Getting Unrestricted Gifts: 3 Tips for a Better Ask

Grants and major gifts enable your nonprofit to make huge strides in fulfilling your mission. However, in addition to program initiatives, your nonprofit also needs operational funding to keep its own doors open. 

Expenses such as employee salaries and office rent fall under the category of overhead costs, or general operating expenses. While funding for overhead is vital to running your nonprofit, many major funders often restrict their funding from supporting these costs and any program initiatives outside of the one they dictate. 

Donors should be able to have a certain measure of control over how their gifts are spent, and managing multiple restricted sources of revenue is standard budgeting practice for most nonprofits. However, this doesn’t mean that the right ask can’t improve your nonprofit’s control over incoming donations. You can and should ask for unrestricted gifts when the time is right, so be prepared to make that kind of unique request.

Donorly’s team of fundraising consultants have worked with nonprofits of all sizes to prepare them for making strategic fundraising asks and help them manage the donations once they are received. To help your nonprofit’s fundraising team prepare for soliciting major donors, this guide will address three tips for earning unrestricted gifts:

  1. Prepare Your Case Statement 
  2. Research Donors
  3. Allocate Funding 

Keep in mind that even the best pitch for an unrestricted gift may result in a donation that still comes with stipulations. However, your team can still make an effective, moving case for supporting your nonprofit as a whole when approaching donors. Once you successfully ask for an unrestricted gift, your team should also know how to make the most of whatever funding you do receive.  Let’s get started. 

1. Prepare Your Case Statement 

Asking for donations requires a researched marketing pitch that conveys to supporters why your cause is important and how their contributions will create change. These same basic principles apply to major gifts and requests for unrestricted funding. 

Major gifts are usually only made to nonprofits after an extensive, personal relationship with donors has been established. During this cultivation process, your nonprofit will have spoken to prospective major donors about the importance of your mission and their support as well as other topics related to participating in your nonprofit’s community. 

Many nonprofits track their relationships with major donors using reporting tools and databases, so they can manage each relationship and ensure their donation requests are made at an appropriate time. After many one-on-one conversations, you’ll have collected a significant amount of data on each of your major donors, which will allow your team to create a case statement tailored to their unique motivations and interests. 

Relationship-building and tracking are essential parts of asking for any type of major gift, whether to a specific campaign or in the form of unrestricted funding. The key difference, however, will need to be in how you frame your ask and explain the impact that support will make on your mission. These elements will come into play as you develop a case for support for your ask.

While your case statements will vary based on each donor, a few common elements to include are: 

  • A brief overview of your nonprofit and its mission. Begin with a summary of your mission and proposal to establish a clear understanding of your nonprofit and purpose. A summary also lets donors know what your presentation will include, which allows them to follow along better. Make it clear from the start that you’re seeking unrestricted support so prospects won’t feel confused or misled later in the cultivation process.
  • Details about the specific problem your nonprofit is combatting. Specific details that donors can visualize and connect with will help make your mission seem more real to donors. For foundations, businesses, and other donors who receive many presentations, these details help them differentiate between case statements, and ones that only use generalities are often declined. Explain exactly why you’re in need of additional annual or unrestricted funding right now.
  • Your proposed solution to this problem and its benefits. Even if you are seeking broader funding, your nonprofit should be able to articulate a specific solution you can put into action if you receive funding. Explain not only what your solution is but why it is effective and what benefits it provides. Make a concrete connection between increased unrestricted funding and your mission. For instance, if you need a larger office or more staff to meet increased need for your services, explain how growing your operational capacity will directly translate into increased impact for your constituents.
  • Details and testimonies from constituents who would be helped by your nonprofit. Donors want to know who they are helping. Collect stories and statistics about your constituents that you can present to your prospective funders to help them visualize who will benefit from their contributions. For example, a nonprofit that helps the poor is less likely to receive support than a nonprofit that helps low-income families affected by natural disasters.
  • An outline of how you intend to put your plan into action and use the funding you receive. While your exact plan can change as your situation changes, create an actionable outline of how your nonprofit will go about implementing the solutions you described previously in your case for support. This should include a timeline and a budget. It’s also considered a best practice to make it clear that your nonprofit intends to follow through on this outline independent of whether or not you receive funding. 

Refining your case statement for each potential donor is time consuming. Use templates like these to create a comprehensive fundraising plan that allows you to break down your approach for each donor.

