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Just Give ’Em the Money: The Power and Pleasure of Unrestricted Funding

Unrestricted money makes an organization work smoothly, enables innovation, and provides fuel for growth.

SSIR x Bridgespan: Giving That Gets Results SSIR x Bridgespan: Giving That Gets Results Giving That Gets Results is an eight-week series of voices from the vanguard of giving. Philanthropists and foundation executives share how they are adapting their strategies, aiming for results, and measuring their impact to learn and improve. #givesmart

When I stumbled into philanthropy, seven years out of medical school, I had no idea that there was an accepted set of practices to follow. Through a combination of cluelessness, hubris, and too much time in remote field sites I remained blissfully unaware of the mores and norms of the grant-making world. In my ignorance, I figured that the best thing for the Mulago Foundation to do was to find high-impact organizations focused on the things we cared about most—and give them a bunch of money.

That’s worked out pretty well for us, and unrestricted funding remains a cornerstone of our funding strategy.

What we—Laura Hattendorf and I—can’t figure out is why everyone doesn’t do it. Unrestricted money makes an organization work smoothly, enables innovation, and provides fuel for growth. It unlocks potential and allows people to get down to business and do what they’re best at. It makes it possible for great organizations to weather crises without losing momentum. For us, it serves to leverage other people’s restricted money—and I love the feeling that we’re getting a better deal.

I suppose that many worry that if they give an organization unrestricted money it will be wasted or used inefficiently. The solution is pretty simple: If you don’t think an organization is smart enough to use your money well, don’t give them any. It would probably be best for all concerned if a few more NGOs went out of business anyway. (I just heard an economist on NPR say that in a healthy economy, about 10 percent of companies go out of business each year). The social sector could use a little pruning. It would probably be nice if a few foundations went out of business too, but that’s a subject for another time…

In the real world, if you were to invest in a company you thought would make you a tidy profit, you wouldn’t tell the senior management they had to make a product of your choosing, restrict the number of vehicles they purchased, or expand operations into a new country. Why should we do any differently in the social sector? Why not simply invest—fund—on the basis of return in the form of impact? Isn’t that the point?

Unrestricted funding on the basis of real impact is a lot more satisfying than worrying about line items in a budget. What is important is the impact per donor dollar: the cost per child’s life saved, per family out of poverty, per island species saved from extinction. If we like that number—if we think they are cost effective in terms of impact—we don’t have to get worked up about overhead costs or whether employees fly business class now and again.

Perhaps donors feel that they’re being more responsible by restricting funding to a given activity when they can track that activity closely. They’re not. An organization can faithfully carry out the activities funded with restricted money and still not have much impact. The attempt to achieve tight control and close observation can miss the impact forest for the operational trees.

Or perhaps some donors give restricted money to have closer engagement with the doers. Let’s face it, they’re the coolest people out there, and I certainly treasure my relationships with those who are doing great work to make the world a better place. But if you really want a genuine relationship, show some faith and put some skin in the game with unrestricted money. You’ll find that people are much less guarded and much more open to your ideas and ongoing input. The current fashion of donors calling themselves “partners” is more than a little silly—we’re funders and it’s a fundamentally asymmetric power dynamic. When you change the equation to unrestricted money for real impact, however, the dynamic can start to shift: donors give doers the dough they need to create impact; doers give donors the impact they need to justify their existence. It starts to look less like feudalism and more like symbiosis.

So, if you want to get more out of your philanthropy—both personally and professionally—find high-impact organizations working on the stuff you care about most and give them some money. Make them accountable for impact, and if you like the result, give them a bunch more money. They’ll respect you for it, and will probably listen to you from more than politeness. And if enough of us do that often enough, we might even move the social sector toward a more efficient market for real impact.

See more from SSIR x Bridgespan: Giving That Gets Results

Read more stories by Kevin Starr.

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COMMENTS

  • John Barcanic's avatar

    BY John Barcanic

    ON August 3, 2011 10:43 AM

    Thanks for the great post, Kevin. Whatever part of the work we’re in, whether funding, doing, or managing we can all get caught up in the illusion of control. However, if we’ll set people free to do the work they’re best at they’ll surprise us with what they accomplish.

  • BY Tomi Ann Foust

    ON August 3, 2011 03:10 PM

    Wow!  Thank you so much for seeing the BIG picture and saying what needs to be said—would you like to come to Hutchinson, KS and help us at Big Brothers Big Sisters change the lives of the over 100 children on our Waiting List?  We would be honored and thrilled.

  • BY peter seligmann Conservation International

    ON August 3, 2011 04:06 PM

    Kevin this is a great piece.  All of us who have worked for ngo’s appreciate the flexibility that unrestricted support provides.  We think of this support as a sacred trust that we have to earn to retain. We however have an obligation to operate efficiently and deliver on expected results. 

    Many donors have focused missions.  In our case, for example, a foundation might be interested in marine conservation.  Targetting their support for our marine priorities is a way for them to support an organization that does more than marine conservation.  We like this so long as restricted funds support our priorities.

    What I have experienced is that many supporters who begin by giving restricted donations for our priorities, become unrestricted donors based upon our delivery.

  • Van Crosby's avatar

    BY Van Crosby

    ON August 3, 2011 06:09 PM

    Thanks Kevin—-I totally agree. I am starting my own foundation and one of the things I want to do is turn good people loose, tell them what I want done but let them figure out how—-.

  • Jill Myers's avatar

    BY Jill Myers

    ON August 3, 2011 06:42 PM

    Thanks Kevin!  I am a Program Coordinator of a NP specializing in dental care for the underserved.  Here’s the thing it is easier to find funding for “the latest and greatest” equipment, but very difficult to find funding to support the staff it takes to meet our goals and mission.  We need more funder that will believe in us.  It is encouraging to know that there are funders like you out there.

  • BY Neshad Asllani

    ON August 3, 2011 10:26 PM

    There is always funding for the good project. Never had a funding problem, when I start a project my only concern is doing good in the world and the cause and impact into the communitty.

    Neshad

  • Rosemary McKenzie-Ferguson's avatar

    BY Rosemary McKenzie-Ferguson

    ON August 4, 2011 02:29 AM

    I work within the workers compensation industry, Work Injured Resource Connection is (as best I can tell) the only not-for-profit Community Advocate Association in the southern hemisphere.
    So you think it would be easy to get funds to run the social justice prorammes that are needed to assist injured workers.
    Sadly that is not the case, every funding body or philanthropist has always come back with “the workers compensation programme should be doing that, or providing you with the funds!”

