Philanthropy is transforming. With more and more funders looking to embrace trust-based principles, a new era of giving has arrived. The latest evolutions center the grantee and prioritize the community.

If you are part of a funding organization looking to shift its practices to align with power-sharing and participatory principles, providing unrestricted funding is perhaps the single most transformational change you can make.

When it comes to shifting practices, the onus is on funders. The power dynamics dictate that they have to be the ones to reimagine their relationships with grantees. Here, we’ll lay out how to make that happen.

When funders give to nonprofits but require that their contributions be used only for specific projects, those funds are restricted. On the other hand, unrestricted funding is financial support that a nonprofit can use to support their mission any way they see fit.

Unrestricted funds can go toward the essential overhead costs that keep nonprofits running. This can include staff salaries, rent, technology, equipment, and more. Although not always exciting, these investments in general operating support make a big difference. In short, it’s the infrastructure an organization needs to run their programs and have an impact on the community.

Think of it this way: you can buy someone a fancy, souped up car, but if they don’t have any roads to drive it on or gas for the tank, it’s not going to mean much.

The Benefits of Giving Unrestricted Funds

Shifting away from project-based grants can mean rethinking long-held practices, but doing so can strengthen your relationships with grantees and improve long-term outcomes for the community in the following ways.

  • Stability
  • Longevity
  • Retention & Recruitment
  • Innovation
  • Trust
  • Effectiveness  

Read the full article about unrestricted funding by Laura Steele at Submittable.