A topic that has come up in several conversations lately is "how restricted are your unrestricted funds?" First, of course, you have to understand what we mean by "restricted" funds. I usually assume that all nonprofit managers and fundraisers know what I'm talking about, but there are those who don't.
When you apply for a grant for a specific program the funds you receive are restricted for use only in that program. If you find that you have a shortage in a different program, you cannot simply shift those funds to the other purpose without first clearing it with the funder. Likewise, you cannot use those funds for general overhead line items that were not included in your proposal budget.
"Unrestricted" funds refers to the money you raise without promising anything in return. Many people assume that any individual donor money falls into this category. That may be the case, but it's not always so! If your appeal letter specifies that "your donation will go toward program X" then any money the letter brings in is restricted to program X. Just because each $25 donor doesn't require a report on how their money was used doesn't mean you can spend it any way you choose.
It may not be "sexy" to raise money for the power bill or office supplies, but it's necessary. There are certain foundations who are aware of this and will fund general operating expenses. But you must also learn to make the case for truly unrestricted funds that can cover overhead to your individual donors.
Tags: nonprofit, fundraising, foundations, individual donors, restricted
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