In 2016, I wrote Too Important to Fail – it’s a Question of Trust. This was in reaction to a report for the World Humanitarian Summit  which highlighted that ‘only 0.2 percent of reported humanitarian funding was channelled directly to national and local NGOs in 2014’. Arguing that this was the most important funding gap, I suggested that strengthening accountability and financial standards would help more donors to give directly – believing that accountability is the gateway to trust.

At that time, I was CEO of Mango, which became Humentum, and went on to partner with CIPFA to develop the world’s first international accounting standard for non-profit organisations, through IFR4NPO. This work has taken a decade, and after a six-year process to develop standards and three rounds of global consultations, the standard will finally be published in 2025. Meanwhile, despite all the talk and initiatives around locally-led development, the proportion of humanitarian funding going directly to national and local NGOs remains at its tiny 0.2 percent 2014 level. What’s also disheartening is that Development Initiatives which has doggedly tracked and amplified this pitiful percentage has just announced it is closing for lack of funding.

As a qualified accountant, it will come as no surprise that I’m a huge fan of transparency and accountability, which needs to work in all directions, not least to the communities and stakeholders that non-profits work with.  However, increasingly I have come to realise that accountability is necessary but not sufficient when it comes to building trust in funding relationships.

This is an argument that has been well made by Keating and Thrandardottir in ‘Building Trust in NGOs’ and draws on their many years of academic study into trust in international relations. They argue that the focus on accountability, (which can be said to have pre-occupied many NGOs, their donors and regulators), is based on a rational model of trust and while this is important, it neglects the social model of trust and emphasises a managerial tone and risk-led regulation. The social model they propose includes looking at different areas for accountability such as authenticity, shared values, identity, solidarity and working towards common goals. They argue that these can build trust and reduce an emphasis on data and more formal accountability mechanisms.

With due and humble acknowledgement of Keating and Thrandardottir’s great thinking on trust, I’d like to propose we start working with a Triple AAA model for trust building in funding relationships. The first ‘A’ – accountability is the one we have done most work on already and which will be greatly accelerated through the adoption of international accounting standards in the non-profit sector over the coming years.

Alignment is the second ‘A’ and is the motor behind the trust-based philanthropy movement. If a donor aligns deeply with the values and mission of a non-profit then that donor will be more likely to give funding on a fully flexible and unrestricted basis. Many philanthropic funders are moving in this direction. The international accounting standard will still be important, as the legal requirement to ensure funds are applied to the mission and the international non-profit equivalency needed for tax exemption are key enablers of this form of flexible giving.

Our third ‘A’ is authenticity, a more complex and relational factor, which is hard to specify and describe but is also usually glaringly obvious to those in any relationship. One example of authenticity in action is participatory grant-making. To be authentic, this needs to look beyond decisions on who receives funding to approaches which ensure that inter-connected social networks, lived experience, and community knowledge inform and shape different and ‘lighter’ forms of accountability.

I believe that trust in funding relationships could be assessed and deliberately built by looking at all three perspectives, rather than having a primary focus on accountability. In terms of assessing the partnership, the presence of each ‘A-factor’ could help determine the fit and balance. For example, if there is strong alignment between the funder and partner, is there scope to relax accountability requirements on how funding is used; and if the funder can satisfy itself about the authenticity of an organisation through its leaders having lived experience and a dynamic relationship with their stakeholders, could they relax their requirements for accountability and alignment?  As with all relationships, the balance of factors is important and while we currently face an over emphasis on accountability, we wouldn’t want to swing to an overuse of alignment as this could mean that those in receipt of funding become too donor-led overtime.

If we accepted this more holistic methodology for building trust in funding relationships, there would be changes in the attitudes which drive due diligence processes, where the current emphasis on managerial and risk-based approaches creates major structural barriers to funding more informal organisations and social movements. If more funders started to look at alignment and authenticity as part of partnership ‘assessments’, it would help build momentum among other stakeholders, especially regulators and taxpayers, to accept these additional factors as an equally valid basis for entering into a funding relationship. This would help supercharge efforts to reform international development.

Adopting a more holistic approach to understanding and building trust is critical if we’re to rebalance the current over-emphasis and narrow reliance on formal accountability measures. I believe this is now as necessary as accountability itself and would urge funders to follow the words of Maya Angelou, ‘do the best you can until you know better. Then when you know better, do better.’

Tim Boyes-Watson is a co-founder of Fair Funding Solutions whose mission is to make money work for social good through co-creating and accelerating practical solutions to shift the structural inequity and injustice of the current funding system. If you’d like to explore this more, please comment below, or discuss via LinkedIn.