    I can speak at functions and explain as much as I like just what life as an injured worker is truly like.
    I can have people role play so that they can “be” injured for a short space in time.
    I can answer the same question time after time.
    And still nothing changes.

    Tomorrow I will get another load of non-perishable foods that will put food onto the tables of just a tiny few injured workers and their families.
    Saturday I am having a trades person come to give a quote to line my car garage so it can be used for food storage, I already know that I need to purchase another larger deep freezer to be able to handle more perishable foods so that injured workers will have access to quality foods.

    It is all very well to say to find a not-for-profit Association and just give them the money.
    What I have is people needing help that is not provided by the system they are trapped in, I have no one who even considers injured workers worthy of support and I have the understanding that if I walk away, if I fail these people I will be no better than the system that they are trapped in, if anything I will be worse because I know how truly easy it is to gift hope instead of defeat.

  • BY Lisa Siljanovski - The Lions Hearing Center of MI

    ON August 4, 2011 06:04 AM

    Kevin, how refreshing to read your post. You would think that any support is good support.  I have come to realize however, that restricted funds restrict your ability to apply them with the greatest level of efficency. I serve as a volunteer for the Lions Hearing Center of MI. I have chaired our annual fundraiser for the past 5 years. I have never refused a donation no matter how small. Even the littlest trinket when combined with other “trinkets” can become an amazingly beautiful gift basket placed on my auction table and realize a sizeable bid. It is because I choose what to do with that donation that I am able to enhance its value. Unfortunately when restrictions are attached, a grant or donation of any kind could actually become less valuable as the strings attached can become entangled in the effort it takes to fulfill.

  • BY Janet Jacobs, Museum of Arts and Sciences

    ON August 4, 2011 06:22 AM

    I think you are my new hero. Put qualified people in place with a goal to accomplish and give them the money. Key words here are “qualified and goal”. If the governing board is clear on these points, success is assured.

    All not for profits-whether providing sustenance for the body or for the mind & soul-rely more than ever on the philanthropy of those in the local community. When seeking funding, show results-the before and after.

    When our board targeted a need to get children involved at a young age in art, science and history, a local philanthropist put up a sizable amount as a matching fund to build a new wing and the results was a state of the arts Children’s Museum. It has served as an adjunct classroom for the local school system and is a valuable asset in our community. Tuesdays are free days at the Museum. We strive to appeal to all and be available. This before and after is an effective tool in securing continuing interest and funding for other needs.

  • BY Eric Saunders, New Hope Ministries

    ON August 4, 2011 07:03 AM

    Thanks Kevin.  Unrestricted funding provides the greatest benefit for high performing organizations.  Tying funding to outcomes results rather than specific programs strengthens mid-level organizations and encourages them to become even stronger.  The bane of good non-profits is the “seed money” funding that insists on a new project or program but won’t make a commitment past the first year.  Foundations and fundsers need to see the value of investing in under-resourced but highly effective programs!

  • BY Norm Pifer, Cruz Roja (Red Cross) International Vo

    ON August 4, 2011 07:19 AM

    Kevin, your comments are so much appreciated. Our efforts in Mexico, through our NPO in the US are constantly blessed by unrestricted funds. Oh sure, we have some donors who still can’t understand the differences in Red Cross North versus South of the border, but the majority of donors in and to this retirement community see the effects of emergency ambulance and emergency clinic services in action along with disaster preparedness.
    Mexicans unable to afford medical services and retired ex-patriots whose age and health require our services, truly appreciate unrestricted support to help us recover direct costs.
    No government funding supports us, so the flexibility of using unrestricted funds very much keeps us afloat. Thanks again

  • BY Susan Otuokon, Jamaica Conservation and Developmen

    ON August 4, 2011 07:46 AM

    I hope more foundations will listen to you and give it a try. As someone who has been working with NGOs/non-profits for almost 20 years, the great difficulty faced in obtaining unrestricted funding has been very frustrating. The NGO I am involved in now, has years of excellent track records and produces annual financial reports (which would be independently audited right up to last year if we had unrestricted funding). Im not sure its so much a lack of trust, as a belief that the donor should control everything - even if with little field experience the foundation has no idea what works and what doesnt. In my experience, we need trained people to get our conservation and sustainable livelihoods work implemented, but it is very difficult to access funds for paid, full-time staff, though we could probably find the funding for short-term consultants. We also need funding for our Endowment Fund, that would allow us to cover the costs of utilities, rent, accounting and critical administrative support that most foundations do not want to cover.

  • BY Heidi Warren, Starfinder Foundation

    ON August 4, 2011 07:51 AM

    Here here! I wish more folks in the philanthropy world were thinking along these lines! (And hopefully your article will help move some in that direction.)  At my organization we talk frequently about the need to find true investment in our work, so that we can move beyond hand-to-mouth survival to real innovation. Unrestricted investment will not only allow us to attain greater impact, but it will also enable us to model to the youth we serve the kind of entrepreneurial spirit and belief in a world full of possibilities that we wish stimulate in them.  Thank you for your smart commentary.

  • BY Dominique Corti, MD - President, Corti Foundation

    ON August 4, 2011 10:09 AM

    Excellent post.
    For over 10 years we have built up our support foundation for Lacor Hopital (500 bed hosp in Northern Uganda) by aiming hard for unrestricted funds for running costs, despite everyone trying to dissuade us. But the statements in the third paragraph are too true. Coupled with good administrative practice and accounting, it has proved winning for our support foundation, for our hospital and its over 250,000 patients treated each year (half of which are children under six) and 600 Ugandan staff.
    One essential aspect missing in the evaluation: the “DO NO HARM” principle to other good and terribly important local organizations. The last 10 yrs of disease specific (vertical) programmes have accomplished a lot of good, but also a lot of unintentional terrible damages as well. For those who are interested in this, please read the present issue featured on capacity.org (financial and editorial support provided by a steering group four partner organisations including the European Centre for Development Policy Management (ECDPM) and the United Nations Development Programme (UNDP)).

