Unrestricted vs. Restricted Giving: One Empowers; One Lacks Trust
Hey there, thanks for joining me. You’re here for the first release of Jake’s Take where I’ll discuss and share about what’s going on in the world of philanthropy.?
Today’s edition is on strings tied to gifts. As a nonprofit founder and leader, I quickly learned about the double-edged sword that is a restricted donation or grant.?
A restricted donation of any kind is a.) generous and b.) shows a lack of trust in the organization it’s meant to empower.
I’m grateful for every donation we’ve received at Team Rubicon whether it’s restricted or unrestricted. But, while a restricted gift will go to an intended purpose or specific program—creating impactful outcomes—it can also gunk up the system and limit overall impact.?
Unrestricted gifts, on the other hand, strengthen a nonprofit’s infrastructure and ability to carry out their critical work serving a cause they understand best (and are likely connected to personally). Advocates also think unrestricted donations can compensate for donors’ potential tunnel vision that lead to missed opportunities for more equitable impact.
What happened to trust??
The polite conversation around trust-based philanthropy has been ongoing for some time. You’d think an individual, foundation, or corporate partner who believes enough in the nonprofit’s mission to donate would also trust them to spend it impactfully. And yet, here we are talking about a giving inefficiency that nonprofits have quietly complained about for years.
Funding imperfections aside, recent shifts warrant optimism.
In a sort of remarkable way, the pandemic and surrounding crises spurred a movement to loosen restrictions, allowing organizations to spend money and meet urgent needs how they saw fit.?
Beginning in March 2020, donors and foundations by the hundreds signed what became known as “the pledge,” introduced by the Ford Foundation, to loosen restrictions on gifts and speed up pandemic-relief services. From what I’ve seen, it seems to have held strong and made a difference. A large percentage of signers continued giving with reduced restrictions into 2021.?
Time will tell if this pledge to reduce restrictions—or cut the ties on donations entirely—will stick around as pandemic-related giving unfortunately continues to fade.?
No one can predict when an urgent crisis will unfold, but when it does, having unrestricted reserve funds allows nonprofits to act fast without worrying or changing plans to accommodate the use of certain funds.?
This in no way limits impact by any definition. In my experience, unrestricted funding broadens the impact of a nonprofit. And it starts by fostering a better relationship between organization and donor—one built on trust.?
I’m optimistic that unrestricted giving will remain the choice for most donors moving forward.???
Ukraine
The humanitarian crisis in Ukraine and its neighboring countries is far from over. More than 4 million people have fled Ukraine, mostly women and children. Millions more have been displaced within the country. If you’d like to donate to support refugee relief efforts, these are a few organizations that could use your unrestricted gifts: @nova-ukraine , @international-rescue-committee , @save-the-children-international , @Razom , @world-central-kitchen , and @ TeamRubicon .?
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MacKenzie’s No-Strings Giving Style
Anyone talking about philanthropy, especially trust-based philanthropy, is talking about MacKenzie Scott. And for good reason. The relatively hush-hush billionaire has donated over $8 billion (that we know of) to hundreds of nonprofits in the last two years through her foundation, and her record-setting gifts all come with no strings attached.?
Did she invent the practice of unrestricted giving? No; it’s been around for a while, albeit not applied broadly enough. But, MacKenzie’s changing the game.
She’s choosing to trust that the organizations receiving her unrestricted money know how to put it to great use. The organization I co-founded, Team Rubicon, is one of them, and you can be damn sure it’s being used to expand urgent disaster response and humanitarian relief programs.
She has been reluctant to share details, wanting to avoid drawing attention away from the causes she’s supporting, which is admirable, and here I am talking about her. I’m ok with it given the topic of this particular newsletter. Perhaps the attention MacKenzie’s generosity has attracted will invite other billionaires to embrace trust-based philanthropy.?
The Launch of Groundswell
Groundswell is officially available for everyone looking to make a difference in the world (click here to join our beta! ). My team and I could not be more excited to bring this one-stop giving platform to the public.?
