Trust or control? Thoughts on the funding of civil organizations

Opposing mainstream grant-making practices, trust-based philanthropy is gaining momentum worldwide. Instead of paternalistic control, it promotes reciprocity, balanced power dynamics, and the inclusion of beneficiaries’ perspectives. Advocates argue that trust-based support leads to genuine social impact.

The Pécs Community Foundation’s ongoing EU-funded CERV grant inspired a reflection on the planning, execution, and evaluation processes in the grant-making world. The dominant approach—one of strict oversight—discourages civil actors, dampens enthusiasm, and imposes extreme bureaucratic demands that make life unnecessarily difficult. The frustration is exacerbated by the relatively small amounts of funding awarded, often around 10 million HUF (approximately 26,000 EUR).

While it is commendable that the EU seeks to support the civil sector, it seems unable to adapt its large-scale development funding logic to smaller, short-cycle projects or less professionalized actors. The reporting requirements for civil organizations receiving grants, whether from EU or philanthropic sources, reflect a market-driven mindset. The need for accountability in spending public or private funds is understandable, but evaluations demand significant resources—tools, trained personnel, time, and energy.

Philanthropy itself is also subject to criticism. Some argue it is merely a pastime of the elite, offering tax benefits and reputational advantages while failing to challenge systemic inequalities—in fact, reinforcing existing power structures (e.g., Giridharadas, 2018).

However, a different approach is emerging within community philanthropy. Over the past two decades, international discourse has increasingly highlighted the principles of trust-based philanthropy. This model challenges the traditional donor-driven grant system, advocating for a shift in funder-grantee relationships. Instead of paternalistic control, it emphasizes reciprocity, shared power, and the inclusion of beneficiaries in decision-making.

In 2018, the Inside Philanthropy platform awarded its annual prize to “participatory grantmaking,” recognizing it as the most promising innovation.

In 2020, MacKenzie Scott (ex-wife of Jeff Bezos and Amazon shareholder) began donating enormous sums to civil organizations based on similar principles. Her approach required only a simple three-page report and granted recipients full autonomy in fund usage. She selected organizations committed to fighting social inequalities and supporting marginalized groups (e.g., women’s rights, anti-racism, LGBTQ+ rights).

A study by the Center for Effective Philanthropy (CEP) on the first three years of Scott’s initiative found that most grantees were relatively large organizations with professional staff. Respondents reported that their organizations had strengthened, become more credible, improved leadership quality, and enhanced teamwork.

At the 2018 Global Fund conference, the #ShiftThePower movement identified trust as a key component of community philanthropy (Assets, Capacities, Trust).

Advocates of trust-based funding argue that long-term, strategic, system-specific changes are necessary for meaningful social impact. They reject narrow, donor-imposed goals, short-term funding cycles, and excessive control. Instead, they emphasize long-term transformation, mission-driven work, and adapting to the perspectives of beneficiaries through dialogue.

This perspective values civil society organizations for their ability to drive social innovation, experiment with alternative solutions, and contribute to social progress. Their independence and flexibility, combined with deep local knowledge, enable them to address community needs effectively.

To support this model, philanthropic foundations must rethink outdated grant-making practices, offering greater trust, flexibility, and larger, longer-term funding. This shift has already simplified and streamlined funding applications, extended funding periods, and reduced mid-term reporting burdens. Instead of frequent evaluations, the focus is on long-term impact, responsible value-driven operations, and collaborative learning.

Key stakeholders and local ecosystems play a vital role in assessing progress and identifying obstacles, guiding funders on how best to support real impact. Social change is rarely achieved by a single organization; rather, it is a cumulative process requiring time. A supportive, learning-focused funding approach is therefore desirable.

Evaluations still exist in this model, but they emphasize self-reflection, context-specific assessment, and transparency rather than rigid metrics.

(Written by Teréz Kleisz, curator of the Pécs Community Foundation.)