THE BLOG
22/10/2013 08:46 BST | Updated 21/12/2013 05:12 GMT

Trust and Philanthropy

Earlier this month, the Stars Foundation - in partnership with the Bill & Melinda Gates Foundation, Charities Aid Foundation, GlobalGiving UK, the Pears Foundation, and the Guardian - launched the Fund the Front Line campaign. The campaign highlights the work of small to medium sized charities and NGOs on the frontlines of international development. It also encourages donors, of all types, to support vetted organisations with unrestricted funding.

Initiatives like Fund the Front Line are important because they force the donor community to have discussions around how best to fund. The contents of the campaign's microsite (currently live on the Guardian - you can find it here) provide all of us in philanthropy, fundraising and international development with an arena to discuss the need and significance of unrestricted funding; an important discussion and debate, particularly at this point in time, when the competition for funds has never been fiercer.

Unrestricted giving is ultimately about trust. The trust a donor has that their funds will be used in whatever way is best to carry out the mission and activities of the organisation they support. Now this could mean paying staff (for without them, there would be no organisation), paying the costs associated directly with a particular programme, or investing in a new initiative. Ask any charity, NGO or social enterprise what is the best type of donation or philanthropic gift they can receive and odds are that unrestricted giving is their answer.

So if unrestricted giving is the most helpful and desired type of donation, why do so many donors - whether institutional or individual - choose to restrict their funds? In other words, if you trust someone and their organisation enough to give them money, why would you not trust them enough to let them do whatever they think is best, or most needed, with that money?

Over the years, I've advised many individuals, foundations and companies on their philanthropic giving. I've helped individuals articulate their philanthropic ambitions, advised foundations on how best to diversify their funding portfolios and worked with both small and large businesses to think more strategically about their philanthropy and CSR. I think that the answer to the above question boils down to trust.

When a donor is new to giving or new to a particular organisation, they more often than not lack the trust that their money will be used effectively. This is a completely understandable position. After all, we all know stories about charitable waste, corruption, etc. However, as Muna Wehbe, CEO of the Stars Foundation, rightly points out: "unrestricted is not unaudited."

An informed donor, just like an informed investor, spends time understanding the history, mission, activities and impact of the organisation(s) they support. Now, not all of us have the time or the money to do site visits (even if a programme is just on the other side of town) or to get to know the staff of an organisation. But, I would argue, that never before has it been easier to learn about and compare an organisation's effectiveness and impact, as well as dig up any negative publicity. Before you donate to anyone, read their latest annual reports and have a close look at who else supports them. If you choose to give them money, ask yourself how your gift can best support the organisation and their cause.

It's not fair to only put this burden on the donor. Many organisations themselves need to get better at communicating their impact to, and cultivating their relationships with, their donors. Trust is a two-way street, and organisations need to be better at connecting with their donors in meaningful ways - it's a competitive funding climate, and if you are not building trust with your donors, someone else might be.