Groundswell is designed to fix inefficiencies we saw from inside nonprofits looking out. We want to provide everyone access to a Donor-Advised Fund (DAF), which for too long has been primarily available only to the ultra wealthy. Groundswell users can create a Personal Giving Account, powered by a DAF, to centralize all their giving.
You may see a handy app, but I see a giving movement capable of creating real change.?
Let’s go back to the trust-based philanthropy conversation. Because I strongly believe in the benefits of trust-based unrestricted funding, Groundswell does not offer the option of placing restrictions on gifts. Expanding access to a tax-advantaged Personal Giving Account is helping more donors be strategic about philanthropy.?
An increase in unrestricted funding for nonprofits is the standard we should aim for if we truly want to empower organizations serving the causes we each care about.?
This is big news for your company’s CSR goals. Groundswell’s model of Philanthropy-as-a-service (PhaaS) is a streamlined an out-of-the-box solution for companies to increase their giving in a decentralized way.????
Employees and job candidates are seeking more than higher salaries. They’re also interested in the company’s values and have a desire to work for an organization adding good to the world.?
Partnering with Groundswell is the most efficient way to empower employee-led giving and align values across your organization.
I’ll be sharing more thoughts on these and many other timely topics revolving around philanthropy every other week. I look forward to an engaging conversation in the comments below or directly.
– JW?
Mechanical Engineer | Business Consulting Minor | Veteran | Student Athlete
2 年Great first Take, Jake('s). I can completely understand the inherently constrictive nature of having donations (generous and appreciated) allocated for you by the donors, who unfortunately may not have the full picture of how to best use their dollars or supplies. I am curious to hear where you stand, on donors who MAY actually be intimately familiar with an organization's inner workings, successes, and inherent preferences that may objectively constitute inequitable funds allocation? The hypothetical situation I present to you is an imaginary public institution of higher learning that unequivocally discriminates against gender or race by choosing to disproportionately provide funding stemming from grants and alumni donations for only one sport or special interests club while being grossly negligent in the support they provide others. Do you believe there's a place for restricted donations made with the intent of correcting for negligence and discrimination within an organization?
AI Solutions Architect | Podcaster
2 年Nicely done! Jake when are you gonna do Jocko's Podcast???
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2 年Wouldn't you agree that "trust" becomes the primary motivator for an unrestricted donation. Anyone person or philanthropic organization has to trust the organization that they select to receive their donation. Will they use that donation wisely and in accordance with their core principles. I know you are well aware of the TR Culture Principle, "Your Mother's a Donor." The world of philanthropy is often rocked by headlines of poor management and spending extravagances. Vetting before any unrestricted donation is essential. Organizations receiving any donation, whether restricted or unrestricted, must constantly past the test of trust. History is full of well established organizations straying from their primary goals and going off the rails with lavish and unwarranted spending.
Actively engaging with Quality People and Enterprising Organisations to achieve their full potential. Leading analysis, defining, refining, purpose and delivering outputs. Building strategic foresight to deliver now
2 年Perennial issue you have rekindled with this insightful piece Jake Having worked throughout the gambit of organisations, apart from independent (?) philanthropic organisation, there are different views not just reinforcing the point regarding trust. Trust in what? Capability to be effective and efficient in delivering humanitarian support? Trust in shared values in addressing the underlying causes (a matter of perspective according to different philanthropists and governmental donors) of why we have increasing (debate?) humanitarian crises? This piece certainly raises problems in the USA and in my state of birth - UK. https://robertreich.substack.com/p/ps-a-final-note-on-tax-day?s=r There are fundamentals where certain campaigning NFPs are coming of age. Or their age has come as we see inequity fitting with climate change and the increasing demands on corporations to look again at their purpose beyond the meaning of making 'an accounting profit'. great kick off Jake - thank you for re-invigorating my thinking and actions for sure.
Future Energy Insights Lead
2 年Great newsletter, thank you Jake! A quick question on Groundswell - are you planning to expand the app's scope outside of North America? I appreciate there is probably legislative complexity in it, but we sure need something like that here in Australia...