  • BY Isaac Holeman, Medic Mobile

    ON August 4, 2011 12:51 PM

    As one of the high impact organizations funded by the Mulago Foundation, I’d like to emphasize a few points in this article.

    Kevin and his team really, *really* grill us about our impact more intensely than any of our other funders. Occasionally these conversations have changed how we operate (we transitioned from a startup board of informal advisors to a well structured board of of directors driven largely by Mulago feedback). There is nothing soft or superficial about unrestricted funding. Focusing on a whole organization rather than specific line items means Mulago is more hardcore about the big picture and what really matters for our organization.

    We are able to work efficiently with some extremely restricted funding (e.g US government contracts) only because we have Mulago to fill in the gaps. Without the unrestricted funding we would become enormously less efficient and in some cases altogether refuse the ultra-restricted funds.

    When Mulago asks us for something we bend over backward to make sure they get it in a timely manner. We take their advice 10x as seriously as some other funders (not exaggerating). When people ask us who supports our work we jump to describe Mulago and the Maternal Health Task Force (another flexible funder). We bring whatever returns we can to the Mulago foundation because their unrestricted funding lets us focus on our mission, doing what we’re good at and passionate about.

  • BY Kerry Wood, Vice President, Foundation for Califor

    ON August 4, 2011 01:06 PM

    This is one of the most refreshing commentaries I’ve come across in a long time. Thank you, Dr. Starr, for taking the time to disseminate this much-needed message!

  • BY Anna McDonnell - 5 for Fairness

    ON August 4, 2011 01:06 PM

    This is such a great piece, full of clarity and common sense. At 5 for Fairness, our members donate to a collective grant account and when the account reaches $5000, we vote to decide which organization working to make the world fair for girls most deserves an unrestricted $5000 grant.  When trying to decide between worthy organizations, our members don’t generally have preconceived notions about how the grant money SHOULD be used, but it matters intensely to them that the organization can clearly state how it would be used.  Organizations that cannot or will not clearly state how they would put our $5000 to use generally don’t win the grant.  And I think that’s a good thing.  The more clarity and transparency there is on both sides of the giving/receiving equation, the better for all concerned.
    http://5forFairness.org

  • BY Lu Ann Graf, Executive Director, Care Net of Cadil

    ON August 4, 2011 01:24 PM

    Kevin’s comments are so appreciated by an Executive Director who is forever confused by the drive to support only new programs. Why would a foundation not want to see organizations that are effective, continue to grow and thrive in their community? I have never understood why the majority of funding goes to new initiatives while established programs struggle financially. If only philanthropists would give generously, trusting the organization that they have chosen to support and then watch what happens. Obviously, if an organization is not moving forward, then one would choose to put their funding elsewhere.

  • BY Wilson Passeto NGO Água e Cidade

    ON August 4, 2011 01:24 PM

    Muito importantes as conclusões de Mr. Kevin. Para alguns brasileiros que estiveram lendo as reflexões de Kevin é uma oportunidade para entender melhor as distorções que existem em nosso país em matéria de ações de ONGs (NGOs) dos países desenvolvidos. O foco delas na sua esmagadora maioria é na preservação das florestas. Já observaram que não existem NGOs com foco em cidades! Para as entidades do hemisfério norte o assunto mais importante é o aquecimento global e a melhor forma de ajudar esta causa é a preservação das florestas. Assim eles pensam e agem, preservando árvores. Enviam grande quantidade de recursos para ONG ambientais, ou melhor, “ditas ambientais”, e quase nada para organizar a democracia e os temas das cidades. Claro que preservar florestas é um tema importante no Brasil. Mas realizar uma conferência em Manaus com “ambientalistas” de todo o planeta, inclusive o Bill Cinton, (o Bill envolvido com a natureza selvagem?) numa cidade que não tem esgoto sanitário e as condições urbanas são péssimas é algo no mínimo inusitado e fora de propósito. Mais de 50% dos índios na Amazônia vivem em cidades como favelados! E quem se importa com isso!? O maior impacto ambiental no Brasil são as cidades onde vivem 87% da população (mais de 90% da população da Amazônia é urbana!). A urbanização aconteceu nos últimos 40 anos. Mais de 110 milhões vieram das áreas rurais ou são descendentes deles. A democracia brasileira depende do voto das pessoas que vivem em cidades, sem dignidade e sem serviços públicos elementares, abandonadas por um Estado corrupto e sem rumo. Elas pouco se importam com as florestas que não conhecem. Mas o discurso internacional do Estado é florestal. As políticas públicas para cidades simplesmente não existem. Esta não é a prioridade e também não é a maior preocupação das Fundações do Hemisfério Norte. Assim, assistimos esta distorção e os desperdícios de recursos (recursos inclusive que vêm atrapalhar o desenvolvimento brasileiro e da AL). Ficamos perdidos em discussões sem fim. E sabemos que estas ações ditas ambientais, não vão dar em nada, são apenas ações para “inglês ver”. Será que vale a pena tentar dizer para estas fundações que o modelo de “áreas preservadas” (para “inglês ver”) combinado com “cidades sem dignidade para onde foram deportadas as pessoas”, como fizeram no Quênia, não será possível no Brasil e na AL? Eu não tenho mais paciência para isso ... Alguém quer tentar? O Kevin está tentando.

  • BY Orion Lumiere

    ON August 4, 2011 02:31 PM

    Good lord!
    I have wondered the same thing since I got in the fundraising field, thank you for some words of sanity! If you love the work we do enough to fund it, what’s with all the strings that are going to eat up my time to comply with them? Do you want me spending my time and energy fighting the hard, good fight society depends on nonprofits to fight, or do you want me spending my time re-formatting my budget for the umpteenth time so my line items fit in your reporting format boxes? Or worse yet, wasting time disguising crucial operating support requests as some sexy ‘new’ program, when I could be focusing on getting better and better at the thing we do best? (what is with the obsession with ‘new programs,’ anyway??) It may not always be a partnership, but donor-doer _is_ a relationship, and if you don’t trust someone enough to have a relationship with them without stalking them, then it’s not the right fit. Thanks again for a great article; the Mulago Foundation is lucky to have you!

