COVID-19 and Unrestricted Giving, Part 1: Now Is the Time

By April 2, 2020April 21st, 2020Industry Trends & Commentary

In part one of this three-part series, we explain why the time is right to pursue an ambitious donor education and solicitation effort around unrestricted major giving.

In part two of the series, we will discuss the ways both nonprofits and donors alike can learn if they’re ready to embrace unrestricted philanthropy.

In part three of the series, we will share the ways to build or reframe your case with a new focus on unrestricted support.

COVID-19 has unleashed the threat of an economic crisis that has yet to fully manifest. And while all efforts are appropriately focused on flattening the curve, the potential for an economic crunch at best or recession at worst looms over us. Nonprofits, like small and large businesses alike, are at real risk, with major nonprofits predicting nearly insurmountable deficits.

Fortunately, the adage that opportunity is born of crisis holds true, particularly where philanthropy is concerned. Now is a good time to review and consider the next Big Idea.

Or, perhaps like the fashion industry, now is the time to revisit the past – to a time before business trends became a norm in philanthropic activity. In fundraising, this applies to expectations around unrestricted and restricted giving.

Since the early 1990s, there has been an upward trend in restricted major and principal gifts. While restricted gifts are undoubtedly beneficial in many ways, their downsides can be significant:

  1. Organizations can lose control of their mission.
  2. Program teams must pivot and create new programs in response to donor wishes or interests.
  3. If organizations are not careful, major gifts add to the budget rather than relieve it.
  4. In crises such as the COVID-19 pandemic, restricted gifts cannot be accessed and put to work, leaving organizations and those they serve at risk.

During today’s pandemic, the existence of restricted gifts – created with noble intentions to drive impact and address critical needs – are instead preventing nonprofits from accessing readily available funds that could have immediate and profound impacts on their missions.

Restricted gifts have long worked to channel some of the biggest gifts in history to organizations, and it is not our intention to diminish their utility nor the efforts of fundraisers who have asked for and received them.

Rather, consider current circumstances as an inflection point.

The fundraising industry has conditioned donors to expect a restricted major gift ask. That’s in large part because fundraisers have convinced themselves that a donor will only commit to a large or mega gift if they can see clear, tangible outcomes. At best, such thinking is misplaced. At worst, it leverages significant assumptions regarding donor motivations.

Remember, fundraising is a marriage of a donor’s values with the mission of an organization. It’s a fundraiser’s job to properly align all those factors and create a compelling reason to give.

But the compelling reason need not be new and novel each time. Focus on fundamentals: namely, the mission. Let the core mission, rather than side projects or assumptions about your supporters, drive investment.

Is it risky? No, it’s imperative.

Jennifer Harris, Ph.D., is Senior Vice President at Graham-Pelton Consulting. Contact her by email or by calling 1-800-608-7955.

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