Shifting Power: How Trust-Based Funding Strengthens the Social Sector

Across the social purpose sector, the conversation about trust-based funding is getting louder. We are at a critical moment shaped by decades of advocacy, research, and lived experience from communities, social purpose organizations, and funders.

What is trust-based funding?

At its core, trust-based funding is about rebalancing power between funders (including governments, philanthropic foundations, and corporate funders) and the organizations they support. It is built on the idea that those closest to the work are best positioned to know what is needed to support change.

In practice, this means a range of integrated approaches including unrestricted funding, long-term funding, simplified reporting, and relationships grounded in mutual accountability rather than administrative control. It is a shift from transactional oversight to genuine partnership.

Why it matters

In our work with organizations across the social purpose sector, we see the real costs of restrictive funding that is distributed without trust. Teams are stretched thin managing multiple reporting requirements. Strategic planning efforts are deferred because resources are locked into narrow deliverables. Staff and volunteers are making do with dated systems because they are unable to finance effective, purpose-built tools. Community needs are left unmet because funding cycles dictate pace and priority.

We have also been lucky to see the catalytic effect of trust-based funding. When organizations have flexibility, they have room to innovate. They respond to community needs as they emerge. They invest in reflection, learning, and leadership. They take risks that lead to breakthroughs. The impact is visible and lasting.

Shared momentum across the sector

We are in an exciting moment of collective advocacy for trust-based funding.  This fall alone we have seen:

• The release of the Open Letter from Canada’s Nonprofits and Charities to Corporate and Philanthropic Funders, which with 100+ signatories, amplifies a growing national consensus that Canada’s nonprofits and charities need more equitable and sustainable funding from their corporate and philanthropic funders.

  • Tamarack Institute is the steward of this letter and is facilitating follow-up actions. 

  • So far, the Open Letter has prompted responses from each of Canada’s philanthropic networks. Community Foundations of Canada, Environmental Funders Canada, Philanthropic Foundations of Canada, and The Circle on Philanthropy have issued supportive responses that include specific commitments.

• The launch of Fair Funding for Nonprofits, a coalition of 50+ members across Canada working to transform federal funding to the benefit of communities, workers and the nonprofit sector as a whole. 

  • Imagine Canada serves as the backbone of this coalition with financial support from Canadian Women’s Foundation and Cooperation Canada. The work of the coalition is directed by a Steering Committee.

    
    

The organizers behind both of these efforts are committed to collaborating and aligning their efforts to achieve the greatest impact.They are also building on existing research and initiatives including:

• Imagine Canada’s research exploring funder perspectives on unrestricted funding.

• Future of Good’s list of Canada’s Top 50 Equitable Funders which highlights funders redefining accountability and partnership.

• The Foundation for Black Communities’ report on their trust-based partnership with MLSE Foundation.

• The Circle on Philanthropy’s Ways of Working.

• Guidance from Community Foundations of Canada and others that outlines best practices for trust-based relationships, including multi-year commitments and simpler application and reporting processes.

  
  

Together, these steps can build a path to a funding culture built on shared purpose, transparency, and reciprocity.

Looking to the future

If we stay the course, what might the sector look like five years from now? We imagine a landscape where:

• Core and unrestricted funding for social purpose organizations is the norm, not the exception.

• Reporting focuses on reflection and adaptation, not compliance.

• Relationships are long-term and built on reciprocity, not control.

That is the kind of ecosystem where social innovation and equity can truly thrive.

A call to action

We invite our collaborators, clients, and community to add their energy to this moment. We encourage you to:

• Sign the Open Letter from Canada’s Nonprofits and Charities to Corporate and Philanthropic Funders

  • Adding your signature demonstrates the breadth and depth of organizations across Canada seeking change from their corporate and philanthropic funders.

  • What can you expect after signing? 

    • Tamarack Institute staff are following up with signatories through bi-weekly emails, a survey that will gauge interest in ongoing involvement and invites insights on how organizations are using the letter.

• Join the Fair Funding Coalition

  • Joining the coalition shows strength in numbers, demonstrating to the federal government why this issue matters.

  • What can you expect after joining?

    • Through Imagine Canada staff who support the Coalition as well as the Steering Committee and other Committees, you can expect 4-6 email updates per year, invitation to general meetings of the Coalition, the opportunity to participate in campaigns, and the opportunity to join committees.

• Have conversations with the organizations and funders you work with about what trust, flexibility, and shared accountability could look like in practice.

  
  

We have seen what is possible when funding relationships are built on trust. It is time to make that the standard, not the exception.