If you’ve ever worked in nonprofit fundraising, you know that significant gifts rarely come without strings attached. Quarterly reports outlining how the money was spent and the direct impact it has had are typically expected, and it is not unusual for large donors to specify how they would like their donation to be used. This donor oversight in donor partnerships keeps everyone responsible and accountable, and is in part employed out of suspicion, or fear that money given to charity is not being used for charity.
So, 24 nonprofits were recently surprised to learn that Amazon Founder and CEO Jeff Bezos gave millions to their cause without any restrictions, as reported by Recode. Instead, he asks for just an annual report in any form with whichever key performance indicators the nonprofit deems appropriate.
With this cumulative $97.5 million donation to organizations that focus on homelessness, Bezos kicks off the Day 1 Families Fund, making a delayed but strong entrance into the world of philanthropic giving. After screening a number of nonprofits, Bezos sent out applications to organizations he was interested in, and selected 24 from that group, 15 of which received $5 million grants, and nine of which received $2.5 million grants. His second philanthropic project, called the Day 1 Academics Fund, will create preschools in underserved communities.
There are reasons why more donors don’t give in this way and there are reasons why more should. Whether you’re a nonprofit looking to improve your donor partnerships or an individual looking to make a gift with significant impact, here are some things to consider when creating your donor partnership framework:
The pros of restricted gifts
- Explicit guidelines on how a donation can be used eases concerns about the money going right into the pockets of the nonprofit leaders instead of toward the mission. Less transparent accountability from the nonprofit means that donors will have to trust that their money is being used productively. Big-name embezzlements over the years have exacerbated concerns about blind philanthropic giving (underlining the importance of strategic donor partnerships.)
- It holds the nonprofit accountable for tracking impact. Because many nonprofits are pulled in a hundred directions trying to work toward fulfilling their missions, a semi-annual or quarterly report offers an opportunity for development officers to sit down and look at the impact that incoming money has had on the organization.
The pros of restriction-free gifts
- The more time nonprofits spend satisfying their donors, the less time they dedicate to their mission. Those quarterly reports take up time and money, and can put pressure on meeting certain goals that aren’t in the direct interest of the mission.
- One annual report can demonstrate a longer view of nonprofit goals and the ways they are reaching them. In addition, if donors stipulate which factors belong in the impact assessment, these metrics may be given inordinate amount of attention by the nonprofit rather than how they would typically measure success.
- Nonprofits need money to do things that aren’t always shiny. Donors typically don’t want to hear that their money that month went toward facility upkeep, or raises for the lower-level staff. But these are all necessary allocations of funds in order to run a successful organization. Too frequently nonprofits end up bending over backwards to implement a program or bolster a piece of their programs according to the specifications of the donor, even if it’s not in the best interest of the organization long-term.
