ARTICLE
Unrestricted: The Gifts That Keep On Giving
Topics -
Updated - 01/17/2025
You’re not fit to be a fundraiser unless you hear things that frustrate the daylights out of you. At the top of my list is hearing from nonprofit colleagues that donors aren’t interested in making unrestricted gifts. Even worse, is when they believe that asking for such gifts is not consistent with being donor centric.
I have a one-word response to that sentiment: Poppycock! It’s a self-fulfilling prophecy that dooms nonprofits to failure in the same spirit of not having the conviction, courage, and commitment to step up and ask for gifts of time, talent, and treasure in the first place.
In many tangible ways, unrestricted cashflow is the most valuable gift any organization can receive. In fact, a cogent case can be made that one unrestricted dollar is worth several restricted dollars.
Why are unrestricted gifts beneficial?
Unrestricted gifts are still certainly not the most popular or best understood. It is up to all of us involved in philanthropy to tell their story and explain the indispensable role of unrestricted giving in advancing the missions, objectives, and dreams of our causes.
Nonprofits continue to be challenged to do more with less. Leaders knew how to stretch nickels into dimes and now are being challenged to stretch them into quarters.
Unrestricted gifts represent immediately expendable resources that help meet current operational expenses. They go to work immediately to support and/or enhance core programs, pay for scholarships, new technology, salaries, books, upkeep of facilities, and much more.
That’s the inherent beauty. They can be used in countless essential ways.
Unrestricted money is a nonprofit elixir. Funds flow to the areas where the need is most timely and compelling. Plus, they empower an organization to be able to respond to unanticipated needs and opportunities, such as the crises that emerged from the pandemic.
People might enjoy designating their donation for a certain area/project and benefiting a specific program, but restricted gifts have finite utility. By not restricting contributions for a specific program or area, donors enable the organization to allocate its resources more efficiently and apply them where the needs are most pressing.
Leading advancement of three institutions of higher education, I can tell you that scholarships with very narrow awarding criteria drove us crazy. Specifying majors and home towns closed the doors for many deserving students. Frankly, too many donors were driven by the desire to mirror themselves or their experience.
Why is there resistance to unrestricted giving?
Some donors worry that their gifts will be wasted or used inefficiently. Those donors should pause and reflect on why they’re giving to the organization in the first place.
They obviously care about the mission, and through the organization, want to touch, improve, and save more lives, especially those who are struggling. Likely, they’ve done research and have confidence in the organization to reach the stage of having a relationship with them.
Unfortunately, too many nonprofit leaders have convinced themselves that donors won’t support such gifts and have been reluctant to ask for them. When you don’t ask, you don’t get.
Donors have every right to expect benchmarks and reports on the impact of their gifts. Donors making unrestricted gifts should receive the facts on the organization’s cost-effectiveness and the difference it is making in advancing its mission.
An effective best practice is establishing a recognition society to salute donors who make an annual commitment to unrestricted giving. This often constitutes a loyal inner circle of contributors who can be counted on during times of challenges and opportunities.
Think about investments in the private sector. When people invest in corporations and purchase shares of stock, they don’t restrict their money to specific areas such as research and development, marketing, and others. They expect the corporations to know how to best use their dollars and then prudently report on the return on investment.
Do stockholders instruct management how their money is to be directed? Of course not. They expect management to exercise good judgment and achieve the strongest possible return on their investment. If they’re not pleased with the return, they pull their investment. Why should the nonprofit sector be any different? Nonprofit leaders deserve the same level of respect.
Want to achieve stronger impact? Give your chosen nonprofit organizations latitude in spending your gift. The upside is huge — expediting stability, momentum, innovation, and growth.
Fortunately, at the highest levels we are seeing recognition of the power of trust-based philanthropy. MacKenzie Scott has blazed an amazing leadership trail in this direction, awarding more than $19 billion to more than 2,450 nonprofits and proudly and humbly proclaiming that they — more than she — know how best to spend those dollars to touch, improve, and save more lives. She isn’t alone. The Ford and Rockefeller Foundations and other major funders stepped up in awarding grants with maximum flexibility for recipients during the pandemic. In the foundation world, these are typically known as grants for general operating support.
In conclusion: Don’t overlook unrestricted giving
Nonprofit leaders should cogently and unabashedly make the case and ask for unrestricted gifts.
This is about unlocking potential and enabling the nonprofit to get down to the business of doing what it does best.
Trust is the most precious commodity in philanthropy, and by earning it, nonprofits and worthy causes can achieve amazing results. And donors, by placing their trust wisely in flexible funds, become dynamic partners in championing good works and empowering nonprofits to address the constantly changing areas of greatest need.
Does your nonprofit make the case and ask for unrestricted gifts? Let us know in the comments.
How to Write a Fundraising Plan in 2 Steps!
Comments