Philanthropy’s constructive critics, financial activists, and virtually all nonprofits have long argued for a dramatic increase in unrestricted grantmaking. Yet grants untethered from funder restrictions and requirements remain relatively rare. As a result, funding is usually earmarked for things like new or specific programs rather than covering essential costs related to retaining talent, upgrading technology, pursuing innovation, or engaging with communities to define needs and solutions. Even in the face of widespread calls during the COVID-19 pandemic to loosen the strings, a 2022 report from Candid and the Center for Disaster Philanthropy showed that only 18 percent of 2021 pandemic giving was explicitly designated as flexible or for general support.

Results are not the problem. A 2023 Center for Effective Philanthropy (CEP) study on the effects of $14 billion in grants from MacKenzie Scott—issued without restrictions on use or timing, and requiring limited or no reporting—found that recipients accelerated their impact by investing in pay equity, capacity, innovation, and operational initiatives that improved staff morale and creativity. A study of unrestricted, five-year grants from the Ballmer Group turned up similar findings, and at the individual level, research on direct giving and guaranteed income programs shows lasting positive effects.

The funder critiques of Scott’s giving expressed in CEP’s study are revealing. The report notes: “More than three-quarters of the interviewed funders express concern about nonprofits’ ability to handle large, unrestricted gifts,” citing worries that recipients might start “resting on their laurels” or have difficulty “understanding the complexity of that infusion of cash.” The report also notes that about a third of funders worry a lack of conventional reporting requirements means a lack of accountability.

Concerns like these—which CEP points out were not borne out by its research on the nonprofit recipients—are hard to combat with data alone, because they reveal hidden barriers. No-strings funding activates unacknowledged power dynamics and unexamined money myths, including the idea that if you just give people money, they won’t spend it responsibly or will become dependent, and the belief that only people with the expected credentials know how to invest or spend money wisely.

These beliefs and assumptions, along with the anxiety that comes with giving up control, work against wider adoption of unrestricted funding. And they are more powerful than most of us realize. We’ve found that even the Just Economy Institute (JEI) Fellows we work with—people who want to shift the flow of capital and power—are surprised by how much exploring their relationship with money changes their perspective.

To unpack the dynamics at play and gain insights on breaking down barriers, we interviewed three JEI advisers and alumni who have practiced or influenced no-strings giving.

Read the full article about unrestricted grants by Deb Nelson and Tina Beck at Stanford Social Innovation Review.