5 donor-friendly ways to raise unrestricted funds

Nearly everyone is dealing with this in some way or another. Can you raise restricted (earmarked, designated) funds from your donors? The Whitewater blog looks at this issue in I've seen the future - and it's earmarked:

If your charity is struggling to recruit new donors of the 40 to 60-year-old variety, maybe, just maybe, you're seeing evidence of their aversion to your 'strictly-unrestricted-funds-from-direct-marketing' policy.

Here's the problem for many nonprofits: Because large institutional funders (foundations, government, etc.) usually give tightly defined restricted funds, the individual donors, being at the bottom of the food chain, are left to give unrestricted funds -- the un-sexy funds that make everything possible.

But raising unrestricted funds is tough. And as the savvy, cynical Boomers move into the donor ranks, we're likely to see more and more individual donors demanding the same privileges we now reserve for institutional donors: They want their money to go where they want their money to go.

So how are you going to serve donors and still raise the unrestricted funds you need in order to keep operating? Here are some approaches you might take.

1. Donor negative option
This is the most common way fundraisers solve the problem. It's the check box on the reply device that says Use my gift where it's needed most. It allows the donor to look beyond the topic of the appeal at hand and unrestrict their gift. A certain percentage of donors always choose this option. I'll guess it has a positive impact on response (though I don't know, never having tested it); donors almost always respond to choice.

2. Donor positive option
This is pretty much the opposite approach, and I haven't seen this done. (I tested it once, but the results were not conclusive for a number of reasons.) Basically, you make it clear you're raising unrestricted funds, but include a check box that says something like Please use my gift exclusively for this project. My hypothesis (as yet not really tested): Few donors would choose this option, but they'd respond well to having the choice.

3. Blanket disclaimer
This is what most of the catalog fundraisers (like Heifer International) do. They say something like All gifts are symbolic and help fund the entire work of the organization. That seems to legally get you off the hook, and I'll guess most donors are okay with it. To me (and the organizations I work with agree), it feels a little sleazy.

4. "Permission unrestricting" after the fact
I love this one, though I have no experience with it. Here's what happens: You raise restricted funds, then if you raise too much for your needs, you go back to donors and ask them if you can redirect their gifts. I've heard that Médecins San Frontières did this after the Indian Ocean Tsunami. This is a very donor-honoring strategy. And honestly, how many donors are going to say no? The risk of losing revenue is tiny.

5. Promote the advantages of unrestricted giving
Unrestricted gifts may be un-sexy, they're important. Why not tell your donors that? The problem, of course, is that's left-brain info, and giving is a right-brain decision. But there might be a back-end way to promote this idea among your more committed donors.

This is a fairly frequent topic on this blog. If you're interested, see also these posts:

Technorati Tags: fundraising, ethics

Comments

I think you're on the right track, calling donors and asking if they'll unrestrict. I'd guess that most would be okay with it, and pleased that you'd ask. Another approach would be to offer their gift back. How many do you think will take it back?

Posted by: Jeff Brooks | 21 December 2006 at 20:41

For our organization, we have been using the donor positive response. Recently we have noticed that a larger portion are designating for a specific programs our agency. The advantage is that I think the donor may buy into the organization more if they have a choice where the gift goes. The problem is if too many donate for a specific part leaving another vital part unfunded. We do have the cateogories fairly wide so that even for a particular program there is a fair amount of leeway. The donor does have the option of being more specific but they have to write that option out and then we are careful to follow the donor's wish. I have on occassion called a donor to ask if the donor would undesignate a gift. This was usually only if I knew the donor well enough to think that they would be fine with it.

Posted by: Brooks Kelley, CMA | 20 December 2006 at 16:38