  • BY Miki Vuckovich, Executive Director, Tony Hawk Fou

    ON August 4, 2011 02:42 PM

    Terrific advice! The results, for most organizations, is clear enough. How they get there will change over time. The organizations are in the best position to predict and adapt to the changing environment. Giving them the trust and leeway to make those changes, and to use donations in the most effective way they know, WILL ultimately have the greatest impact. If it’s CHANGE we want, give the agents of change (the NGOs) the power to make it.

  • BY Carole Folsom-Hill

    ON August 4, 2011 04:47 PM

    This is it! I totally agree with this approach. We would do even more than we do now! We live in and serve nearly the poorest county Yakima in the state of Washington with over 50% immigrants from Mexico.

  • BY Cathleen (Cate) Murphy, American Family Housing, i

    ON August 4, 2011 05:37 PM

    Since you are obviously a very busy man, I doubt you will get down this far to read my post. So I suppose I’m writing it mostly for venting/therapy purposes.

    I work full-time for a nonprofit that provides emergency, transitional, and permanent affordable housing. I consult with a few more nonprofits and serve on two boards, all focused on helping the homeless and at-risk become self-sufficient. Having experienced homelessness myself, I am driven to do everything in my power to eliminate it. 

    I have a (questionable) habit of giving out my personal cell phone number to anyone who might be approached by a homeless or needy person—shelter providers, mental health outreach workers, pastors, and Consequently, I receive a constant stream of desperate phone calls for help. Unfortunately, 90% of the time I have to say something like… “I’m sorry, but no one in Orange County has funding for that exact type of service for the exact category you fall into.” In addition to dictating that funds can only be used for particular services, many funders only allow us to serve certain types of people.  Frustrating and short-sighted.

    I notice the Board members I work with behave in a similary way when it comes to making funding decisions. They want to help someone with one particular need, but not with another equally pressing need. To address only half a problem is to leave the entire problem unsolved.

    I know funders mean well. They feel it is their ordained responsibility to siphon out funding in the most effective manner possible… and obviously, direct services are a lot more attractive than overhead and operating costs. A handful, like the Weingart Foundation, are finally acknowledging that operating and overhead costs are just as essential to a nonprofit’s survival and should not be ignored.

    Thank you you for being a voice of reason. I hope members of the funding community take notice.

  • BY John Silva, grant writing teacher

    ON August 4, 2011 06:20 PM

    Very good points Kevin.  In teaching grant writing, I tell my fundees and funders to avoid the word “partners” and you say it rightly, they’re not. 

    Giving an unrestricted grant is better.  A funder can’t ever really know what’s on the ground, unless the funder works in the organization as well.

    If there is anything to quibble about, I would give unrestricted grants primarily to organizations that show a good track record and results.

  • BY Monica Metzler, Illinois Science Council

    ON August 4, 2011 07:28 PM

    Just want to echo all the positive responses for this voice of reason.  The question is…. will those at foundations take it to heart and start thinking outside the tiny boxes of their extraordinarily limiting grant strictures? 

    Some years ago, a wonderfully intelligent friend told me if she ever won the lottery and could establish a charitable foundation she would call it the “Light bulbs and Post-its Fund,” because no foundations will fund such basics but no organization can operate without them.  Love it!

  • BY Babu Rahman - Agami

    ON August 4, 2011 08:48 PM

    Kevin,
    Thanks for your voice of reason in the insanity of fundraising. I founded Agami (basic education for poor children in Bangladesh) many years ago. We constantly struggle for funds, and even then many of our donors demand that the funds get spent in a particular fashion. This hamstrings our effectiveness. I hope that you talk to other big funders out there and start a real shift in the way people give money. Thank you.

  • BY Sam Ratanak Sakada

    ON August 4, 2011 09:18 PM

    Dear Kevin,

    thank you so much for your powerful words. My organization has been working on improving living condition for more than ten years. There is so much improvement in our target areas. But the thing is that we are sure we can do more if there were some unrestricted funding in our bank account where we could use it for our staff capacity building or enterprinuerial initiative for our sustainability.

    Personally I am praying that our prominent donors both institutional and individual ones consider what you are saying. This is not only benefitial to our poor and vulnerable groups, but also to our sustainability.

    Humble Respect and appreciation,
    Sakada Sam

  • Don Andrews  Executive Director  Sharing Hands, In's avatar

    BY Don Andrews Executive Director Sharing Hands, In

    ON August 4, 2011 09:55 PM

    Kevin - your words hit home in several ways. I frequently have more concern about paying the lease than I do about paying for the food for our Food Bank. And the lease is equally as important. Donors are willing to either give us foodstuffs or the money to purchase them. However, they rarely, if ever, give us money for our lease. Restricted funds do just that - restrict us.

    Secondly, they cause us to misfocus. We should be determining what needs to be done and how to fund it - not casting about to see what funding is available and then creating a program to obtain it.  That’s like having the answer and looking for the problem. This is not effective non-profit work.

  • BY Raj Janagam (Unreasonable Fellow 2011)

    ON August 4, 2011 10:09 PM

    Dear Kevin,
    We need thousand more people like you to understand funding in this way!

    Thank you for the post and sharing it smile

  • Ronnie Petersen's avatar

    BY Ronnie Petersen

    ON August 4, 2011 11:42 PM

    Hi Kevin

    You hit the spot. Calculated and value-based risk taking. If more funders adopted this approach, more effective organisations will receive much-needed money to make the difference.

  • BY jaswinder Gill

    ON August 4, 2011 11:45 PM

    Its nice to know that some one thinks on those lines. In India I am scared to take any project specially funded by goverment because its very difficult to give details and than justify your work. I have a small set up & work to collect money for my NGO. My salary is my main source of funding.

  • BY Daniella Boston

    ON August 5, 2011 03:40 AM

    Here here! Kevin Starr - you’re the man!

  • Fred Palmerton, former director CRI's avatar

    BY Fred Palmerton, former director CRI

    ON August 5, 2011 05:49 AM

    An interesting take on the subject can be found in the pages of a new book, “Christianity As Philanthropy” by Eric Foley

  • BY Prof. Eliezer Jaffe, Chairman (Volunteer), The Isr

    ON August 5, 2011 07:20 AM

    The article is very relevant for all international nonprofit organizations. Although the Israel Free Loan Association (IFLA) is able to issue 350 interest free loans each month to low-income working poor Israelis throughout Israel, the hardest thing is to find donors who allow us to give loans to anyone in need rather than to specific categories of people in need. Even more difficult is finding donors to help with administrative expenses which are only 4% of our total financial activity, but are crucial to the operation of our organization. These rare donors and foundations really understand what makes everything possible.

