Thankyou unveils new trust-based funding model

The organisation hopes to inspire other social enterprises, corporate donors and philanthropists to fund sustainable solutions to long-term problems 

One of Australia’s leading social enterprises is shifting its giving model to focus on funding impact rather than activities, looking to reform a system it says is built on “donor dysfunction”.            

Pro Bono News spoke with Thankyou managing director Daniel Flynn about the organisation’s new method of sustainably alleviating global poverty. 

Flynn, who co-founded Thankyou in 2008 when he was 19, said for the past 12 years Thankyou’s giving approach has contributed to a broken system.

He said this system has been built by “donor dysfunction”, which is driven by a desire from donors to support projects that they can tangibly see and understand.

One example of this was giving Thankyou Water consumers tracker codes to see the GPS coordinates of the projects they funded.

But Flynn said the social enterprise now realises that this has led to organisations treating the symptoms, but not the root causes of systemic issues – resulting in temporary fixes and broken solutions.

He pointed to 2018 research on impact-focused projects that found funder-created obstacles made up 46 per cent of issues threatening the success of a program.

Thankyou’s new approach is called trust-based philanthropy, which involves funders taking a step back and not controlling every detail of a project. 

As Flynn describes, just as you wouldn’t give a heart surgeon money and then tell them how you want that surgery done because it’s your money, this approach is about letting NGOs do impactful work by giving them the power to decide where funding goes. 

He said it was about removing power imbalances between funders and organisations and creating a partnership, not a transaction.                

“It’s about saying to partners, ‘we are not going to prescribe where and how you spend the money’,” Flynn said.

“If you’re needing to headhunt really critical talent for your next step as an organisation, and that takes you past some mystical administration fee level, we have no issue with that.

“This is about [working out] what an organisation needs to succeed. And we want our money to go towards that. We trust the organisational leaders involved in the decisions they make to get there.”

Flynn acknowledges Thankyou is not pioneering this way of thinking, but rather “joining a seat at the table” with this trust-based philanthropy approach. 

He said there were leading philanthropic thinkers and organisations around the world that were giving in this way through multi-year grants and providing unrestricted funds, but it was a small amount of funds. 

He urged all funders – from government to corporate donors and social enterprises – to consider trust-based philanthropy and fund sustainable solutions to long-term problems.

“We go out there and talk to people around the world, and they say ‘this is the best money a charity could ever get’. But it’s also very few and far between,” he said.

“And our hope is we’ll add what we can so ‘the best money a charity could ever get’ becomes commonplace.”

Thankyou has pledged to stop linking products to a specific activity – such as water that funds water projects or diapers that fund maternal and infant health projects – and to stop putting tracker codes on individual products to “see” your impact. 

But while the organisation will reduce administration and reporting requirements for grant recipients, Flynn said this was not a step away from the idea of impact measurement.

He said this was not about giving out free money, but was based on impact performance – not activity measurement.

“The challenge with a lot of shareholder business models or some government stakeholder models is people want to see results now,” he said.

“They want to see what the quarterly update is but true impact in development takes time and it’s messy. True impact is not the number of wells built and the number of filters implemented, although that’s easy to measure.

“And I think that’s why as a sector, donors have got too wrapped up in this and then charities have built really strong reporting on activities but we need to get back to true impact.”