Unrestricted Major Gifts Are Charities’ Best Friends is Jim Eskin’s take on the importance of nonprofit cashflow. Here’s what Eskin has to share:
In addition to record-setting philanthropy, one of the more encouraging trends we’ve witnessed over the last few years in response to the pandemic is funders letting non-profits and recipients of their generosity decide how money can be best spent. This has long been known as unrestricted giving.
For various reasons, non-profits — including those that needed those type of dollars the most — were reluctant to ask for support that they could use when and where needed the most. MacKenzie Scott has blazed an amazing leadership trail in this direction, awarding more than $12 billion to more than 1,250 non-profits and proudly and humbly proclaiming that they more than she would know how to best spend those dollars to touch, improve and save more lives. She wasn’t alone. The Ford and Rockefeller Foundations and other major funders stepped up in awarding grants with maximum flexibility for recipients. In the foundation world these are typically known as grants for general operating support.
In many ways, unrestricted gifts are the most valuable gifts any organization can receive. In fact, a convincing case can be made that one unrestricted dollar is worth two restricted dollars.
Unrestricted gifts are still certainly not the most popular nor best understood. It is up to all of us involved in philanthropy, both as professional staff and volunteers, to tell their story and explain the indispensable role of unrestricted giving in advancing the missions, objectives and dreams of our favorite causes.
In today’s environment turned upside down by the pandemic, non-profit organizations are being challenged to do more with less. Non-profit leaders knew how to stretch nickels into dimes and now are being challenged to stretch them into quarters.
Unrestricted gifts provide critical support to help bridge a widening gap of need so that growing numbers of people can continue to be served.
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 ways.
Unrestricted money is a non-profit 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 all the crises that emerged from the pandemic.
People 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.
Why a 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. Likely, they’ve done research and have confidence in the organization to reach the stage of having a relationship with them.
Unfortunately, too many professional and volunteer non-profit 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 for gifts of time, talent and treasure.
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 used? Of course not. They expect management to exercise good judgment and achieve the strongest possible return on their investment. Why should the non-profit sector be any different? If they’re not pleased with the return, they pull their investment. Non-profit leaders deserve the same level of trust.
Want to achieve stronger impact? Give your chosen non-profit organizations latitude in spending your gift. The upside is huge — facilitating stability, momentum, innovation and growth.
Professional and volunteer non-profit leaders should cogently and unabashedly make the case and ask for unrestricted gifts.
This is about unlocking potential and enabling the non-profit to get down to the business of doing what it does best.
Trust is the most precious commodity in philanthropy, and by earning it, non-profits and worthy causes can achieve amazing results. And donors, by placing their trust wisely, become dynamic partners in championing good works and empowering non-profits to address the constantly changing areas of greatest need.
Unrestricted Major Gifts Are Charities’ Best Friends was first posted at INSIDE CHARITY
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Jim Eskin’s leadership roles span more than 30 years in fundraising, public affairs and communications in the San Antonio area. During his career, he established records for gifts from individuals at three South Texas institutions of higher learning. He enjoys training non-profit boards on fundraising best practices and overcoming the fear of asking for gifts. His consulting practice Eskin Fundraising Training builds on the success of his 150 fundraising workshops and webinars and provides the training, coaching and support services that non-profits need to compete for and secure private gifts. He has authored more than 100 guest columns that have appeared in daily newspapers, business journals and blogs across the country, and publishes Stratagems, a monthly e-newsletter exploring timely issues and trends in philanthropy. Sign up here for a free subscription. He is author of 10 Simple Fundraising Lessons, which can be purchased here.
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