  • BY Rhonda Staudt

    ON August 5, 2011 07:30 AM

    Exceptional article - unrestricted giving would be wonderful for all international non profit organizations because no one seems to want to fund administrative costs.  We operate in developing countries and need to give to those in need who don’t often meet guidelines created by western societies. 

    Hope donors will change their way of doing business.

  • BY Larry Pauly, Director of Strategic Gifts, Freestor

    ON August 5, 2011 07:54 AM

    Dr. Starr, your insight will be repeated, hopefully to the many thousands of donors who are on the fence about restricting their gift.  Professionals like myself, and other colleagues who have posted here, find that we are sometimes afraid to make unrestricted requests of philanthropists and foundations.  Your reasoning will go a long way to stemming that fear.  As a physician, you may be offering a lasting cure.  I hope so! Thank you for sharing your thoughts and I wish you success and happiness in your work to serve others.

  • BY Laurie Mahoney, Junior Achievement of Western New

    ON August 5, 2011 07:55 AM

    Kevin, thank you for saying so clearly what grantees have been trying to tell grantors for many years.  If an organization has a core mission/program that they deliver well, has deep impact and has been running efficiently for many years, do not ask them to create a new program to fit the “flavor of the month”.  Provide the organization with the funds they need to enhance and expand what they are already doing well.  This would provide a much more efficient use of both organization’s time and money!

  • Nathan Medina's avatar

    BY Nathan Medina

    ON August 5, 2011 08:18 AM

    Wow! I wish every foundation would read this article.  I understand that many foundations have their reasons for restricting their giving but at times it does seem cumbersome.

  • BY Luke Disney, Executive Director, North Star Allian

    ON August 5, 2011 08:18 AM

    Hear, hear! I couldn’t agree more with this post. Having moved from the private sector to the NGO world the “partnership” approach to restricted funding taken by the majority of donors seems both inefficient and largely designed to keep a lot of people riding desks and pushing paper. It’s particularly ironic given the current trend of donors adopting private-sector (or should I say “corporate”) language but not practices - which, by the way, are by no means always and forever superior to the practices of top-tier NGOs. But that’s another article/post topic…

  • BY Katie Scolari Borden

    ON August 5, 2011 10:23 AM

    BRILLIANT. Thank you Kevin. Trust drives investment decisions, whether they are for-profit or not-for-profit. It is our job as an NGO to earn that trust and keep it. Our donors should hold us accountable for the impact we are claiming to have in people’s lives. But proscribing how we get there hinders the learning and adaptation process that is essential to effective programming. And tracking a donation to a bag of cement doesn’t matter if the investment in people isn’t made. Unrestricted funding has made possible some of our most innovative and scalable ideas while also helping us continually build our organization’s evolution into a thought-leader. So thank you for using your voice to make this important case. Let’s spend our time focusing on impact. Surely the world will be a better place for it.

  • Linda Tessar, Hope Haven of Cass County's avatar

    BY Linda Tessar, Hope Haven of Cass County

    ON August 5, 2011 10:24 AM

    Unrestricted funding – Novel!  Your philosophy – energizing!  The refreshment of the concept of unrestricted funding implies accountability rather than rampant irresponsible spending.  While there may be need for restricted funding, it seems that philanthropically restricted funding is the epitome of exerting power and control from one organization over others – programs, needs and constituents be damned.  As restricted funding means limitations, unrestricted funding embodies a foundation of real change encompassing creativity, growth, advancing programs and people.  Again, how novel!  Thank you.

  • BY Elaine Osowski

    ON August 5, 2011 11:17 AM

    This has long struck me as the most common sense approach to funding, and for some reason, it has also struck me as some kind of taboo topic. Thank you so much for your words and work.

  • joebeek's avatar

    BY joebeek

    ON August 5, 2011 11:33 AM

    Kevin,
    From all the responses in praise of your post, you have obviously struck a chord here.  Of course I agree as well.  As a relative newcomer to philanthropic management, I have been struck by the contrary effect that restricted giving has relative to institutional transparency.  Instead of providing greater accountability to funders, as I think is the intention, restricted giving forces management into a wasteful and inefficient game of matching funding sources with expense types.

  • BY Fred Best - Ambassador to The Wellbeing @ Work Fou

    ON August 5, 2011 11:38 AM

    Having just set up a new Foundation aimed at delivering Wellbeing & People Management solutions/improvements we intend to get as many people as possible fit for, attending and performing in the work-place. 

    This post has impacted me positively across the pond - so thanks for that.  Like it or lump it `Work` is an integral part of Society - by work we mean any activity which involves effort/energy and delivers something.  Far too many people on this planet have (or believe they have) either mental or physically barriers toward work - at the Foundation we believe everyone is capable of doing something.  Our definition of `Wellbeing` includes a scale of 1 to 10 which reflects our individual/collective abilities to be able to DO something (i.e. work).  None of us can be rated as 10 - that’s not sustainable but neither should any of us be rated as zero as that would mean we are dead!  Thanks again for sharing your thoughts - nice to know there are a other good souls in this world trying to make it a better place for all of us.

  • BY Michael Henderson, Accounting & Management Con

    ON August 5, 2011 11:59 AM

    “From your mouth to funder’s ears.” Given the challenges we face to raise funds, as a NP professional, I am glad to see overwhelming support of your idea. (We can’t all be wrong). I will be sure to send this link to the Donor’s Forum. They may be interested in hosting a seminar to discuss this topic. Can we share this message with Chronicles of Philanthrophy? This could be their next feature article.

  • BY Bill Somerville, Philanthropic Ventures Foundation

    ON August 5, 2011 05:18 PM

    Kevin,

    Good for you for advocating unrestricted funding. We have been doing it for 20 years and we call it discretionary money to be spent at the grantee’s discretion. And we give our grants in a 48 hour turnaround. We often send money to programs we know and admire with no application. All our giving is paperless meaning we write the agreement and send it with the check and they send back a signed copy. We have everything for an audit, a signed agreement on what the money is for and a signed receipt for the money.

