Trust in philanthropy is eroding.

Widening inequality is contributing to public fears and anxiety about the roles various types of institutions play in public life—be they philanthropy, government, business, or academia. For the philanthropic sector specifically, many people question the degree of influence individual and institutional philanthropists have over the public sphere, simply by virtue of having large endowments. In some quarters, there is a sense that wealthy individuals ‘game the system,’ including through their charitable works, further contributing to a sense of mistrust.

This has led to heighted scrutiny and critique of the philanthropic sector by the public, politicians and commentators. The question for philanthropies now is how to react and remedy these perceptions. To date, few institutions have formulated their responses in a strategic way since many of the critiques are recent. Yet most recognize the need to demonstrate some degree of accountability and become more inclusive.

At the heart of this debate is the social compact: an organization’s license to operate or its agreement with society about what public good or value it creates. The social compact encompasses concepts such as accountability, legitimacy, transparency, and public trust. It also reflects shifting notions of how philanthropies view their role in society, demonstrate value, express accountability, and interact with stakeholders.

In our recent report, ‘Social Compact in a Changing World. How Philanthropies are Grappling with Growing Scrutiny and Critique,’ we explore: (i) the response of private philanthropy to the rising tide of scrutiny; (ii) how foundations have adjusted their social compact as a result; and (iii) strategies foundations have adopted over time to become more responsive and accountable in fulfilling social compact.

Some of the strategies foundations may follow include:

1. Align
Strive for internal clarity and a common understanding of the social compact, including the foundation’s role in society, targets of accountability, sources and arbiters of legitimacy, and the public good the foundation serves.

2. Communicate
Develop a robust external communications strategy to relay to the public what the foundation does, why it does it, and who and how is engaged in decision-making, and how they are engaged. This can include demonstrating successes, lessons gleaned from failures, grantmaking transparency, peer learning and community outreach across a spectrum of platforms.

3. Listen
Build genuine feedback loops that enable input, participation and representation of communities served in decision-making, and support a consultative method of program design. Listening to communities makes it easier to identify needs, increase the effectiveness of programs, and enhance trust.

4. Demonstrate
Demonstrate how feedback loops and consultative engagement have helped to enhance and fine-tune the foundation’s focus areas, initiatives, grantmaking and strategies to show a genuine commitment to and positive effect of these approaches.

5. Research
Conduct regular landscape research to measure the temperature and public attitude toward the foundation’s work and philanthropy generally, in order to adjust strategies and act based on evidence.

6. Reflect and assess
Assess internal operations and external work regularly against a set of indicators that measure effectiveness, impact or progress. It is important to openly share and discuss the results internally among staff and externally with grantees, partners and other stakeholders to devise effective next steps.

7. Broaden representation
Broaden board representation, as well as that of stakeholders who provide inputs into program strategy and design, in order to reflect interests and viewpoints of different sectors, including private, public, nonprofit, grantees and issues area experts.

As the examples and insights we have gathered show, donors have numerous opportunities to become more proactive in responding to those that seek to delegitimize philanthropy’s role in society. Building on some of the best practices outlined in this report, private philanthropy can take specific actions to better demonstrate legitimacy, show how it benefits the public good, and inspire deeper levels of trust. This will ultimately lead to a better use of society’s precious philanthropic dollars for the greater public good.

Olga Tarasov, Director, Knowledge Development, Rockefeller Philanthropy Advisors