibilities, but they were incredibly close to him and when he needed to exercise some power or authority, he had the trust because he had done it over a number of years. So you can do it formally in a board, but sometimes it's even more powerful to have a small cadre of people that influence others that can help support where you need to go because you've built trust in that relationship.

Number three is, and I mentioned this a second ago is your willingness to listen. You can't engender trust if all you do is talk. They, people have to believe that you have their best interests, the community's best interests at heart. And to do so, do that you have to listen to what the community wants. This is part of the problem. Back to the book and Vibrant Vulnerability that I've written I talk about constantly throughout that we need to get CEOs not to walk in the room and think they have every answer. Yes they're the experts, but at the beginning of the relationship they've got to ask the community leaders, those who have the resources, own the businesses, the philanthropists, what is it you think we need? Why is that important, and even if they disagree keep your mouth shut listen.

I've recently had a CEO who looked at me and said I don't know why they just don't give it give us the money. And I looked at him and said because they don't trust you because you keep telling them what they should do, and the more you tell them the more they don't trust. Why don't you go in and ask them what they think? And he just looked at me and said well, but I'm the expert. And I said but it's their money. Be willing to ask what are your thoughts on all of this. Instead of taking the whole plan take part of it, and say can you help us fill in the gaps. Even though you might have all the answers, your willingness to get upper-level leadership to actually listen and not create massive amounts of opinions right away isn't critical in building Trust.

The last thing I would say is is that stewardship becomes even more important if you want this kind of trust-based philanthropy concept where you can get more restricted dollars to use them where you need to. Stewardship becomes important. You got to report. That's that transparency piece. Too often it seems like I have people who say well I'm not sure I want them to know all the details, and I'm like well I'm not sure. That's how I would put it. I think you want the community to have that information because that will engender trust. If the community doesn't believe you're going to do what you're going to do, you burn that bridge once and the bridge is gone. And by the way, you might be the executive, the CEO who's not a fundraiser, and you burn it once, and all of a sudden you might leave. But the organization is left with ruins in terms of trying to rebuild those relationships. You're a steward of the time and for which you represent the organization and a realization that it lasts much longer than you is critically important. So how do you fit in? Do you have the right connections? Do they have to be formalized or it could be a kitchen cabinet or core group of advisors. Are you willing to listen more than talk? And how do you increase stewardship to talk about what you do and why it's important and how money's been used in the past. That's how we're gonna get to more flexibility in the fundraising dollars we get. The problem is that we need other people to help us do that.

If you're listening and you're a fundraiser or a part of the leadership of philanthropy, because at the end of the day, we don't spend the money in healthcare. It's the CEO and the doctors in education. It's the chancellor, president, and the faculty in social services. It could be the person, CEO, and those who provide the food in the Food Kitchen or in the shelter for some place like great, like Habitat for Humanity, who are building the houses. We've got to get them to be a part of this conversation. That's why I wrote the book. Vibrant Vulnerability is about the concept of how we force these discussions into the c-suites, administrative teams for people who aren't in philanthropy. And that's going to engender more trust in our community and get you more leveraged leeway, opportunity to use dollars the way you need to.

Don't forget check out the blogs. They are right at hallettphilanthropy.com, two a week, can RSS feed so you can get them right to you. And if you want to reach out to me that's podcast@hallettphilanthropy.com. A minute or two longer than normal I apologize but what we're doing what we're talking about is critically important and what I want you to know is is what you're trying to accomplish in building those relationships in the trust. Trust to the donors. Trust inside the organization for philanthropy is critical and what you're doing, and how you're doing it is making a difference. Going back to my original, maybe not to me but originally Gaelic phrase my favorite saying of all time, some people make things happen, some people watch things happen, then there are those who wondered what happened. That you're someone who's making something happen for the people and the things in our community that are wondering what happened, and that's worth something. Building trust will get you more flexibility around resources from philanthropy. That's a two-way street. It's a power shift that's going to make it tough. I'll look forward to seeing you next time right back here on the next edition of "Around with Randall" and don't forget make it a great day.