    Unfortunately, we are in an era where foundation people feel paper equals due diligence or, as one foundation executive said, “If you don’t trust them have them fill out paper.” It new takes an average of 27 hours to apply to a foundation. This is absurd.

    Keep up your good ideas. We need them.

  • BY Paul Shoemaker

    ON August 6, 2011 08:26 AM

    Hey Kevin - great piece, I agree with you 99%. I even wrote a sort of companion piece about 4 years ago - http://bit.ly/pGqQmy Your .“real world” paragraph really brings it home and is the ultimate conundrum because most foundations are started by someone who created their wealth in the private sector in the first place and they should get unrestrcited funding more than anyone else. The analogy I sometimes use to describe restricted funding is a puzzle - it’s like a non-profit’s work is to put together a 100-piece puzzle and they are given 100 piece by funders, but they have 5 of the same piece, 6 of another piece, etc (restricted funding) and don’t have any of several dozen other pieces they need (unrestricted) to build a whole, complete puzzle.

    The 1% I would, for obvious reasons smile, quibble with is the notion that “partnerhship is silly.” I agree again with the power dynamic you describe, but working together with non-profits can work, it can level (never get rid of) the power dynamic, and most importantly, serve as a way of funders working to help a non-profit build a stronger organization and grow their capacity to create more social impact. Unrestricted funding is a linchpin in our relationships with investees. I’d be glad to share more with you, if you’d care to talk someday.

    The primary point, by far, is that your piece and main point are spot on. Let’s get more and more funders and philanthropists on the Unrestricted Funding train!

  • BY Thilakam Rajendran (unreasonable Fellow 2011)

    ON August 7, 2011 02:36 PM

    Thanks Kevin, you have shared what we NGOs can only ask within our four walls!! We often ask Why don’t you trust us and judge by our past outcomes?‘The service the organisation renders to its target groups,the quality of outcome and its dedicated staff and management,the values and the principles ,the power of knowledge it has generated over years of experience - are these measured nowadays?
    Our organisation had a value and a policy that"Work should speak for itself"and hence quietly worked with great passion and commitment and would never blow our trumpets and also apply for any awards.  But sadly never had the capacity to attract investors as in today’s context the Investors/Funders look at achievements through the glass of ‘popularity,branding,awards etc..‘Such organisations also don’t bend to suit the funding needs but will work tirelessly to enable its beneficiaries!! They are often caught between the values and reality.For such organisations we need people like you to join them and strengthen their backbone without any conditions when they are crumbling due to lack of resources!!!
    Thilakam Rajendran, http://www.arunim.in (Unreasonable Fellow 2011)

  • Ona Porter's avatar

    BY Ona Porter

    ON August 8, 2011 12:04 PM

    Mr. Starr,
    When the Committee for Effective Philanthropy was studying five years of budgets and impact for a number of non profits in NM a couple of years ago, I remember several times saying to the lead researcher, “and how will you measure THAT?”  The answer is; they didn’t measure anything that was “soft.”  Looking only at the empirical, they found a 147:1 return on investment!

    Following your same sense of the funder/CBO relationship, we are now working to develop a $50M trust fund to expand the work of our highly effective assets consortium.  Our idea: Give us a 1% loan that will be forgiven in 5 years if we meet some very aggressive metrics that we set forth.  This will allow our entire focus, and all resources to be on high impact outcomes not the “machine” that it would take to over several years to build it through traditional grant making.

    A future of opportunity and justice is ours in this kind of scenario!  Thank you for the “high voice” for change that is so critical.

    .(JavaScript must be enabled to view this email address)

  • BY Lauren Burnhill, One Planet Investments

    ON August 8, 2011 12:57 PM

    Kevin,

    I join the many voices in agreement on the wisdom of your vision! My take is slightly different now that I’ve worked in an NGO as well as on the for-profit side of social change work. Why would anyone ONLY provide restricted funding? Seems like a guaranteed recipe for failure to except a resource-constrained organization to deliver operational excellence if you’re not willing to fund some of the operations. On the other hand, too much unrestricted funding (in our case, resulting from an IPO) seems to contribute to irrational exuberance for new things as opposed to strengthening what exists and building on that base. I’d like to see all grant funding include an unrestricted piece - or at least appropriate funding for admin/overhead - in addition to restricted funding that specifies a mutually agreed upon goal.

    Donors who think about outcomes, but won’t fund the capacity to achieve outcomes grow up to be venture philanthropists who want “impact investments” but won’t invest in appropriate business models for making those investments. I hope you will add high impact intermediaries to your scope of vision. The current environment seems to focus on either educating potential impact investors, or helping impact entrepreneurs become investment ready - but (aside from myself) no one seems concerned about the need for effective impact investment intermediaries between these two groups. As more and more NGOs look for sustainable revenue streams and new social ventures (many with new business models emerge), the existence of intermediaries who understand “standard practice” and can creatively move from there into “appropriate practice” is critically important!

  • BY Sandra Clark, Landesa

    ON August 8, 2011 05:42 PM

    Excellent post – when I sent this around to fellow staff the subject line from a colleague was, “music to our ears.”  The reality is that organizations of all shapes and sizes benefit strategically when a funder provides nimble resources, but this is especially true for organizations like mine who are in the midst of important (and often challenging) scaling seasons. Unrestricted funds allow us to step back, breathe, assess, course-correct, and make all of our funding more impactful. And along the way, the work advances even more efficiently when our funder walks alongside us a partner. This recent New York Times piece (http://nyti.ms/p4RKdS) showcases great partnership in action from our friends at Omidyar Network. From our CEO: “I could easily make the case that the nonfinancial resources we got from Omidyar were as equally beneficial as the money they gave us.”

  • BY Joanna Jones

    ON August 9, 2011 05:04 AM

    Thanks Kevin, for this excellent and refreshing piece of reading.  I agree ... music to my ears.  Why are funders so short sighted that they need the appeal of a project that they can see, feel and touch!

    Having been in the helm of fundraising for Plant Heritage for the last 11 years, nothing annoys me more than the time it takes to apply for funding for a SPECIFIC project - when all the time it is the core/unrestricted funding we need more than anything to keep this wonderful, but passionate, little charity going.  I agree with all the comments above and thank youl.
    Joanna Jones
    Plant Heritage

  • BY Michael Johnson

    ON August 9, 2011 05:49 AM

    Bravo! 

