Trust in each other and our institutions is fundamental to building thriving communities and a healthy planet. Yet the recently released 2023 Edelman Trust Barometer shows an ongoing downward trend in trust in most aspects of society worldwide. Particularly concerning: Trust in nonprofits continues to falter. After leading in trust for 19 of the study’s 23 years, nonprofits dropped behind business and out of the “trusted” category in this year’s report.
The reasons for this trust deficit aren’t hard to discern. While most charitable organizations do honest, challenging work to improve people’s lives, the bad apples get the biggest headlines — especially when they involve some of the wealthiest and most powerful individuals in the world.
Most recently, Sam Bankman-Fried, founder of the imploded cryptocurrency exchange FTX, turned out to be a fraudster wrapped in philanthropic clothing. Outfits such as the Trump Foundation — shut down for “functioning as little more than a checkbook to serve [Donald] Trump’s business and political interests” — give philanthropy as a whole a bad name. In both cases, justice caught up with them, but plenty of damage was already done to nonprofits left scrambling without the funds they were promised. On a larger scale, these bad actors dealt a blow to trust in the philanthropic field, a currency as important as cash.
Many factors contribute to winning or losing trust. For philanthropic organizations, whose very purpose is to advance the greater good, the baseline must be to operate with ethics and integrity. While individual organizations should create their own standards, a cohesive set of ethics guidelines for the field would help improve perceptions of philanthropy and how it operates.
With that goal in mind, the organization I lead, the Council on Foundations, this week is releasing a set of ethical principles created by our members through an Ethics Task Force put in place last year. The principles offer members a framework to earn and retain trust in their institutions and the field of philanthropy more broadly, helping them to become more effective partners in advancing the greater good and holding them accountable through a policy that allows for sanctioning council-member organizations.
Some of these principles might seem obvious, but their power will come if they are taken together and adopted widely. Specifically, we are calling on foundations to:
- Practice our profession with integrity, honesty, and a commitment to maintaining and strengthening public trust in our institutions.
- Place philanthropic mission above institutional and personal self-interest.
- Understand, apply, and evolve best practices.
- Establish and enforce high-integrity operating standards and effective ethical standards in our organizations, including policies on whistleblowers, codes of conduct, antidiscrimination, and conflict of interest.
- Operate inclusive and equitable organizations that nurture and grow a diverse community of skilled philanthropic professionals.
- Respect the dignity, privacy, beliefs, and cultures of our varied constituencies — including the people we serve, our employees, donors, and volunteers.
Many Council on Foundations members are already living these principles. The Lumina Foundation, for example, has one of the most extensive transparency policies in philanthropy. Its public commitment to achieving racial equity and justice includes conversations with potential nonprofit partners about their organizational culture — hiring, training, diversity, inclusion, and belonging — and how their work addresses systemic or institutional racism, serves communities of color, and portrays people of color. The Tides Foundation hired a chief legal and ethics officer in 2021, prioritizing this work within a senior leadership role, and the Ewing Marion Kauffman Foundation’s general counsel and corporate secretary added the title of chief ethics officer to his role way back in 2004.
Among the ethical principles laid out by council members, the issue of best practices and how they connect to trust deserves special attention. The field has long called for changes to improve philanthropy’s effectiveness and long-term impact. But how best practices are defined needs to evolve and must include trusting nonprofit partners and local leaders to know what works best in their communities. While acceptance of this trust-based philanthropy grew during the pandemic, much of the field has yet to embrace it in a genuine and lasting way, and there is evidence that some might now be backsliding.
Trust in institutional and individual philanthropy will grow if such practices are given as much credence as other metrics of effectiveness. More foundations should follow the lead of peer organizations that have committed to trust-based approaches. They include the Lilly Endowment, which gave $34 million in unrestricted capacity-building grants to local Indianapolis nonprofits and set up the Giving Indiana Funds for Tomorrow initiative to encourage donors to give unrestricted funds to community foundations “so they can respond with flexibility to changing needs in their communities.”
(The Lilly Endowment is a financial supporter of the Chronicle of Philanthropy.)
MacKenzie Scott has of course made headlines for giving billions of dollars in unrestricted grants during the past few years. Many more in the field should embrace the integrity and trust embodied in her funding methods. That means taking on the burden of due diligence themselves rather than outsourcing it to the nonprofits they fund. Scott’s team does its research behind the scenes and, when a grantee is chosen, lets it spend the money as it sees fit. The impact of Scott’s approach has been transformational and should be a clarion call for all of philanthropy.
The alarming poll numbers and tales of a few corrupt players must not be allowed to define the field. These stories will fade when more donors show what trust looks like — through their actions as well as their words. Foundation leaders need to hold each other accountable for ensuring their organizations maintain the highest ethical standards. The Council on Foundations’s ethical principles provide a baseline to help them get started.
