Strategically Share Top Year-End Giving Options Nonprofit Donors May Not Be Aware Of
| What if we said “Give Where Most Moved” instead? |
Too many folks still worship at the altar of unrestricted giving. I recently came across an article on NPR’s site, Disaster Donations Surge, But What About Tomorrow?, in which Eileen Heisman, the CEO of National Philanthropic Trust, admonishes potential donors to be loyal in their giving because it helps build planning. She says:
“It’s really expensive for charities to find new donors and to raise money, so by doing fewer larger gifts, and then staying with them for three to five years, you’re actually helping the charity plan better and it’s easier for them to meet their mission.”
She goes on to scold donors, noting that a common mistake people make is giving to a very specific project or narrow program within a charity. These “restricted gifts” she says, don’t help a charity out with its other needs such as computers, training and maintaining facilities.
“Really, if you like a charity and you’re going to give a small gift, consider giving an unrestricted gift. It really is the hardest money for them to raise … [and] charities that are well run will use it wisely, I promise you.”
With all due respect, I think this is nonsense.
And I mean this in that it goes counter to intuition and common sense. Why not encourage supporters to give to those programs about which they’re most passionate? Wouldn’t you think that would bond them to the organization over the longer term in a more natural way than telling them it’s akin to eating their vegetables?
I’ve never really understood the penchant in so many nonprofits to eschew restricted gifts. Some do this to the extent that major gift officers are penalized for bringing in too few unrestricted gifts. Essentially, this means these fundraisers are not allowed to talk to donors about what the donor really cares about. Their task is to steer the donor away from their passions and towards a middle-of-the-road strategy that simply doesn’t excite them. This is absurd! If you want to know why, take a look at this blog post by donor-centered fundraising guru Penelope Burk.
Restricted giving is every bit as good as unrestricted. In fact, research shows it may even be better (see below). Yes, we need to keep the lights on. Yes, we appreciate donors who “get” this. Truly, I love the donors who give happily “where most needed.” But I also love those who give passionate, transformational gifts to a program near and dear to their heart. One is not better than the other. And there’s definitely room for both.
Wait, you say? What if we raise too much money for one program? Here are a few thoughts about different scenarios:
1. It doesn’t happen.This is the most likely scenario. I’ve never had it happen. In fact, experience points to the fact that folks really appreciate being given choices and will respond in greater numbers when this is the case. At the same time, about 50 – 90% of folks will decide to give an unrestricted gift! You see, if you package your overall case for support into different program ‘cases’ that resonate with people’s individual values, you’ll end up capturing more attention. People will actually read what you send to them and/or listen carefully to what you’re saying to them. They’ll think about their giving. And they’ll make a thoughtful gift. Yes, you’ll likely end up generating earmarked funds for a number of different programs. That’s great! And for those programs that don’t specifically float people’s boats you can direct your unrestricted funding there. As for how you talk about your impact? You’re missing the boat if you simply talk in generalities and use unrestricted funds for ‘sexy’ programs that could potentially bring in greater donors and dollars.
2. It happens. If it does, that’s not a bad problem. It should cause you to think. Whoa! People really like this program! Should we be doing more of it? Could we? Of course you don’t want unintentional mission drift, but thoughtful, strategic mission growthis a different thing. Of course if you really end up with such an outpouring of support that you’ve more money than you can or want to use then, by all means, notify the donor and offer to return the money. This is not only the right thing to do; it’s also a good trust-building strategy. The fact that you were able to generate so much community goodwill only reflects positively on you. And often the donor may tell you to keep the funds to use where most needed. Whatever happens, you’ve had an opportunity to deepen your relationship with this supporter.
Donors increasingly want choices. They want to be in control. And other organizations are giving them these things. If you don’t you will cease to be competitive in the donor marketplace. So, please, ignore Eileen Heisman’s advice if you’re a fundraiser. Don’t badger your donors to make unrestricted gifts. Be donor centered.