    As a young 501(c)3 that began grant research and writing two years ago, what I would say to foundations at this point if asked is:

    1) While I can understand the wisdom of project restricted grants to help keep young organizations disciplined, do not underestimate the extra administration burden this causes an organization that wants to have solid financial integrity.

    2) If you deny our request, do not simply wish us well, but do us a favor and save us the guessing time (that distracts from pursuing our mission), by telling us what would make our grant request stronger in your eyes, especially if our purpose is strongly in line with your purpose.

    3) I like the advice of Lauren from One Planet Investments (08-08 post), to grant alongside a restricted amount, an unrestricted amount to give the 501(c)3 help with the less specific broader costs. We would find that helpful.

    4) In spirit with Sandra Clark Landesa’s post (08-08), one foundation of a manufacturing company offered us gratis the consulting services of one of their staff skilled in Hoshin Planning. That has had a remarkable affect on us as an organization. It continues to make us a more disciplined and smarter 501(c)3.

    Thanks again for your insights.

  • BY Sean Dobson

    ON August 9, 2011 10:43 AM

    Kevin, nice essay. I make some similar arguments in the posts below:

    http://www.ncrp.org/files/rp-articles/Responsive_Philanthropy_Spring2011-Dobson.pdf

    http://blog.ncrp.org/2011/08/plan-it-dont-wing-it-how-to-induce-more.html

    Best regards,
    Sean Dobson
    Field Director
    National Committee for Responsive Philanthropy
    .(JavaScript must be enabled to view this email address)

  • BY Carolynn L. Sween, Community Foundation of Northea

    ON August 9, 2011 03:18 PM

    Kudos to Mr. Starr, as well as Mr. Somerville, who commented on Aug 5. I admire the work of both the Mulago Foundation and Philanthropic Ventures Foundation very much. When I was fortunate to hear Mr. Somerville speak at an Iowa Council of Foundations event, I was re-energized to help our Foundation embrace unrestricted funding as a key strategy for achieving the kind of large-scale impact we seek in our community… our CEO and our Board clearly recognize the value of unrestricted funding for the local nonprofits we know and trust to achieve that impact. In fact it has become something of which we’re very proud: the fact that we’re one of the funders who “gets it”. 

    Keep up the great work,
    Carolynn L. Sween
    Director of Programs
    Community Foundation of Northeast Iowa

  • BY Biswanath Sinha

    ON August 10, 2011 01:40 AM

    This is a very stimulating article-very well written and educative for me. The real challenge remains in cretaing new high-impact organisations as the need is ever increasing. The existing high-impact organisations too need to keep the track record intact year after year. In India, many such great organisations are headed by an individual rather than group of people. Thanks. Biswanath Sinha, Sir Dorabji Tata Trust and the Allied Trusts, Mumbai, India

  • BY Kazu Haga Peace Development Fund

    ON August 10, 2011 07:33 PM

    Well said.  As someone who has worked in philanthropy for close to 10 years, I could not agree more.  Our foundation sends out the majority of our grants in general support.  Especially for funders like ours that prioritize supporting small and emerging organizations, this is even more of an issue since placing restrictions places an additional accounting/administration burden on the grantees, and they end up spending more time on reporting and financial tracking then on the work we want them to be doing.  Thanks for this article.

  • Carmen Grigoras's avatar

    BY Carmen Grigoras, SPEhRo

    ON August 11, 2011 01:43 AM

    Very intresting all these opinions. Is some interested to devellop some projetcts in Romania?Social economical /business projetc, or social integration projetc for mentaly desabled adults?Thank you for any answer on .(JavaScript must be enabled to view this email address) or .(JavaScript must be enabled to view this email address);you can see us on Facebook :ong SPEHRO.

  • Klaas de Boer, student Leiden University's avatar

    BY Klaas de Boer, student Leiden University

    ON August 11, 2011 02:25 AM

    Only question then is: How do we measure impact and, possibly even more important, how do we determine whether the impact measured has been the result of the funded activities or of other factors (beyond the control of the project/programme)? This is often referred to as the problem of attribution. Randomized control trials or counterfactual analysis could (theoretically) help in solving this problem. However, these kind of comprehensive research programmes and analyses are beyond the capabilities and expertise of most nonprofits. In that case, some restrictions or ‘gound rules’ may be needed to try and make sure the money is spent according to its objectives.
    Please, correct me if I am making a false assumption.

  • Priscilla Banda - Nascent's avatar

    BY Priscilla Banda - Nascent

    ON August 11, 2011 07:02 AM

    Unrestricted funding, unrestricts the mind. Caution can come in handy, visit Zambia and see for yourself what restrictions have done to the minds.

  • Ray Foote  -- National Parks Conservation Associat's avatar

    BY Ray Foote -- National Parks Conservation Associat

    ON August 11, 2011 07:17 AM

    Kevin, outstanding points, thank you.  As a professional fundraiser for 25 years, I cheer anytime someone makes a thoughtful case, as you have, for unrestricted giving.  We certainly need to keep working on shifting funders’ and donors’ behavior. 

    However, we on the receiving side can do more, too.  I’ve long observed that organizations generally don’t do a great job reporting back to the enlightened funders who DO provide unrestricted support, demonstrating in every way possible the effectiveness and quality of the organization broadly (volunteer leadership, staff, plan/program/budgets, etc.) because those will determine not only current impact, but capacity/likelihood of future impact.  That is key.  As you rightly observe, this is all about having general confidence in leadership and direction.  Thanks, again. 

    Ray Foote
    Vice President for Development
    National Parks Conservation Association
    Washington, DC

  • BY Bonnie Marquez

    ON August 11, 2011 10:02 AM

    Great topic, THANK YOU KEVIN!!  The difference of receiving unrestricted funds vs restricted has the potential to make or break a 501(c)3.  The obligations and requirements of contracts and grants never seem to allow enough to indirect cost so that the organization can have a solid administration.

    I can only imagine what the organization I work for can do with unrestricted funds!  We strive to provide social services and advocacy for the American Indian community within Los Angeles County.  We do this in a respectful manner with high regard for cultural values, Tribal affiliation, spiritual and personal values of individuals.  Our services address the health, mental health, substance abuse, employment and social service needs of American Indians/Alaskan Natives.

