Creating Results-Based Funding Models to Improve Impact

This article was written by 2025 Mutz Philanthropic Leadership Institute class member Arvetta L. Jideonwo

From a philanthropic perspective, many funders believe they have developed results-driven models for distributing funds that target the individuals or communities most in need of support. However, there are challenges in how impact is tracked and defined. First, the tracking of “impact” often comes directly from the non-profit organizations receiving the funding. Second, funders typically have limited control over how these organizations achieve the desired outcomes. As a result, many organizations report metrics such as the number of individuals served, items distributed, or other direct services as their outcomes. While these are deliverables, they do not necessarily reflect the true, long-term impact.

In a recent conversation at the Mutz Philanthropic Leadership Institute with Robyn Faucy, CEO of Results Plus, a consulting firm based in Sarasota, Florida, she emphasized that funders often focus more on activities than on actual outcomes when deploying funds. These activities include tracking the number of people served, programs conducted, or grants distributed. Faucy asserts that genuine outcomes should involve measurable changes in behavior.

As someone who has been an executive leader on both sides of the philanthropic process—from fund distribution to seeking funds, I believe true impact occurs when nonprofits demonstrate that their work has led to tangible changes in knowledge, attitude, or behavior. These changes can be tracked over time, making it easier for donors or funders to shift their focus from service deliverables to actual outcomes. To help achieve this, funders must start asking different questions during biannual or annual reporting, such as:

1. What does success look like for your beneficiaries?
2. How much of a difference did the program make?
3. What are the long-term or 6- to 12-month anticipated outcomes?

If we want different results, we need to ask different questions. The focus of results-based discussions should center around beneficiaries and the tangible changes we aim to create in their lives. While it’s important to encourage innovation in funding approaches, we must not lose sight of the real, measurable impact these programs have on individuals. For instance, promoting the innovative thinking behind new funding models is meaningless to beneficiaries if it does not result in tangible improvements in their lives.

To establish a strong results-based funding model, we should evaluate the following factors:

1. Quality of Intervention: This involves assessing the intervention’s direct impact, the time needed to achieve desired results, the cost-effectiveness, the program staff's capacity to deliver the intervention, and the number of people involved.
2. Quality of the Service Provider: Evaluating the nonprofit’s organizational capacity, including staff, board, and volunteer resources, as well as whether they provide a unique service or if the community already has similar offerings. It’s also important to consider factors that impact the organization's ability to effectively serve its beneficiaries.
3. Funding Approach: This looks at how the organization is funded, the diversity of its funding sources, its long-term financial sustainability, its alignment with core funding priorities, and its reliance on temporary support such as grants.
4. Exogenous Factors: This involves considering the societal, political, and environmental factors, both planned and unplanned, that could affect the organization’s ability to deliver on its stated outcomes.

In short, to achieve meaningful and lasting impact, funders must prioritize outcomes over activities, focus on long-term changes for beneficiaries, and assess the effectiveness of interventions, service providers, funding models, and external factors that may influence results.

To ensure continuous progress toward achieving a nonprofit's outcomes, these factors should be measured both at the application stage and throughout the funding relationship. To do so effectively, I believe funders should embrace a trust-based philanthropic approach. This approach allows for longer-term grants, reduces administrative burdens, and fosters a partnership model for achieving and evaluating outcomes.

Trust-Based Philanthropy focuses on shifting decision-making power to nonprofit leaders, providing them with the flexibility and resources needed to address complex and evolving community needs. Key practices include offering unrestricted funding, providing multi-year grants, and minimizing administrative tasks. These practices enable grantees to allocate resources more efficiently and adjust their strategies as new challenges or opportunities arise.

As the Executive Director of a corporate foundation, I applied trust-based philanthropy to shape and develop our foundation’s national grantmaking model. This included building strong partnerships with grantees to minimize power imbalances, fostering relationships with student scholar beneficiaries, and establishing outcome-based reporting measures. These measures included tracking persistence rates, academic performance throughout the semester, student gatherings, and access to academic, social, and tutoring support to ensure the success of students. These metrics were aligned with behavior change, helping to track the direct impact of our efforts.

The Trust-Based Philanthropy Project emphasizes that this approach is geared toward achieving meaningful results. By encouraging funders to cultivate collaborative, supportive, and learning-focused relationships with nonprofits, trust-based philanthropy produces a range of benefits that are essential yet often under-recognized in terms of long-term social impact. Trust-Based Philanthropy encourages practitioners to apply its value across four key areas: culture, structures, leadership, and practices.

The core of trust-based philanthropy is about building a partnership, not a transactional relationship. This involves shifting decision-making power to the nonprofit leaders, allowing them the flexibility to address evolving needs in their communities. By reducing the administrative burden and providing unrestricted funding, nonprofits can allocate resources in a way that best meets their needs. 

By integrating trust-based philanthropy with results-based funding models encourages a commitment to both long-term outcomes and accountability. Through applying the principles of trust and partnership, the relationship between funders and nonprofits evolves into a more supportive and collaborative one. This partnership creates an environment where both parties are working together toward common, measurable goals, which ultimately benefits the community. 

Overall, this approach shows a deep understanding of the benefits and mechanisms of trust-based philanthropy. Integrating these principles with assessment factors for results-based funding is an excellent way to ensure that both the funders and nonprofits are working toward sustainable, community-focused outcomes. 

Seeking to understand whether you’re practicing trust-based philanthropy to elicit strong results from your nonprofits partners? Click here for a self-reflection tool: Trust-Based Philanthropy Self-Reflection Tool — Trust-Based Philanthropy