2. Research Donors 

There are many different kinds of donors to approach for major gifts. In addition to individuals, corporations and foundations can also provide significant unrestricted funding and require a unique approach. However, no matter what kind of donor you are appealing to, you should be sure to thoroughly research them ahead of time. 

What kind of data should you collect to prepare for your ask? Not all data will be relevant, and trivial data can clutter your reports and preparations. Over the course of your relationship with these prospective funders, keep track of: 

  • Their capacity to give. Some donors have more financial freedom to give than others. This can be due to their personal financial situation or other limits, such as a business having a donation cap. Use your prospect research tools to find the average donation range of each donor you approach so your request matches what they usually give. 
  • What kind of organizations they give to. Research previous organizations your donors have contributed to and determine if there are any similarities with your organization. Some organizations, such as corporate sponsors, will outright state what kind of nonprofits they support on their philanthropy page. However, as Double the Donation’s guide to corporate sponsorships warns, you should look into more than just a corporation’s stated values in order to ensure their business practices also align with your nonprofit’s mission. Partnering with a business that acts against your nonprofit’s interests can harm your image in the eyes of your supporters. 
  • Their connection to other potential donors. Attaining major gifts revolves around forming relationships, and receiving an introduction to another potential donor is a valuable reward in and of itself. As you grow your network of donors, take note of other potential prospects they interact with but don’t have a relationship with your nonprofit. In some situations, donors will voluntarily introduce their connections to your nonprofit, but sometimes it is also appropriate to ask for an introduction. For example, if a donor has agreed to support your capital campaign, they are already invested in the success of your nonprofit and may be more inclined to reach out to other donors on your behalf. 

In addition, research what kind of donations your prospects usually give. This information can be trickier to uncover, but the more you can research ahead of time, the more your nonprofit will be prepared to meet with potential donors. Exploring the annual reports of other organizations your prospects have supported can help indicate the types of gifts they’ve made previously. Professional prospect researchers with access to extensive networks and resources make valuable partners for this process, as well.

3. Allocate Funding 

Nonprofit accounting requires juggling multiple revenue streams and types of funding. This makes it a rather complicated process in comparison to for-profit businesses. However, a thoroughly organized accounting system can lead to additional benefits for your nonprofit. 

When a donor contributes to your nonprofit, there are often restrictions on how their gift can be used. Many major donors will agree to support a specific campaign or initiative, and their money must only go to that program. To stay organized, nonprofits have to track multiple restricted and unrestricted funds for each aspect of their operations and allocate funding accordingly. 

Managing incoming revenue can quickly become complicated, especially as your nonprofit gathers more sponsors. This gives nonprofits two options: recruit an in-house bookkeeper to allocate funds or outsource to a professional nonprofit accounting consultant. 

  • In-house bookkeeping can be done by a hired professional or a trained volunteer. You can improve their ability to keep track of different revenue streams by investing in reporting and accounting software. This can keep your financial data error free and accessible by multiple users. 
  • Outsourced accountants and bookkeeping consultants are often professionally trained and have years of experience assisting nonprofits. When hiring an accountant, ask about their previous work experience to ensure they have worked with organizations similar in size and organizational structure to yours. 

Which option you choose depends on your nonprofit’s resources to spend on accounting services. Some nonprofits do not have the capacity to create a dedicated accounting position, whereas others will decide they need more immediate access to their accounting information than they could receive from a third-party bookkeeper. 

In either case, it’s critically important to have a solid fund accounting system in place. Even if your prospects don’t explicitly ask about your accounting processes, responsible stewardship demands that you properly allocate gifts as intended. The logistical, legal, and reputational headaches that can come with a disorganized process should definitely be avoided, so double-check that your accounting approach is compliant and running smoothly long before diving deeply into a large annual fund push for unrestricted gifts.

Earning unrestricted gifts is an ongoing process as your nonprofit develops relationships and establishes trust with donors. As your nonprofit creates stewardship plans to illustrate impact to donors who will help to grow your capacity and impact, ensure your nonprofit has the ability to follow-through on its promises by staying organized and responsible with every donation received.

About the author
Founder and President Sandra Davis leads Donorly with 30 years of fundraising experience and leadership. Sandra has consulted on numerous capital campaigns, led strategic planning and feasibility study efforts, and managed board development and recruitment efforts, planned giving, special events, and annual giving programs. Under her leadership, Donorly has grown to support the fundraising efforts of over 75 clients to date.