    Please visit: http://www.uaii.org

  • BY cathy DuBois (ReInventing The Cycle, Inc.)

    ON August 11, 2011 02:49 PM

    We are a grass root non-profit trying to get our program Project S.T.O.P. (Stop The Oppressive Predator) launched to help keep kids safe from child predators.  We are finding how difficult it is to get funding because many are hesitant to give to new organizations, but these organizations probably need it the most.  I agree that it is important to be smart about distributing funds, but also take some chances on those organizations that have causes that you find worthy.
    Thanks,
    Cathy DuBois
    CEO ReInventing The Cycle
    http://www.ReInventingTheCycle.org

  • BY Natalie Brenner, Progressive Technology Project

    ON August 12, 2011 01:10 PM

    This is an excellent article.  A donor who restricts their gift ends up generating more administrative activity - exactly what they are trying to avoid by giving a restricted gift in the first place.  If we receive unrestricted funds, we simply continue on with our program-related activity, dedicating more time and dollars to the direct mission work than is spent managing, reporting on, documenting and following up with the use of restricted funds.

    We greatly appreciate all of our donors and the funds we receive - restricted or not - but we are able to more easily administer unrestricted funding, greatly reducing general/admin work and increasing our ability to dedicate the largest percentage of time to program work and service delivery.

  • BY Ravi Chopra

    ON August 13, 2011 11:09 AM

    Well said, Kevin. Several decades ago when there were few non-profits and fewer donors, funding was done in a fairly simple manner—a discussion across the table, maybe a field visit or two and then a trial grant. If the results were good, more grants followed if needed. Then the non-profits agenda was enlarged, not necessarily by the felt needs of the intended beneficiaries, but by the goals of the organization, governments and donors. Then came the corporatization of the non-profit sector. So it is hardly surprising that the values and methods of corporates have begun to dominate what the voluntary sector does and how it does it. All I can say Kevin, is, “May your tribe grow.” At least small donors can follow your method. Happy giving.

  • BY joel Solomon-Endswell Foundation

    ON August 15, 2011 06:02 PM

    Very important point of view. Endswell Foundation was based exclusively on general support, as we spent down our $20m endowment over 18 years. We committed a major multi year general support grant each year to help build TidesCanada.org, Canada’s major Public Foundation offering financial and program advisory services nationally. We believe Endswell’s impact has been deep and systemic through that formula combination of moving money efficiently and supportively. The third leg of the stool was to do Mission and Program related investment along the way, as well as full SRI screening of the public markets portfolio component.

    I urge living Donors to accelerate the lifetime of your Foundation and leave smaller amounts for your progeny. Make a difference now, when it most counts. Use the capital of the asset base to invest in mission aligned opportunities, while making the most supportive, fewest demands grants you possibly can.

  • Yes indeed. Shame I only saw this thread so late - here at STARS Foundation we make unrestricted awards to excellent local organisations in Africa / Asia / Middle East and the more we do it the more we are convinced of its impact

    http://www.guardian.co.uk/global-development/poverty-matters/2011/nov/10/case-for-unrestricted-giving

    http://www.starsfoundation.org.uk

  • Jenifer Morgan (SSIR)'s avatar

    BY Jenifer Morgan (SSIR)

    ON January 3, 2012 08:42 AM

    Posted on behalf of Kavita Ramdas:

    Thanks Kevin for this thoughtful and well articulated piece.  The Global Fund for Women, which I had the pleasure to lead for 14 years, only makes unrestricted general support grants.  This has allowed us to seed, strengthen and link women’s movements and women’s rights organizations in 170 countries around the globe.  This past year we had the rare pleasure of watching 3 of Global Fund for Women grantee recipients be publicly honoured for their work as women’s rights activists and peace builders when they received the Nobel Prize for Peace.  Leymah Gbowee and Ellen Johnson Sirleaf of Liberia and Yemeni activist Tawakkol Karman are women who are ordinary women who have accomplished extraordinary things.  We did not know when we made those grants that their work would amount to anything - we only knew that their work was desperately needed, genuine, and was led by deeply committed activists for change.

    The due diligence of the Global Fund for Women is intense and thorough, but once we have established that the group of women is truly committed and engaged in the work for social change, then our role as a funder is to provide the resources with respect and appreciation for their skills and expertise, offer our solidarity in other ways if they need additional support, and step aside and let them do the work.  That is what it means to be “a partner”.

  • BY Judith Ranger Smith

    ON January 4, 2012 12:36 PM

    Applause, Kevin Starr.  At Singing for Change we’ve been giving unrestricted grants since we began in 1995, and we’ve never been sorry.  Because I came to philanthropy from the nonprofit sector, I knew the value of having enough money in the bank to pay the electric bill AND repair the broken air conditioner - without having to fudge a grant report.

    We trust that our grantees are experts in their fields, or at least, that they’re brave pioneers who aren’t afraid to fail trying to crack a common social issue.  We don’t pretend to know their business and therefore don’t dictate how they spend our money.  We think they’ll use it to further their mission, and the way they further their mission is the reason we invested in them in the first place.

  • Thank you Kevin,all projects needs resources for smooth running and its goals accomplishment,however the need of measuring the impacts as the resources is a must so as to view consistence of resources used and financial resources should real focus on projects that indeed in the pose of bringing positive change in the aspect of sustainability,meaning social ,economical and ecological spheres should be taken in to consideration before actully implementaion of the project,otherwise we can use more resources to make more resources to be used in the future

  • Thanks, so much, for sharing this great perspective.  It’s hard to justify taking issue with philanthropic giving - you’ve done a wonderful job of articulating a very real problem.

  • BY Margot H. Knight

    ON April 4, 2013 12:15 PM

    As a grantmaker for 20 years (and obviously, now as a grantSEEKER), I am a passionate supporter of unrestricted (but not unaccounted for) multi-year operating support.  If an organization has a mission that matters to you, if it is well-managed and you are interested in their sustainability and vitality over time, make gifts of unrestricted operating support.  Staffing, utility bills, insurance and all the unsexy parts of running a non-profit business are difficult to sell to sponsors or funders on a retail basis.  Unrestricted operating support doesn’t necessarily put your name up in lights, but it keeps the lights on. 

    Real friends show trust through gifts of operating support.  And it’s okay to verify, but with restraint, please.

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