Individual Donors Respond to Crisis Part 2: Unrestricted Support

As nonprofits, and the people and communities they serve, faced compounding challenges over the past year plus, individual donors have provided crucial support. In fact, increased financial support from individual donors — in addition to foundations and the government — helped nonprofits to fare better through 2020 than nonprofit leaders had expected.¹ Further, a recent report from the Urban Institute found that most nonprofits, especially small nonprofits, say that support from individual donors is very important for their work.²

Given the importance of individual donors to nonprofits, in the spring and summer of this year, the Center for Effective Philanthropy (CEP) surveyed and interviewed nonprofit leaders to understand how their experiences working with individual donors have changed since the pandemic began. (For methodological information, please see here.)

Here is what we learned:

The biggest changes that nonprofit leaders have experienced in working with individual donors are:

1. Their relationships with individual donors have grown stronger.
2. Individual donors have provided them with more unrestricted support. 

In this two-part blog series, we examine these changes in-depth. The first post focused on changes in relationships between nonprofit leaders and individual donors; this second post examines the increase in unrestricted support that individual donors have provided nonprofits.

Unrestricted Support

Nonprofit leaders emphasize that they need unrestricted support to do their best work and, since the pandemic began, almost half have received more unrestricted support from individual donors.³ Those that have received more of this type of support speak to its positive impact, including the ability to meet changing needs, retain staff, and, quite simply, do their work.

Most of those who have not experienced a change in the amount of unrestricted support they receive from individual donors say there was no change necessary because their individual donors were already providing unrestricted support. 

In Their Own Words: Interviewed Nonprofit Leaders Who Have Received More Unrestricted Gifts From Individual Donors Speak to Their Value

“The flexibility allowed us to better serve the people we work with by taking advantage of opportunities that best met their changing needs.”“Donors have been quite flexible. Before the pandemic, they would give a certain amount of money to sponsor a specific artist. We went to them and said, ‘The artist isn’t doing anything live right now. Are you willing to unrestrict your gift?’ The answer to that question was, for the most part, ‘yes.’ That gave us financial stability and allowed us to hold onto staff.”“Donors that usually give restricted support gave unrestricted support. It was a godsend, because there were a number of agencies that we had relied on in the past that shut down their grant programs. Having our donors step in with unrestricted funding allowed us to continue our work, and it got us through some rough patches with staffing. It was absolutely critical.”

In prior CEP research, one common refrain we heard from funders that do not provide unrestricted support is, “We do not provide unrestricted support because it is too difficult to measure and assess the impact of this type of funding.” However, this is not necessarily true. In fact, some foundation leaders argue that providing unrestricted support actually enables nonprofits to have a greater impact and that it builds trust and stronger funder-nonprofit relationships.

Similarly, Tiffany Cooper Gueye — who has experience as a nonprofit leader, a grantmaker, and an individual donor — explained on the Giving Done Right podcast that restricted support can limit impact:

“You know, you could imagine a scenario where an organization is rich with restricted funding to do in-person programming, and then all of a sudden these schools all shut down, but all of their funding is restricted to programs in these schools. There are other things that those communities might need or other ways in which they might be a resource, but the restrictions of their funding prevent them from acting. That would be a disaster for the mission of that organization, and I don’t think it would be aligned with the intent of the donor supporting them. So, the flexibility is really key.”

Going forward, nonprofit leaders hope that individual donors will continue giving unrestricted support. They underscore the positive impact that this type of funding has on their ability to achieve their mission, innovate, and be responsive to changes.

In Their Own Words: Interviewed Nonprofit Leaders on What They Most Need from Individual Donors Going Forward

“I would like donors to support our mission as a whole, not just a particular set of activities.”“I understand the desire to give a restricted grant, but by doing that, donors limit the organization’s ability to pivot and innovate. I would like donors to say, ‘these are the objectives you and I have, and you have flexibility in how you get there.”  “Unrestricted funding is the most helpful. As we saw in 2020, things can change in an instant. Unrestricted funding allows us to respond to whatever is happening.”⁴

In considering how to most effectively support the nonprofit organizations they donate to, we recommend that individual donors reflect on the following questions:

REFLECTION QUESTIONS

1. How do you decide whether to provide restricted or unrestricted support to nonprofits?
   1. What information about nonprofits do you factor into this decision?
   2. Do you ask nonprofit leaders what type of support would be most helpful to them and why?
2. How might your decisions about providing restricted versus unrestricted support affect nonprofits and the impact they make?
3. How do you measure the impact of your restricted support? Your unrestricted support?
4. How do your decisions about providing restricted versus unrestricted support relate to your philanthropic goals?

Hannah Martin is a manager, research, at CEP. Follow her on Twitter at @hannahqmartin.

1. Lewis Faulk, Mirae Kim, Teresa Derrick-Mills, Elizabeth Boris, Laura Tomasko, Nora Hakizimana, Tianyu Chen, Minjung Kim, and Layla Nath, “Nonprofit Trends and Impacts 2021” (Washington, DC: Urban Institute, October 2021), https://www.urban.org/sites/default/files/publication/104889/nonprofit-trends-and-impacts-2021_0_0.pdf. ↩︎
2. Ellie Buteau, Hannah Martin, and Charis Loh, “Crucial Donors: How Major Individual Givers Can Best Support Nonprofits” (Cambridge, MA: Center for Effective Philanthropy, 2019), https://cep.org/portfolio/crucial-donors-how-major-individual-givers-can-best-support-nonprofits/. ↩︎
3. “Assessing Impact with General Operating Support Grants: Debunking the Myths,” The Center for Effective Philanthropy Blog (blog), October 29, 2020, https://cep.org/assessing-impact-with-general-operating-support-grants-debunking-the-myths/. ↩︎
4. Tiffany Cooper Gueye. Interview with Tiffany Cooper Gueye. The Giving Done Right Podcast. Podcast audio. 2020. https://givingdoneright.org/episode4/. ↩︎