As philanthropy grows to encapsulate a wider range of important causes and communities, trust-based grantmaking has emerged as a prominent yet often misunderstood approach. According to a January 2024 opinion piece in the Chronicle of Philanthropy, some misconceptions persist about this method, particularly the notion that it equates to a lack of accountability. 

However, this perspective misses the mark. A closer examination – particularly, through the lens of the Segal Family Foundation, spearheaded by Board Chairperson Martin Segal – reveals a more nuanced reality where trust-based philanthropy is balanced with rigorous oversight and accountability.

Here, Martin Segal discusses the Segal Family Foundation’s mission and the timeless importance of trust in philanthropic success. 

Building Trust for Lasting Success

The Segal Family Foundation’s methodology demonstrates that trust-based grantmaking is far from indiscriminate. Organizations with strong reputations may initially attract attention, but they must earn and maintain trust systematically. The foundation relies heavily on referrals from trusted sources, but it also conducts thorough due diligence before committing to a grant; this involves reviewing financial statements and collaborating with grantee partners to set clear milestones at the start of the grant period. While the foundation requests only one comprehensive report per grant cycle, continuous engagement through multiple touchpoints ensures ongoing accountability. A distinctive aspect of the Segal Family Foundation’s approach is its local grantmaking teams embedded within each operational hub.

These program officers, who possess deep knowledge of the local context, foster close relationships with grantee partners, facilitating diligent oversight without becoming burdensome. This locally-embedded structure is not yet common in the philanthropic sector but stands out as a right practice that could significantly enhance the effectiveness of any grantmaker.This framework allows the foundation to confidently extend flexible, multi-year grants, which have proven to be transformative for partner organizations.

Acknowledging the inherent risks in trust-based funding, such as the potential misappropriation of funds, the foundation maintains that these risks are not unique to this model. Misuse of funds can occur even with stringent reporting requirements and shorter grant periods. The belief that thoroughness necessitates micromanagement is particularly prevalent in contexts like Africa and the Global South, but this assumption is challenged by the experiences of respected peer funders. For instance, the foundation’s Donor Salon gatherings offer a platform for sharing insights and strategies among philanthropic peers, fostering a collective effort to refine trust-based practices.

At Segal Family Foundation, we hold grantee partners to a high standard, and partners consistently meet these expectations, as evidenced by the achievements of initiatives like the African Visionary Fellowship. The foundation’s success stems from a genuine belief in the potential and integrity of its partners. While it is understandable for funders to seek protection against fraud and validation of impact, these pursuits should not come at the expense of empowering organizations to grow. By setting reasonable parameters and actively supporting their development, funders can unlock greater potential.

This discussion invites a broader reevaluation of trust within philanthropy. The Segal Family Foundation’s approach serves as a compelling model, illustrating that trust-based grantmaking, when executed with care and diligence, can significantly amplify the impact of philanthropic efforts.

Published by: Nelly Chavez