Shifting To Unrestricted Grants

Shifting To Unrestricted Grants • What we Learned

In the past few years, LVCF’s foundation-directed grantmaking strategy has been integrating “trust-based philanthropy” as a key element of how we do our work. Trust-based philanthropy seeks to demonstrate humility and collaboration in what we do and how we show up in all aspects of our work as grantmakers in our region.

We were attracted to this approach because we have taken a strong stance to learning and listening to grantees and nonprofit partners. Our work is to connect donors to causes that matter, and the only way to do that work is to understand what has gone on in the community historically, in the moment, and what might be on the horizon. However, as we entered into dialogue with nonprofit partners, we noticed that because there was an off-balance power dynamic between a typical funding institution and a nonprofit, there simply wasn’t enough trust between organizations and ourselves for organizations to tell us the full reality of what was happening within their organizations or in the field. Instead, we heard about how our funding of a particular issue was great, and how everything at the organization was operating at its highest efficiencies.

This pattern makes sense –nonprofits feel that if they are transparent with a funder, they might end up risking losing their funding. So, like any wise institution that uncovers an issue, we began to ask ourselves what part we play in setting up this dynamic, and what can we do to build more trusting relationships? We understood that if we wanted to make real impact, we needed to understand the actual reality of nonprofits and the problems that they are facing, so that we can be a genuine partner in helping address those issues. We turned towards embracing trust-based philanthropy, a common approach that was being adopted by funding institutions across the nation to address this very issue.

Integrating Trust-Based Philanthropy

Over the past few years, we have integrated trust-based philanthropy values that function as a grounding force across four key dimensions of our work including: culture, structures, practices, and leadership.
We have been championing this approach to grant unrestricted funding for several years, and as we champion this grantmaking approach, as a learning organization, we are committed to sharing what we are uncovering with our donors and fundholders.

Youth & Families Grants as a Case Study

LVCF’s Youth and Families leadership grantmaking offers a specific example of our general operating approach, what we are learning, and how it’s making impact. Over the last two fiscal years, we’ve distributed $375,000 in general operating funding to support Lehigh Valley’s youth and their families. Prior to being considered for an unrestricted grant, our staff does careful due diligence of those that apply. We ensure there is a certain level of confidence in the organization’s governance and financial oversight. We believe the greatest impact is achieved by distributing general operating funding.

This is what we experienced:

Part of a National Trend in Giving

Nationally, as the general operating trend continues, funders around the country are evaluating what actually happens when nonprofits receive large, unrestricted grants. There has been several evaluations published, including The Center for Effective Philanthropy’s (CEP) recent examination of MacKenzie Scott grantees, along with complementary research by Panorama Global. We’ve seen similar results in understanding the impact of our own funding in comparison to what is now being published nationally in the field.

Ultimately, what we have found is that when you prioritize trust, mutual respect, and accountability in both directions, you have a deeper understanding leading to bigger impact and the opportunity to be a true collaborator for championing positive change. We look forward to sharing more as we learn more.

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