A beginner’s guide to funding with few or no restrictions
13 February 2023 5 minute read
(Source: Granting Success)
It is tempting to operate at the inputs-level of restricted funding because it represents tangible commitments and is easier to explain to a Board or colleague. But this can limit the organisation you’re funding, giving them little to no leeway to adapt their work, or put learning into practice.
In the example above, a teacher could well be an excellent investment. But this teacher would have no additional budget to achieve their aims and therefore, may not be able to do as much to improve literacy.
Imagine that you’re funding an education charity which has identified that working directly with parents leads to huge gains in child literacy. There are a multitude of ways they could engage these parents, but if you are only willing to fund a teacher, then their hands are tied. While they might provide you with reports each year on the great work this teacher is doing, neither of you will know whether there could have been greater impact through taking a different approach.
Take time to reflect:
- Consider how much control you like to have over how your funding is spent, and why
- Imagine what a Board report would look like with different levels of restriction, where is your comfort level?
Try moving one step along the spectrum and see how it goes.
Funding without restrictions can reduce your administrative burden. You don’t need long reports with lots of questions. Instead, you can ask three simple questions:
- What have you done over the last year (or other length of time)? Make sure to ask about internal activity as well as external, as organisational health and investment can be just as important as delivery.
- Why? This represents a learning approach to impact – what is actually needed by users, what is working well or less well etc.
- What was your impact?
Some funders and frontline charities might set out high level goals that represent progress (these can sometimes be called ‘Organisational health indicators’). These goals are not targets or restrictions by another name, rather they help frame the conversation between the funder and grantee.
Consider having some form of written communication so that there’s an audit trail and how can you make this period of review meaningful for you as a funder – especially if you have to then report to a Board of Trustees.
By funding without restrictions, you get to hear about what the organisation has achieved as a whole, rather than just one part of it. You might be inspired by areas of work you never knew about. All of which represents the impact you helped bring about.
Trust on both sides
There are complicated power dynamics between frontline charities and those who fund them. It can be easier to surrender to a funder’s requests than to deliver what might actually be needed on the ground.
It can also be hard for charities to trust their funders, to believe that they are prioritising impact by giving in a less restricted way.
Over to you
We hope this is a useful starting guide for anyone thinking of moving into less restricted giving.
If you’re already funding without restrictions, how are you finding it? What works well, what works less well? Let us know.
If you want to learn more, you can view our recent philanthropist and funder drop in, which covered the topic of how to approach unrestricted funding.
If you would like consultancy support, get in touch. If you’re a philanthropist, staff member, or trustee at a grant-making organisation and would like to be on the invitation list for our philanthropist and funder drop-in series, please contact Alfie Vaughan.If you’re used to giving with restrictions, how can you move towards a more unrestricted model? In @NPCthinks latest blog they outline how. Click To Tweet