It's About Sense, Not Cents

“No Strings Attached,” an article in the September 20, 2007 Chronicle of Philanthropy discusses the emerging trend of large, unrestricted donations and the positive impact these donations have on organizations.

The article emphasizes importance of unrestricted gifts and their advantages over restricted gifts. I agree that unrestricted gifts do provide many benefits to an organization—they offer flexibility as priorities can shift and needs change over time. Additionally, an unrestricted gift enables the management of the organization, those most knowledgeable of the needs and programs, to drive the funding decisions, not the donor.

However, this article overlooks the upside that can come with a restricted donation. A restricted gift may allow an organization to start a new program without allocating funds away from existing successful ones. Restricted gifts can involve donors who are attracted to the overall mission and capability of the organization, but want to support only a specific program.

Organizations who feel constrained by a restricted donation may not have thought through the implications of accepting such a gift. Organizations should have a 3-5 year operating plan identifying areas that will need funding—whether it is a specific project or general operations. This plan should be shared with donors so that all parties can work in partnership to achieve the same goals. As the conversation between the donor and the organization unfolds, the donor should be educated as to the impact his or her leadership gift can have on the future success and sustainability of a program—and the entire organization. Such a process will ensure that there are no “surprises” and that both the philanthropist and the organization can maximize the benefits of the donation.