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What does it mean to move towards trust-based funding?

As part of the SIX Funders Node, which connects funders across the world that want to learn from each other to be better funders of innovation, Jordan Junge of SIX interviewed Dr Toby Lowe of the University of Newcastle Business School who is working with Collaborate and the Big Lottery Fund to explore trust-based funding, as a response to complexity.

What is trust-based funding?

'Trust-based funding starts from the idea that the world is complex and that we are all living and operating in messy and complex systems. The problems we face are so dynamic and the appropriate actions to take are so context-specific, that what’s right for one place isn’t always right for another time and place.

Trust-based funding is a potential response that charitable funders, and others including those in the public sector, can take to meet this complexity.

It's about empowering those closest to the problem to take the actions that they deem appropriate.

Why is it different?

Public sector commissioning and charitable funding primarily comes from a set of thinking that broadly belongs to the New Public Management paradigm. This paradigm believes that those at the top develop the strategy and that they should performance manage and control the direction and behaviour of those at the bottom, to ensure that strategy is enacted. This thinking has dominated for 30 years, but it's quickly running out of fashion, as it doesn’t deal with the complex and messy nature of the systems that we live and operate in.

Increasingly more funders have realised that they need to devolve responsibilities, and empower those that they work with. They understand that the people on the ground understand the problems best and need to be trusted to make the right decisions that best suit the problem. Trust-based funding is about funders respecting that these communities will make the right set of decisions. Funders can no longer dictate or forecast the right solution from the top.

What’s most challenging about this way of working?

There seems to be a whole range of funders that naturally work out of trust, but it’s really hard for them to justify why they’re working in this particular way. It seems that most people are working out of trust because they just feel like they should, and not because they have a conceptual framework to justify their actions. However, without this conceptual framework, the practice field remains fragile.

My research with Collaborate is to uncover the different components of trust-based funding and piece this together as an emerging paradigm.

How should funders find the right people to trust?

Funders need to ask themselves who do they trust to do the work that we need and want to see happen? And what’s a good reason to trust them?

Once values begin to align, you start shifting from a rules-based management approach to a principles-based approach. 

Trust-based funding doesn't mean blind trust. You can still measure if organisations are doing what they say they would and living their values. Are these organisations open to critique, particularly from their peers? Are they open to change? Do they know their role in contributing to a larger system?

If it's all about trust, how do you measure impact?

This is a real challenge. It's hard to attribute impact to one set of decisions, particularly in complex systems. However, we need to ask different questions and have different accountability conversations.

Measuring success looks different to different people. This is something that our research is particularly interested in exploring further. For example, the Whitman Institute in the USA, who explicitly brand themselves as trust-based funders, understand success is in the quality and deepness of relationships that they have brokered.

The Whitman Institute and other funders understand that their role and skills are best suited to building and developing these relationships by hosting retreats and creating the innovation 'space'.

We will be launching the research with events in London on May 15 and in Newcastle on May 16. 

If you're interested in more information, you can get in touch with Toby here. You can find out more about our Funders Node work here.

As interviewed by Jordan Junge