PEX reflections: ‘Trust’ in donor-charity relationships

Opinion

Reflecting on his first PEX session, James Macdonald of Beacon Collaborative explores one of the central themes which emerged – trust and, specifically, its importance in developing long-term relationships between donors and charities.

By James Macdonald, Marketing and Communications Coordinator of The Beacon Collaborative

In October, I was invited to my first ever PEX session. It was fantastic to be welcomed into a community of like-minded and engaged people, all passionately committed to social change.

Throughout the session, we discussed numerous topics, from giving trends during Covid to impact investing in philanthropy. But we kept returning to one topic – trust.

Specifically, trust in donor-charity relationships. It made me reflect on the nebulous nature of trust and why building trust is imperative for philanthropy to flourish.

What makes trust essential in giving?

“While giving money to a beneficiary may help one person, donating to a charity can often help people and causes. Many charities have a roadmap for fixing the underlying social paradigms which cause the issue they are tackling; their work goes beyond only providing immediate succour and towards policy change and systemic solutions.”

The relief given by donors to those in need is rarely the result of a direct donation. Instead, most philanthropy is enacted using a distributor or service provider. That is to say, a charity. When you are donating, you almost always give money via an established charity rather than giving directly to a beneficiary.

This makes sense. Charities deeply understand the issue you seek to address and are specialised in helping people who are affected by it. They are experts in their field and have the infrastructure, resources, and skills to get the most out of your donation.

While giving money to a beneficiary may help one person, donating to a charity can often help people and causes. Many charities have a roadmap for fixing the underlying social paradigms which cause the issue they are tackling; their work goes beyond only providing immediate succour and towards policy change and systemic solutions.

A great example is the homelessness charity Shelter. On the one hand, they provide one-to-one assistance through services including free legal and emergency support for those who are sleeping rough or without secure accommodation. On the other, they lobby the government through research-backed campaigns to eradicate homelessness, including the ‘Social Housing Deficit’ movement demanding the building of 90,000 new social homes per year. In this way, the funders who support them can play a role in addressing both the individual and systemic aspects of the social issue of homelessness.

With this in mind, the importance of strong relationships between donors and charities to address a social issue really comes to the fore. If a donor and charity are not on the same page, those in need are the ones who will suffer.

So, what does a good donor-charity relationship look like?

When a giving relationship is based on trust, it is fruitful. Not only can this mean increased funding for a charity in the short-term, but it also means a greater commitment for long-term collaboration, often lasting for years or decades rather than ceasing after a couple of donations.

But not all charity-donor interactions have a solid basis of trust. Poor relationships are regrettably common in the sector, and can stem from many issues, including:

  • frustration from a donor who is not feeling appreciated;
  • exasperation from a charity striving for more (or less) contact with a donor;
  • awkwardness from both sides about the perception of a power-imbalance.

It stands to reason, then, that the converse of these criteria would make for strong, mutually beneficial relationships. 

In my role at The Beacon Collaborative, I regularly speak to philanthropists about the dynamics of their relationships with charities and what drives them to support a charity over a long-term basis.

I feel this quote from my interview with Samuel Lawson Johnston does a good job of representing what I have heard many funders say is important to them – namely accountability, transparency, and integrity:

“Part of the reason I’m more ‘hands-on’ is that I really like to see how donor money is used, particularly in a charity context where there can so often be a trust deficit[…] There is also something to be said for transparency. There is so much nonsense reporting which deliberately tries to hide the challenges charities face. That kind of reporting makes me a bit uneasy. A few good case studies hiding many examples of poor stewardship is not honouring the giver.  […]  I think the character and integrity of the people leading an organisation are very important. Whether consciously or subconsciously, I analyse the feeling I get from my interactions with charity leaders, and try to consider how this might flow through the culture of the organisation.” Samuel Lawson Johnston 

What did PEX members say about trust?

“Trust drives collaboration; collaboration drives trust.”

During our meeting, it was clear the community was bound by its exaltation of transparency and openness in donor-charity relationships. Some members had clearly been thinking a lot about it recently. One of my favourite observations from the group was: “Trust drives collaboration; collaboration drives trust.”

This maxim seems to encapsulate the cyclical and, in some ways, co-dependent interplay between transparency and cooperation. Both charities and donors must commit to entering relationships with open minds and hearts to get the most out of them. This, in turn, will inspire more cohesion between the two.

Another member suggested that we open our eyes to the corporate sector and see what we can learn from there. The corporate sector generally has more budgetary leeway to research its relationship management, gaining valuable insights from consultants at the top of their game. The largest corporations are industry leaders in client management, and there are clear reasons for this – what can we learn from them about the importance of trust?

The most structured suggestion offered was that – to promote trust-based relationships – we must realise that there are two dimensions of trust:

  1. Trust in intentions – Donors and charities need to set goals for collaboration at the start of their working relationship. It is not something which should be assumed. Each party must be clear in what it will be accountable for and what it wants to see from the other side.
  2. Trust in competence – Donors and charities need to develop a shared understanding of the problem they are trying to solve. This starts with a genuine openness around whether the charity and the donor – pooling their resources – can realistically effect the change they wish to see.
Conclusion

“While it is true that good relationships have many key elements, long-term success requires a shared vision and a shared understanding of each party’s duties and desires. Only by truly embracing openness and transparency can donors and charities build a long-term relationship which will make a transformative, positive impact in the lives of those in need.”

I think we all know what constitutes a trusting relationship in our own minds. But there is a danger of relying on these assumptions when going into a new relationship, without checking-in with the other party.

While it is true that good relationships have many key elements, long-term success requires a shared vision and a shared understanding of each party’s duties and desires. Only by truly embracing openness and transparency can donors and charities build a long-term relationship which will make a transformative, positive impact in the lives of those in need.

james macdonald

James Macdonald, Marketing and Communications Coordinator of The Beacon Collaborative

Follow on Twitter @TweetsMacdonald