Offer your supporters enticing giving opportunities that key into what they’re most passionate about. It doesn’t necessarily mean they’ll end up making a restricted gift. It does mean they’ll probably end up paying more attention to you and making a considered gift of some form. Even among affluent donors — who prefer restricted gifts — nearly 70% of those with $1 to $5 million in investable assets say they prefer to give unrestricted gifts to charity, while among those with assets of $50 million or more, 45% say they prefer to make unrestricted gifts. When you offer choices the upside is greater than the downside. For me, it’s a no-brainer.
Stop trying to convince your donors to give unrestricted gifts rather than funding a specific program. Remember: being donor centered means understanding what donors really want and need. The more we continue to approach donors from the perspective of what we need, the poorer results we’ll see. It’s pretty much common sense, isn’t it?
How do you feel about restricted vs. unrestricted giving? If you’re still worried about promoting restricted giving, let’s discuss this more in the comments!
Want More on This Topic?
Grab my “Major Gifts Matters” FAQs about offering donors choices. How much more money could you raise if leadership began to think from your donor’s perspective rather than their own? A lot. That’s what I’m guessing. Get your E-Guide here, all for the price of a grande latte and a calorie-laden muffin you don’t need. Your money back — no questions asked — if you don’t find it useful.
10 Comments
You're right: it has to be a balanced approach. I'm a fan of balance, especially in the ways we engage donors with the mission. However, I don't mind someone like Eileen sending out a general call to small donors encouraging them to give unrestricted. There's room for that.
I like your idea of giving the donor a choice and outlining all the potential areas their money could be of help. It's so powerful when you can tap into the donor's passions…they will be that much more engaged in the organization's work.
Perhaps there's room for it, but in the end it may be counter productive. If research shows us that donors give more when they give restricted, perhaps we should pay attention. It's a good thing for charities to test for themselves. Like anything else, no one size fits all.
Tapping into passions… that's what philanthropy is all about!
Another well thought out article on how we in the non-profit arena can better serve our "constituents". Our foundation is built on the principle of restricted giving and we think in time it will resonate with large investors but as with all of us newbies the tough part is just letting people know we exist. Maybe you would like to collaborate on a non-profit clearing house called "restrictedgiving.org". I would be proud to be a charter member.
I just checked out your website, and it looks very compelling. Nice work!
Very interesting post. As Clay points out, balance is important. For "major" gifts, targeted asks are crucial and donors should be encouraged to make restricted gifts to areas they are passionate about. I think unrestricted giving has its place in annual giving campaigns. I believe there is no such thing as a small gift, but I'm not going to get all huffy about where my $25 goes when I give to ABC University. However, if I'm making a larger gift, you can bet I am putting more thought into how how I want the money to be used. We all know it's easier to retain donors rather than to recruit new ones. So I think unrestricted gifts at "smaller" levels are very important because those are the people who eventually turn into major donors who make restricted gifts.
Thanks Ericka. I've found that about 50% of folks tend to prefer to earmark their gifts for particular programs (of course it varies by charity, but not as much as one might imagine), and it doesn't matter what the size of the gift is. So I like to offer earmarking choices at all levels. It's important to test this for your own organization, and see if one type of gift or another tends to bring in a higher average donation and/or longer-term engagement.
I have offered to returned gifts because we raised too much money for a project. During the conversation, I was able to ask the donors about their passions. I asked them to consider another program. Sure enough the donor engaged, I learned more about them and what makes them satisfied as a giver.
During a different conversation, I asked a donor if they were satisfied with the type of giving (mainly unrestricted event giving). They said no. During the following conversation about specific needs and programs, the donor chose an unexpected need we had. They gave far more to the specific program that helped us hire a new person.
I agree we should explore with donors how they can be the most satisfied with their giving. This takes good questions, patience and time. Often the donor is unsure at first. Take the time to give them options, space and the opportunity to explore.
Thanks for these great examples David. That's what I'm talking about! 🙂