Trust-based philanthropy is a grantmaking approach built on a fundamental shift in the funder-grantee relationship: instead of treating grant recipients as suspects who need to be monitored, it treats them as partners who should be trusted to use funding in pursuit of shared goals. In practice, this means reducing bureaucratic barriers, offering flexible and multi-year funding, and investing genuinely in grantee relationships.
The approach has gained significant attention in the past decade — accelerated by the COVID-19 pandemic, when many funders temporarily loosened restrictions and discovered that grantees used that flexibility well. For some funders, the question is no longer whether to adopt trust-based principles but how.
Trust-Based Philanthropy Project, a US-based initiative, identifies six core practices:
Not every funder adopts all six practices, and applying them requires genuine institutional commitment rather than surface-level adoption.
Grantees know their work better than funders do
A youth mental health organisation working in South Auckland understands the community, the service model, and the operational realities in ways that a funder sitting in an office cannot. When funders impose detailed restrictions on how grants are spent, they often make programmes less effective — preventing grantees from responding to what they're actually seeing on the ground.
Reporting burdens consume resources that should go to programmes
Research consistently finds that compliance and reporting requirements consume significant staff time at grantee organisations — often 10-20% or more. For small organisations, this can mean a part-time person whose only job is generating reports for funders. That's a poor use of programme resources.
Restricted project grants create organisational instability
When the only available funding is project-restricted, organisations build artificial project structures around what they actually do, and can't fund core operations — management, HR, finance, communications. This structural vulnerability makes organisations brittle. Multi-year operating support gives organisations the stability to build genuine capacity.
Power imbalances damage the relationship
When funders hold all the power and grantees must perform compliance for them, the relationship becomes adversarial rather than collaborative. Grantees tell funders what they want to hear; funders don't get honest information about challenges; problems get hidden until they're crises. Trust-based approaches invest in genuine dialogue.
Multi-year unrestricted grants
Instead of a $50,000 project grant for one year, a trust-based funder might offer $50,000 per year for three years with minimal restrictions. The grantee can use the funding for salaries, overhead, adaptation — whatever delivers the outcome.
Simplified applications
Rather than a 30-page application form, trust-based funders often work from a relationship-first model: a conversation with the organisation, a short letter of inquiry, or an invitation to apply. Information requirements are focused on what actually matters for the decision.
Simplified reporting
Instead of detailed financial reports against line-item budgets, reporting might be a conversation, a brief narrative, or the grantee's own documents (annual reports, board minutes). Funders who trust grantees don't need bespoke compliance reporting.
Regular dialogue
Replacing the one-way flow of reporting data with two-way dialogue: funders sharing what they're learning, grantees sharing what they're seeing, both using the relationship to think through challenges together.
Trust-based philanthropy is not without challenges, and funders should engage with these honestly rather than pretending the approach is straightforward.
Accountability to donors
Funders with significant donor bases — endowment funders, charitable foundations, government grantmakers — have accountability obligations. Offering unrestricted multi-year grants can be harder to justify to trustees or donors who want to see that money went to specific activities.
Comparative assessment is harder
If you're running an open competitive round, some standardisation of application requirements helps you assess proposals against each other. Trust-based approaches work better for relationship-based grantmaking than open competitive rounds.
Small funder capacity
Trust-based approaches require more relationship investment than transactional grantmaking. For small funders with limited staff, maintaining genuine relationships with a portfolio of grantees is resource-intensive.
The learning problem
Some reporting requirements serve a legitimate learning function — understanding what's working across a portfolio helps funders improve their grantmaking. Eliminating all reporting can compromise portfolio-level learning. The solution is not more reporting, but better reporting — designed for learning rather than compliance.
Most funders won't adopt pure trust-based philanthropy — and don't need to. The more useful framing is a spectrum of practices, and the question is: where can we move towards more trust, more flexibility, more genuine partnership?
Practical steps any funder can take:
Each of these is a move towards trust-based principles without requiring a wholesale transformation of your grantmaking model.
Tahua supports trust-based grantmaking approaches — with flexible reporting frameworks, relationship tracking, and the operational tools that help funders build genuine partnerships with their grantees.