High trust, low-doc: Is this the future of grantmaking?

Dr Genevieve Timmons, a professional in the grants field for more than 30 years, says high-trust grants have big benefits for both the giver and the receiver.

The author of Savvy Giving: The Art and Science of Philanthropy is a member of Philanthropy Australia's council, on the board of Australia Community Philanthropy and is now working with the Fellowship for Indigenous Leadership, the newly-formed Mornington Peninsula Foundation, and the Inner North Community Foundation, as well as having held government, corporate and community posts across Australia and New Zealand.

Until late last year, Dr Timmons was CEO of the Portland House Foundation - the giving program of the Portland House Group owned by the wealthy Hains family, a role she'd held for 13 years - and helped pioneer a high-trust model.

She credits the Portland House Foundation's former chair Stephen Hains with asking the question that spurred a new way of thinking: "If we can't fund a not-for-profit with a handshake, then why are we funding them?"

While in practice that doesn't mean handing over cash quite so easily, the principle implies that you would be prepared to do so.

"In his view a corporate model of trust means while you can have paperwork, you can have agreements, you can have plans, but in the end they are guiding a common understanding of what you're doing and are no guarantee of the best results. It's the trust between people that guarantees the best outcome," Dr Timmons says.

The funding model can be summarised as valuing the following attributes: high trust, low doc, face-to-face relationships, and a "no surprises" approach, all based on good communication.

How being trusting can work for everyone

Dr Timmons says the high-trust approach is an efficient and cost-effective method of managing grants that is more about guidance and "learning as you go" and less about micromanaging or "looking over people's shoulders".

All grantmakers can adopt aspects of this model, she says, whether they work in the more independent philanthropic sector, or face the constraints of working for state or federal authorities.

"Everybody needs to focus more specifically on the value of trust, no matter what your giving program is," she says.

"I don't think you should limit it to any particular scale or type of giving."

Of course, that higher level of trust requires you to change the way you operate.

"Any funding relationships that include trust involve a lot more learning and deliberate exchange between people."

It also means being able to share the risks, where grantees agree to inform their funders about the "challenges and opportunities" that coincide with the emerging science of grantmaking.

She explains that philosophy: "After agreeing on the intended outcomes, we know we can trust you to make sure the best use is made of our money, and that you will do what you say you will do, or maybe even better if the situation changes."

"No amount of paperwork is going to change that understanding between people."

In practice, it means "don't sweat the small stuff".

It also means not tying recipients up in agreements and lots of paperwork "that doesn't add value".

Increased trust means enabling grantees to focus on what they do best. And Dr Timmons says there is good reason for doing just that.

"The not-for-profit world is full of people with acumen, with vision, with detailed knowledge of what it takes to do the work they're doing," she says.

"As grantmakers, we are most effective if we're focused on the outcomes and keep our eyes on the prize of developing supportive environments for not-for-profits and social enterprises to harness great opportunities."

She stresses increased trust doesn't mean ditching proposals or budgets, but it does mean avoiding "loading people up with requirements that don't add value for anyone".

Low doc doesn't mean you're not keeping tabs on your funds

Dr Timmons says a high-trust method doesn't mean avoiding due diligence, it means exercising diligence in a different way.

"If you want to promote strong funding partnerships, you do have to put the time into understanding who your grantees are and creating common agreement about what's happening."

Time must still be spent assessing a charity or not-for-profit's suitability via the Australian Charities and Not-for-profits Commission (ACNC) register, reviewing websites and more, "because donors and grantmakers want to know what's happening with their money".

"But when you actually start engaging with people and saying, 'We do want to give money to you', I think the cost efficiency is in being able to do this through conversations."

Instead of fully-fledged proposals, they can instead pitch a series of "dot points, with a budget and common agreements". Developing ideas, she says, doesn't mean having to ensure every I is dotted and every T crossed.

The current alternative often leaves grantseekers spending hours or days writing funding proposals.

"The more you do that, the more grantmakers are costing the not-for-profit world … and then not necessarily guaranteeing them money."

"If most grantmakers had to pay just $50 per page in application proposals, there wouldn't be much left for granting," she says.

It's also a burden on the grantmakers themselves, who must read through the proposals, rather than being able to spend time with grantseekers to form the relationships that are essential to good results.

"You end up having to spend a lot more time juggling paper, which to me is not the main game. The main game is getting clarity with people about what you need as a donor, what they need as a not-for-profit organisation, and how you can get on with it."

Dr Timmons accepts, however, that the high-trust model can be hard to get right. In particular, it's hard to ensure there is a sufficient level of discipline and structure.

"It's not just, 'Let's throw the money out there and see what happens,' and people are right to resist that concept if they think that's what it is."

Face-to-face relationships means more powerful information

Dr Timmons sees good grantmaker-grantee relationships as essential, and draws parallels between the high-trust model and participatory grantmaking and collaboration. (See more information about this in our links at the end of the article.)

As she notes in her book Savvy Giving, grants should be a 50/50 equation, where half the effort comes from the grantmaker understanding what needs to be done - and equipping themselves for the role - and the other half from the effort of the grant recipient.

A grants model that emphasises a close working relationship will build common understanding, better collaboration, and the chances that "the money will be well spent," Dr Timmons argues.

