Approaches to Trust-based Fundraising for Non-Profits

Today, in a time of multiple crises, the role of non-profit organizations cannot be overstated. Each addresses an unmet need of people often overlooked, under-serviced, or marginalized. As different actors strive for social change, non-profits have mainly struggled with fragmented and limited resources.?

Well-resourced organizations can navigate challenges better and invest effectively in programs needed by communities. Funders, however, largely support programmatic or project-based funding of non-profits. This selective funding can, at times, restrict investment in operational costs necessary for sustaining core infrastructures that scale impact on the ground. This approach neglects spending on team development and training, strategic planning, and administrative costs. More than 60 percent of the income base is often restricted . Indirect costs can range anywhere from 21 to 89 percent of direct program costs. In this situation, non-profits are ‘starved’ of resources to meet day-to-day requirements.?A vicious ‘cycle of starvation’ ensues, making organizations less effective (Bridgespan, 2009 ; The Conversation, 2021 ). Moreover, restricted funding has led to non-profits having to take up several short-term engagements to meet funding needs, fragmenting efforts towards addressing a cause effectively. There is, however, a growing momentum toward trust-based philanthropy that recognizes the real needs of organizations. Trust-based funding pushes for collaborative funding arrangements to help us achieve our goals.

Non-profits need flexibility in funding to build and sustain impact. Funders hold the potential to scale the impact of organizations across sectors. Since the 1990s, foundations, corporations, and family philanthropies have contributed immensely to the financial support of non-profits and causes (Bridgespan, 2013 ). In 2021 alone, UHNIs donated a total of ~ $196 billion to causes, contributing to 24% of all global philanthropic giving (Wealth X data ). As such, philanthropy in India has also continued to grow. In FY 2022, private contributions totaled about $13 billion, with CSR, family philanthropy, and retail giving cumulatively contributing about 86 percent of private philanthropy in India. These sources are expected to not only remain central to private giving in India (India Philanthropy Report, 2023 ) but also expand at 11% annually over the next five years.?

Growing and competing needs require urgent local attention. Non-profits have competencies, expert proximity, and approaches that are well-suited to rise to the challenge. We are, however, faced with shrinking resources and are being asked to do more with less (Aspen, 2016 ). We need collaborative, trust-based, and unrestricted funding arrangements that can be catalytic in bringing about transformation that is truly far-reaching and impactful. This GivingTuesday, we urge the philanthropic community to find ways in which we can work together and pave pathways for collaborative conversations to create meaningful and sustainable impact.

We (Good Business Lab ) are a non-profit labor research and innovation organization. We design, test, and scale solutions to address some of the most critical challenges faced by low-income workers. Through data-informed research, we show that investments in worker well-being generate real returns for businesses. Our solutions range from providing soft skills training for both workers and their managers to developing tech tools to empower workers to voice their needs to upper management and draw their earned pay on demand. We have also designed interventions around basic physical health needs, like heat stress, nutrient deficiencies, vision impairments, and mental health needs, among many others.

If you are interested in learning more about our work and collaborating, please comment below, fill out the form here , or message one of our team members: Dia Bangera , Kriti Rai , or Karan Menon . Thank you!