Place-Based Funding: Why Philanthropists Choose this Strategy?

As a philanthropist, you have the exhilarating opportunity to maximize your impact with your charitable dollars, your time and your connections. Early on in the planning phase, you may consider: Should I focus on a specific issue or a specific place to drive my philanthropic efforts? Or maybe it is a combination of the two. We see philanthropists derive much satisfaction from building deep partnerships in a specific community to help local leaders solve big problems. According to a survey conducted by the National Center for Family Philanthropy (NCFP), 66% of family foundations that focus on a specific geography do so at a local level; this approach not only addresses systemic inequalities but also empowers local stakeholders to drive sustainable growth from within.

What is a Place-Based Funding Approach?

Place-based funding is rooted in the idea that geography matters–recognizing that different communities face distinct challenges and possess unique strengths. By targeting resources to specific a neighborhood, ZIP Code, city or region, philanthropists have the potential to create transformative impact over time. This approach requires resources, a long time horizon and patience.

Why do Philanthropists Choose this Strategy?

In our experience, we find philanthropists choose to focus on a particular geographic area to:

• Ensure that the philanthropic dollars remain in the community where the funds were created.
• Develop an understanding of a specific community’s challenges and identify barriers to cultivate a thriving community. This can include driving systemic changes on a macro level once root causes are identified.
• Dig in and fund in a very particular area for the long term.
• Nurture long-term relationships with grantees, civic and business leaders and elected officials in one area.
• Target and evaluate philanthropic work.
• Build muscles within the family system around the concept of stewarding vs. owning philanthropic resources.
• Unify a family, especially the next generation, around a common commitment to a particular community.
• Knit together family legacy, philanthropic intent and geography.

What Are Effective Approaches for Place-Based Funding?

Stay Focused on Changing Systems at a Very Local Level:

As a place-based funder, you may decide to focus on a particular community’s equitable access to healthcare. In order to do this effectively, you have to understand the context of the problem at a very local level and the cultural nuances exacerbating inequities. Going to a granular level on a complex issue will help to drive transformative long-term change.

A Commitment to Listening + Partnership:

Building trust within a community will take time. Finding community leaders to create critical connections is an essential step. We’ve observed place-based funders establish early relationships with faith leaders, school principals and neighborhood block captains. You have to have trust before engaging in meaningful conversations to understand needs. It is absolutely essential to build a place-based funding strategy with community leaders; otherwise your strategies will fail. Trust also comes with time. Demonstrating your long term commitment will yield more authentic conversations within the community. It becomes a virtuous cycle.

Experimentation, Learning + Innovation:

When you make a long term commitment to a specific place, you are able to make “big bets” on particular issues over time. We’ve observed place-based foundations take bold risks in providing innovative solutions over time. Through thoughtful evaluation and listening, you can adjust and adapt strategies to address the catalytic change you hope for. 

The Zeist Foundation’s long term commitment to the Edgewood neighborhood in Atlanta is an outstanding example of how to effectively partner with a neighborhood, its leaders and institutions to create lasting change.

What Are the Key Criteria for Success?

Philanthropists who are able to catalyze transform communities over time, possess the following criteria:

• Cultivate their philanthropic legacy and its connection to place; this message is engrained in their learnings together as family.
• Instill the values of service and humility in the family DNA. Prioritize listening to community leaders to effectively formulate philanthropic goals.
• Create a clear mission and goals that adhere to a commitment to geography.
• Prioritize learning as a family focused on community issues. This is particularly important for family members not living in the community.
• Employ a variety of tools in realizing the mission (grants; investments; Program Related Investments; collaborations; communications; etc.)
• Provide responsive grants when emergencies/disasters arise. 
• Generously convene community thought leaders and lead in building collaborations. 
• Develop and revisit often a succession plan for the family’s philanthropy to ensure the place-based commitment is well rooted.
• Limit or eliminate discretionary grant privileges to board/family members. 
• Adopt a flexible mindset and be open to change as the community’s needs change. 

What are the Challenges of Place-based Giving?

Equity: Careful consideration is needed to ensure that place-based funding doesn’t inadvertently exacerbate existing inequalities. Inclusive planning and implementation are crucial to avoid unintended negative consequences. Listening to those directly impacted by the work and trusting the nonprofit staff go a long way to ensure equity in grant funding and overall impact.

Geographic Dispersion: As a family evolves, naturally family members move away. Keeping them connected to a specific place and its needs is a challenge and one that requires effort in designing effective learning journeys. Similarly, a family must consciously cultivate and reinforce the story of the family’s legacy in the community.

The GPA blog post Power of Family Legacy and Philanthropy delves into how a family’s legacy can reinforce the power of place. Although, in the last 10 years, family foundations surveyed in NCFP’s most recent trends report have experienced a 60 point increase with younger generation family members moving away from the primary location of the foundation’s funding; an illustration of how hard it can be to keep a family’s philanthropic focus grounded in one place.

Conclusion

Place-based funding represents a transformative approach to community development, prioritizing local needs and strengths to drive sustainable growth. By focusing on targeted interventions, empowering communities, and leveraging unique local assets, place-based funding has the potential to create more resilient, equitable, and vibrant communities. Creating a learning journey is a great place to start with place-based grantmaking. First, a philanthropist should understand the community better, and meet local changemakers to hear about challenges and solutions.

With coordination and commitment to long-term sustainability and equity, place-based grantmaking is an ideal way to engage locally and directly. As more funders adopt this approach, the lessons learned will continue to refine and enhance the effectiveness of place-based funding, paving the way for a more inclusive and prosperous future.

About Grant Philanthropic Advisors:
We’re an independent, Charleston-based firm helping clients to focus and maximize their philanthropy—in turn, strengthening the fabric of our communities. Founded in 2019, we help donors move from responsive patterns of giving by assisting clients to identify values and become more strategic in their philanthropy. Our goal is to help donors to become more effective as change-makers. Our team has a combined 100 years of experience working in the field of philanthropy.

We work with foundations (large and small staff teams), donor advised fund holders, multi generational families, individuals, philanthropy supporting organizations and corporations to design philanthropic strategies. We work with philanthropies that grant $1 million to $40 million annually. Our clients span the Southeast with a concentration in Charleston, Atlanta and Charlotte.