Beyond the Rhetoric: Why Donors Need to Match Talk with Action When It Comes to Unrestricted Funding

In the philanthropic sector, conversations about unrestricted funding abound these days. From frameworks like “trust-based philanthropy” to the rallying cry of #ShiftThePower, it might seem like we’re entering a new era of flexible funding.

If this were true, it would be very welcome. Flexible funding — or general support — enables organizations and movements to set their own agendas and to invest in critical operational costs, all without the onus of heavy reporting requirements and administrative or financial burdens. For grassroots movements, this means increased responsiveness to community needs, innovation and sustainability — all critical factors in achieving real and lasting change.

The data, however, tells a different story. Philanthropy data hub Candid indicates that general support accounts for a mere 20 percent of overall funding. Other resources suggest that while flexible funding may have once been on the uptick, it has actually declined in recent years.

As peer fundraisers, we can anecdotally say that this discrepancy is likely even more pronounced than it appears. In many cases, even funding opportunities that are contractually classified as unrestricted can bear specific restrictions defined through verbal or “good faith” agreements. When it comes to flexible funding, there seems to be more talk than action.

This presents challenges for both grantmakers and grant seekers. Funding that has onerous and burdensome restrictions can produce tangible harms in terms of costs, labor and obstacles in advancing our missions to build effective social justice movements and advance human rights globally. Grantmaking organizations such as ours, which play an important role in bridging large sources of funding and grassroots movements, are stuck between donors with rigid requirements and unbending targets on one side, and movements with vast, varying and evolving needs on the other.

We understand that there are reasons why donors may struggle to lift restrictions. Occasionally, restrictions may even be useful, such as when there is dedicated funding for care and wellbeing. But it is critical that donors understand how highly restricted funding — when it is the norm instead of the exception — can hinder and even undermine the intended impact of their investments, especially at the grassroots level.

As a group of peer fundraisers from a diverse set of global human rights funds, we are raising our voices and leveraging our unique perspectives — as grantmakers and grant seekers with strong ties to both grassroots activists and large donors — to illustrate how restricted funding negatively impacts both the movements we support and the organizations we work for.

Movements need flexible funding to survive and thrive

In our capacity as funders who work directly with movements, we leverage our close relationships to build portfolios of organizations that we know are best positioned to advance social justice and human rights. Large donors come to us because we can bridge the gap between them and the grassroots.

But restricted funding is not conducive to strengthening or supporting community and grassroots movements. Instead, it drives competition and makes collaboration more challenging — undermining the change we want to see in the world.

Often, donors approach us with preconceived ideas about what and whom they want to fund. This undermines our ability to support the most effective organizations. Instead of funding social movements and other nonregistered groups, which are often the only ones working at the grassroots and community levels, we may only be able to fund those with the necessary infrastructure to meet reporting requirements. While we strive to match funding to the priorities of our grantee partners, we sometimes find ourselves navigating choppy waters between donors’ demands and grantee partners’ needs.

Donor restrictions and reporting requirements also overstretch movements that are already struggling to compete with better and more consistently funded opponents, such as anti-rights movements and corporate actors. Although we try our best to absorb the burdens of restricted funding, increasingly complex negotiations with donors can take months. Grantee partners are expected to provide more and more detailed information to meet difficult compliance processes — costing them time and diverting attention away from their important work.

Finally — and critically — restricted funding makes activists, organizations and movements less safe. We are all acutely aware that activists face numerous threats to their safety and wellbeing. Many of the groups we work with also face rapidly changing situations in the context of climate disasters, conflict and more. The idea of a thematic restriction or priority, for example, is both a luxury and privilege that many community-based organizations may not have as they pivot to respond to emerging challenges and threats.

When donor restrictions are fixed in stone from the outset, grantee partners are unable to quickly pivot to address emergency or security threats. And when we are less flexible as grantmakers, it impairs our ability to provide urgent support to movements in times of crisis.

Restricted funding is more challenging for organizations to manage

Restricted funding also has an immediate impact on grantmaking organizations like ours. Managing restricted funding requires more staff, more time and more resources across entire organizations.

We strive to allocate funding in ways that alleviate the burden on our grantee partners — essentially by transforming heavily restricted funding into less-restrictive subgrants. This is challenging work that takes considerable time, tact and mental gymnastics.

This results in difficult trade-offs. Funding we would have wished to direct to a movement might end up going to our own organizational costs — for example, hiring consultants for additional support or investing in new systems to manage these funds. It is no coincidence that as our ratios of restricted funding have increased, so too have the sizes of our staffs — and our operational costs.

Fundraising and development teams are especially overstretched and overworked. Proposal development and reporting have become highly specialized, requiring the development of entirely new projects and methods to track progress against indicators that often do not align with our internal learning priorities or grantee partners’ evaluation frameworks. In a sea of project-based funding, just identifying opportunities that are aligned with our missions and strategies is a full-time job. Indeed, grant-seeking organizations are increasingly hiring staff entirely dedicated to finding “new business.”

All of this means that our own roles demand more expertise and increasingly specialized skills. We are often asked to be sociopolitical analysts, financial specialists and evaluation experts — all while being strategic fundraisers. In cases where we don't have the systems and processes in place, it is up to us to create ad hoc solutions. And hiring for this broad range of skills is becoming more of a challenge, leaving fundraising teams with long vacancies and even less capacity. (Perhaps ironically, fundraising positions are rarely covered by restricted funding.)

Together, these obstacles make it difficult to raise the type of funding we need to fuel our work and sustain our missions and operating models. They also deter our attention from mobilizing new supporters for human rights and ultimately growing the pool of resources for this critical work.

The way forward

All of these challenges are symptoms of two complicated dynamics in philanthropy: the lack of trust and the exercise of power.

Supporting organizations and movements with unrestricted funding requires that donors believe their grantee partners will maximize investments on their own, without step-by-step instructions. Funding negotiations should be a conversation between peers or equals; decisions about funding parameters must make sense to both sides.

But the issue goes beyond prioritizing trust-based relationships. Donors must move away from setting overly stringent restrictions and priorities or constantly refreshing their funding strategies. The grantee partners we support — not the donors who fund them — are best placed to determine what strategies will advance their agendas.

Although some of these problems run deep, overcoming them is not insurmountable. Our peer fundraising group is based on the value of collaboration, because we believe that we will all be better able to advance human rights when the entire ecosystem thrives. Activists, movements, public funds, private philanthropy and government donors each have unique expertise, tools and resources that can be leveraged to this end.

Matching the talk with action when it comes to unrestricted funding is an important component of a harmonious ecosystem. Donors can offer their tools and resources while recognizing the know-how of their grantee partners. Fundraising teams and organizations will be able to come up for air, redirecting their energy to mobilizing growing numbers of supporters of human rights and delivering on their own added value. Most importantly, more money means that more flexible — and, therefore, more effective — funding will flow to movements.

In the spirit of collaboration, we invite donors to engage in a collective conversation with us on how to build and sustain a robust and cohesive ecosystem in support of human rights. If you are trying to fund in more flexible ways, what has your experience been? If you are unable to lift restrictions on your funding, what are the barriers? Or, if you are ready to experiment with unrestricted funding, we happily volunteer to work with you. Hey, we are fundraisers — we had to put that out there!

Clare Gibson Nangle is director of strategic partnerships at the Fund for Global Human Rights

Shena Cavallo is a philanthropic partnership officer for Global Greengrants Fund

Celia Turner is the partnerships managing officer for the Urgent Action Sister Funds

Jen Bokoff is director of development at the Disability Rights Fund

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