Trust-based philanthropy explained

Trust-based philanthropy is a giving model designed to reduce the power imbalance between grantmakers and grantees. It’s founded on the belief that no one understands an organisation’s work better than the organisation itself, making it best placed to decide the most effective use of resources.

In practice, this means:

• Flexible, often multi-year, grants that organisations can use where needed most, including as investments in fundraising or other infrastructure
• Lighter administrative burdens through simplified applications and reporting
• A shift in power towards the people on the ground, in recognition of their expertise
• Long-term relationships between grantmakers and grantee organisations, with open and transparent dialogue

The underlying goal is to strengthen organisations’ capacity and self-determination, enhancing their potential for achieving real and sustainable impact and societal benefit.

As European philanthropy network Philea has argued, what matters most is not simply what foundations fund, but how they fund it: flexible financing gives organisations room to adapt, take risks, and innovate as circumstances change.

Why flexible funding remains the exception

Yet so far, flexible funding is still the exception rather than the norm with many foundations remaining bound by requirements for detailed reporting and oversight of how funds are spent. Concerns over potential reputational risk and loss of control also play a role. Yet in today’s volatile world, nonprofits’ ability to adapt quickly is essential. Trust-based, flexible funding can strengthen organisations by giving them the capability to prioritise and to pivot when circumstances change, as well as to plan strategically for the long term.

The question that has hovered over this debate is whether that flexibility translates into measurable results. Giva Sverige’s analysis of the Swedish Postcode Lottery’s flexible support scheme shows that it does.

The Swedish Postcode Lottery has taken a trust-based approach to funding with members of the Swedish Postcode Lottery Association for many years. Its support is non-earmarked, meaning organisations can use where it is needed most, including as investment capital to enhance fundraising and monitoring capacities, rather than being restricted to a specific project.

To assess the difference this support has made, Giva Sverige conducted an analysis of the financial development of 100 of its member organisations between 2014 and 2024. Of these, 35 had access to basic, flexible support from the Swedish Postcode Lottery throughout the full ten-year period, while 65 did not.

Giva Sverige tracked and compared each organisation’s income from donations and grants over time, and controlled for other explanatory factors, such as size and purpose, and how income trends were affected in conjunction with major societal events, such as Russia’s invasion of Ukraine.

The results

The analysis found that nonprofits receiving long-term, non-earmarked flexible support saw their income from donations and grants grow significantly faster than that of organisations without such support. The differences remained, even after adjustments for organisational size and purpose, suggesting that trust-based funding helps augment organisations’ basic capacity and generates greater societal benefits over time.

• Organisations that received flexible support recorded, on average, a 52% greater increase in income from donations and grants than organisations without it
• Across the full ten-year period, donations and grants for the Lottery’s beneficiaries increased by 82%, compared with 54% for organisations without flexible support
• Restricting the comparison to smaller organisations – those raising less than SEK 50 million — flexible support was still associated with 23% higher growth
• Even after excluding organisations that received large, one-off donations linked to the Ukraine invasion, flexible support was associated with 47% higher growth in funds raised

Taken together, the results suggest that flexible funding strengthens an organisation’s underlying capacity to raise money – its infrastructure, its resilience, its ability to plan – in a way that compounds over time.

Giva Sverige head of insights & analysis Mårten Palmefors comments:

“The analysis indicates that when organisations are given the opportunity to take a long-term approach through non-earmarked resources, their ability to bolster their own viability and to generate greater societal benefit over time is enhanced, strengthening the case for trust-based, flexible philanthropy.”

What this means for funders

For foundations weighing the trade-off between oversight and trust, the Swedish Postcode Lottery data offers a real-world test of trust-based philanthropy’s core premise – showing that unrestricted, long-term support appears to build organisations that are structurally better equipped to sustain and grow their own income, year after year.