12/100 Things about Nonprofits: Unrestricted gifts need definition too
How do you get donors to give unrestricted gifts? This is a huge challenge for most nonprofits.
Unrestricted gifts are those given by donors with no strings attached. Nonprofits love them because they can use the funds anywhere in their organization. Unrestricted gifts are critical for funding ongoing operations — the stuff you do day in and day out that institutional funders are loathe to give to.
Unrestricted gifts are used to fund back office operations like administration, fund development and finance. While not particularly sexy, these core functions are extremely important to ensuring good management and future sustainability for your organization.
Donors are more likely to give directly to programs, or to anything that feels concrete. That’s why the local land trust can raise hundreds of thousands of dollars to purchase a critical piece of land, but barely can scrape together enough funding to get its newsletter sent on time. Or why many an organization has completed a successful capital campaign to purchase and renovate a new building, only to find it can’t meet the annual costs of operating its shiny new space.
So how do you get donors to give unrestricted gifts? To paraphrase Elizabeth Barrett Browning, let’s count three ways:
- Membership. Though not my favorite, I’ve placed membership at the top of the list because it is the tactic most frequently used. Membership programs imply ongoing affinity for your organization. They suggest giving year after year and donor usually know that the giving supports the basic functions of your organization. The downside of membership is its ability to get in the way of fundraising (Yes. It’s true. More about that in a future post).
- Build donor loyalty. In her book, Donor Centered Fundraising, author researcher Penelope Burk argues that you’d be more successful in pitching designated gifts to your new or more recent donors who haven’t yet learned that your organization delivers on its promises. As you build your relationship and your reputation for results, your donors will be more comfortable investing directly in your organization, without feeling the need to control their gifts.
- Help your donors visualize their investment. While nothing is more important than building donor loyalty, I strongly suggest this approach for both new and long-standing donors. Here is how it works.
Make your case for support just as solid as a bricks and mortar campaign. Look forward three or five years (this is where having a long-term vision really makes a difference). Once you’ve quantified what societal outcomes you are trying to achieve, then add up all the costs of getting there. Add together your direct program costs, your program-related overhead costs, and the cost of the new capacity you need to build to reach your goal. What’s the total? Build your fundraising case around that amount.
You can find an example of this concept in our free Toolbox. Check out “Major Gifts are not Just for Bricks and Mortar.”