In practical terms, she talks about the "face-to-face" or "round table" reporting pioneered by Dr Timmons 15 years ago, that was used by Portland House Foundation and has since been adopted by other foundations in Australia and New Zealand.

The reporting style - in which multiple grantees meet with the foundation at one time - began simply because Dr Timmons lacked the time to meet each grantee individually.

But it also produced the positive side effect that each grantee was able to share their opportunities and challenges with other grantees, foundation staff and board members.

Dr Timmons says that the openness to hearing about progress, ideas and organisations helped spread knowledge and respect; and helped solve problems too.

One of the biggest strengths of the model was the ability to "build capacity with grantees in real time", including creating partnerships amongst each other.

She gives the example of a $100,000-plus foundation program to assist young mothers living with mental illness. The program coupled long-term accommodation with mentor-matching opportunities.

The concept was to allow the women to develop mentoring skills that could open the path for a career in social work or community casework. An accompanying training manual would be available to other organisations.

Four months in, a young participant revealed at a round-table meeting: "It's not working". She told her fellow grantees and the foundation that all the mothers had pulled out of the program.

"Nobody wants to do it," she'd told Dr Timmons and the group.

She explained that for most young mums struggling with mental illness, "the last thing you want to do when you're recovering is to go back and help someone else struggling with it".

This made sense in retrospect. The foundation paused the existing program and asked the mothers what would work for them. Soon after, the program was revised to target job opportunities instead, after the mothers identified that as a top priority. They were trained as baristas, in catering, in toy libraries, Dr Timmons said.

"We were lucky, because we could suspend the money in real time (because) we didn't have to wait for them to report to us in writing. And, we could even begin planning for it, within that two-hour meeting."

The honest assessment of a program also prompted other grantees to call Dr Timmons shortly afterward "with equally difficult problems". Once again, adjustments were made.

Dr Timmons describes that "apparent failure" as "risk management", and an opportunity for a mid-course grants correction which meant the program was a bigger success than it would have been had they pressed on.

"A real failure would have been not knowing that the program wasn't working," she says.

Trust means no nasty surprises for partners

Dr Timmons says in high-trust grants programs she's been involved with, some involving "large amounts of money", where strong relationships are evident, "we can give more money, more effectively".

"It's actually risky not to invest in trust as one of your grantmaking ingredients, because you need people who can do mid-course corrections, and troubleshooting.

She says the right grantees - if carefully chosen in the first place - are those "who will worry about whether they've done what they said they'd do".

"They'll be in touch with the grantmaker to talk about problems they've got."

That honesty allows for organisations to spell out how things are working, and when they are not able to deliver, and why.

"The best possible outcome of a trust relationship is where people will ring up, or in those meetings will say, 'Look we're having problems, it's not working. We've done everything we thought we needed to, but staff have left, or people are not responding to the service the way we thought they would'. Any number of problems could have arisen."

On the other side of the equation, funders must be able to maintain course when problems arise, and not simply be fair-weather friends.

She says an unhealthy grants relationship follows this well-worn path: "Tell us how great we are, because we've given you the money, and tell us how great the work is that you've done. And if you tell us any problems, then we'll probably cut you money off.

"That is the worst possible outcome."

The trust equation also extends to trying to measure the value of a social investment, after a grant is spent, which often just adds to the reporting burden.

Dr Timmons says while it's relatively easy to measure the effects of an economic investment targeting profits not losses, social measures are more difficult to nail down.

"It's a challenging area, but it doesn't help to put a whole lot of overlays onto the not-for-profit and say, 'Give us more information here', unless you've already agreed on it."

She stresses there are some programs most would agree are a "good thing", citing scholarships for youth in rural areas for example.

"Providing scholarships is a good thing. And … to go into too much detail about it, and burden grantseekers or grant recipients with reporting, that's a low-trust model to me."

High trust would be to accept the grantees' word that they've done what they promised, as well as alerting funders to anything out of the ordinary.

Adding extra flexibility into the equation would allow, for instance, an organisation to pivot away from those scholarships to deliver seminars or camps to promote youth leadership, she says.

"That would be trusting the grant recipients and the not-for-profit organisation to say, 'This is a better way to get to the outcome that we're all looking for', which is healthy young people, who have a meaningful engagement with the world."

How can I introduce a high-trust model in government, or with funders who are likely to resist this idea?

Dr Timmons accepts a high-trust shift will challenge many organisations, including many foundations and trusts, but particularly government.

Whether or not you can employ a more trusting approach depends on governance, the reasons for distributing money, and who an organisation is accountable to, she says.

"I think government is particularly in the fishbowl. Everybody's watching, and there's 360 degrees of opinions on what should be happening. And a negative response to things is an anathema for governments."

While foundations, trusts and philanthropists are often more accepting of risk, and governments tend to avoid it, Dr Timmons argues that government agencies need to look to the gains.

"They need to understand that there are ways of cutting down the paperwork, (and) increasing the connections with not-for-profits."

She says governments can introduce more "user-friendly" processes to lighten the burden for grantseekers, including simply expecting that "people will do the right thing".

Dr Timmons says the nature of change in government - including regular changes in personnel - can make it harder to build lasting relationships, which often leads to grantmakers falling back on a "structured approach of distributing money".

Yet after a lifetime in the industry, and as grantmakers learn to accept "we're still in the exploring and pioneering stages" of the grants industry, she is adamant that trust must comprise a much bigger part grantmaking.