If trust is the unique selling point, who should funders back?

In my previous blog, Does your grantee have a unique selling point?, I argued that many charities lack a ‘unique selling point’ in the traditional business sense. They are not protected by barriers to entry; they are not always easy to scale; and, if you look at them purely through a financial lens, many can appear hard to distinguish from one another.

That leaves funders with a difficult, practical question: if several organisations are working on similar issues, with similar missions and similar claims about impact, how do you decide who to fund?

My argument is that, for many charities, especially small and place-based ones, the real differentiator is not a product, model or metric. It is relational infrastructure: the community trust, legitimacy, proximity and convening power that allow them to work in ways others cannot.

But that creates a second challenge. If trust is the USP, it cannot be assessed in quite the same way as financial performance. You cannot rank relationships like stocks or reduce local legitimacy to a single score. So, funders need a different kind of judgement: one that combines discipline with honesty about context, values and fit.

This blog sets out what that looks like in practice. First, funders still need consistent, proportionate due diligence to understand whether an organisation is sound and credible. But once that basic bar is met, the question becomes more relational: whose work do you trust, whose context do you understand, and where are you willing to build the kind of relationship that meaningful impact often depends on?

The question funders keep asking

If you’re coming into philanthropy from finance or business, you’ll recognise the instinctive question: ‘Why should I support this charity and not another?’

In investing, there are lots of legitimate tools to answer this question. You can look at measures such as alpha, beta and the Sharpe ratio, which together help assess risk and return: how much risk was taken, how sensitive the investment was to the market, and whether the return achieved was sufficient for that level of risk.

In other words, the investment world has measurement tools designed to help you compare.

Social impact isn’t as straightforward.

Social impact isn’t a stock-picking exercise

In the charity world, there isn’t a universal benchmark. A youth charity in Leeds isn’t competing on the same playing field as a refugee charity in London. Even two organisations working in the same thematic area can be doing fundamentally different work, with different relationships, in different contexts, and facing different constraints.

There are attempts at comparability. Social return on investment, or SROI, is the most common one people reach for because it produces a ratio that looks familiar: ‘£X of social value for every £1 invested’. But SROI is not a magic comparator.

The methodology is powerful in one sense because it tries to bring wider social outcomes into a single frame. But results vary hugely, methods vary, and there’s ongoing debate about assumptions, counterfactuals, time horizons, and what gets counted as value in the first place.

Here is my more opinionated take: I have rarely seen a negative SROI published. That does not mean nothing ever has a low or negative value. It means the incentives and assumptions often lean in one direction.

So, if you’re a funder or advisor who is used to financial decision-making, this is the moment for a mindset shift.

The mindset shift is… trust

Not trust as a fluffy concept. Trust as the operating system for making decisions in a world where the most important value is often relational and contextual, rather than standardised and comparable.

But trust does not mean ‘fund vibes’. Trust can be built in a disciplined way. I think there are two layers to it.

1. Start with the basics: foundational due diligence

Before you get into personal alignment or relational fit, it is worth being consistent about some baseline questions. This is where our charity analysis approach is useful. It gives you a structured way to ask: ‘Is this organisation sound, and is it doing what it says on the tin?’ Our framework looks at four broad areas:

• Purpose: need, strategy, coherence
• Impact practice: learning, evidence, openness
• People: leadership, governance, culture
• Finance and operations financial health, management, operational grip

Internally, we also have a practical guide for funder clients that makes a point I really like: due diligence should be proportionate and shaped by the client’s risk appetite and the size of the grant. You cannot ask a £20k charity to jump through £2m hoops.

This step doesn’t tell you who is ‘best’. But it helps you avoid obvious mismatches and preventable harm.

2. Then look at fit: values, connections, and interests

Once an organisation clears the basic bar, the next part is less mechanical and more honest. The rest comes down to who you are:

• What issues do you feel pulled towards?
• What places do you feel responsible for?
• What relationships do you already have (or want to build)?
• What kind of change do you actually want to enable?

This is not a weakness of philanthropy. It is a feature.

If relational infrastructure is the USP, then fit matters. The ‘right’ charity is often the one where you can build a real relationship, understand the context, and stick around long enough to be useful.

That is why, in practice, philanthropy is shaped by personal judgement and trust.

So which charities should you support?

If relational infrastructure is the USP, then the funder’s job is not just to ask ‘what do you do?’ It is also to ask:

• What relational space do you hold in this community?
• Who trusts you, and why?
• What would break if you disappeared?
• What relationships are you maintaining that nobody sees?

That’s the due diligence people often skip because it doesn’t fit neatly in a spreadsheet. But it’s often where the real value sits.

And if you can align on that – on values, reality, and the relational work that holds a place together, you get something better than a high SROI. You get a meaningful impact that lasts.

So, my challenge to funders is this: do the basic analysis, but do not stop there. Ask what kind of relationship you are willing to build, what kind of judgement you are willing to own, and what kind of change you are prepared to stay with.

Ultimately, philanthropy is personal. And relational. And if we’re honest, it always has been.